<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
IVILLAGE INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7375 13-3845162
(STATE OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
170 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 604-0963
(212) 604-9133 (FAX)
(ADDRESS AND TELEPHONE NUMBER OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
CANDICE CARPENTER
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
IVILLAGE INC.
170 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 604-0963
(212) 604-9133 (FAX)
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
Please send copies of all communications to:
<TABLE>
<S> <C>
MARTIN H. LEVENGLICK, ESQ. MARK G. BORDEN, ESQ.
RUBI FINKELSTEIN, ESQ. JAMES R. BURKE, ESQ.
ORRICK, HERRINGTON & SUTCLIFFE LLP HALE AND DORR LLP
30 ROCKEFELLER PLAZA 60 STATE STREET
NEW YORK, NEW YORK 10112 BOSTON, MASSACHUSETTS 02109
(212) 506-5000 (617) 526-6000
(212) 506-3730 (FAX) (617) 526-5000 (FAX)
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933,
as amended (the "Securities Act"), please check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / / ____________
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / / ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF SHARES PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Stock, $.0005 par value......................... $46,000,000 $12,788
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell nor does it seek an offer to buy
these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion, Dated December 11, 1998
Shares
IVILLAGE INC. [LOGO]
Common Stock
------------------------
This is an initial public offering of shares of Common Stock of iVillage
Inc. All of the shares of Common Stock are being sold by iVillage. No
public market currently exists for our shares. We anticipate that the initial
public offering price will be between $ and $ per share.
We have applied to list the Common Stock on the Nasdaq National Market
under the symbol "IVIL".
Please see "Risk Factors" beginning on page 7 to read about certain
factors you should consider before buying shares of the Common Stock.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
<TABLE>
<CAPTION>
Per Share Total
--------- -------
<S> <C> <C>
Initial public offering price................................................. $ $
Underwriting discount......................................................... $ $
Proceeds, before expenses, to iVillage........................................ $ $
</TABLE>
The underwriters may, under certain circumstances, purchase up to an
additional shares from iVillage at the initial public offering price
less the underwriting discount.
------------------------
The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the shares against payment in New York, New York
on , 1999.
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
HAMBRECHT & QUIST
------------------------
Prospectus dated , 1999.
<PAGE>
The inside front cover contains the following:
Pictures of the home page of
iVillage.com and various other
screens within iVillage's Web sites.
The information on our Web site is not a part of this Prospectus.
2
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information and iVillage's Consolidated Financial Statements and the Notes to
those statements appearing elsewhere in this prospectus.
This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about iVillage and our
industry. These forward-looking statements involve risks and uncertainties.
iVillage's actual results could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, as more fully
described in the "Risk Factors" section and elsewhere in this prospectus.
iVillage 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.
iVILLAGE INC.
OUR BUSINESS
iVillage Inc. is a leading online women's network and one of the most
demographically targeted online communities on the World Wide Web. Our network,
"iVillage.com", provides an easy-to-use, comprehensive destination tailored to
the interests and needs of women aged 25 through 49. We provide advertisers and
merchants with targeted access to women using the Web. During October 1998
iVillage.com was the only top 100 Web site with a female audience greater than
65%.
Our network consists of 12 channels covering the leading topics of interest
to women online, such as family, health, work, money, food, relationships,
shopping and travel. We facilitate channel usage by providing common features
and functionality within each channel, including experts, chats, message boards
and services.
As of October 31, 1998, iVillage's membership, its core audience and most
valuable users, was 84% female and consisted of approximately 740,000 unique
members, up from approximately 170,000 unique members as of January 31, 1998.
For the month ended October 31, 1998, iVillage.com had 2.7 million unique
visitors.
We believe that iVillage.com appeals to advertisers, consumers and
merchants because it combines the following attributes to create a powerful
environment for advertising and commerce:
o a highly-targeted and attractive demographic user group;
o a high degree of member involvement; and
o an interactive sponsorship model that integrates advertising and commerce
into the content of each of the sites.
OUR MARKET OPPORTUNITY
We believe that women are one of the principal driving forces behind the
growth of the Internet and that as of January 1998, women made up 45% of the
online population. We believe that women also represent an attractive
demographic group for advertisers and businesses, controlling or influencing
over $2.4 trillion of the $3.0 trillion in annual consumer spending in the
United States.
To effectively reach women online, content sites, advertisers and merchants
need to address the differing uses of the Internet by men and women. We believe
that women are interested in problem-solving, community, researching product
information and simple navigation and that they appear to spend less time
"surfing" the Internet than men and more of their time online at fewer
destinations.
We have developed innovative sponsorship relationships that go beyond
traditional banner advertising to support broad marketing objectives of
branding, awareness, product introductions, online research and editorial
integration. These sponsorships and highly targeted marketing opportunities
attract advertisers and sponsors from whom we derive a substantial majority of
our revenues. In addition, we own a majority interest in iBaby, Inc., an online
retailer of baby gifts and products, and generate e-commerce revenues through
agreements with leading merchants such as Amazon.com, Inc., N2K Inc. and
1-800-Flowers, Inc. In connection with and subject to this offering, iVillage
anticipates
3
<PAGE>
exercising its right to acquire the minority interest in iBaby.
OUR STRATEGY
Our objective is to continue to be the leading online women's network. Our
strategy includes:
o building strong brand recognition;
o aggressively growing membership and usage;
o enhancing and expanding the network;
o pursuing strategic acquisitions and alliances;
o increasing sponsor and advertising revenues; and
o generating e-commerce revenues.
We actively promote our brand awareness and site usage through a variety of
online and traditional media, including through recently signed agreements with
NBC and AT&T to provide both online and offline advertising.
OUR OFFICES
Our executive offices are located at 170 Fifth Avenue, New York, New York
10010. Our telephone number at that location is 212-604-0963 and our Internet
address is www.ivillage.com.
THE OFFERING
The following information assumes that the Underwriters do not exercise the
option granted by iVillage to purchase additional shares in this offering.
Please see "Underwriting".
Shares offered by iVillage...................
Shares to be outstanding after this
offering(1)................................
Proposed Nasdaq National Market symbol....... IVIL
Use of proceeds..............................
Brand promotion, expansion of sales and
marketing, acquisition of the minority interest
in iBaby, working capital and general corporate
purposes, including channel expansion and content
development, expansion and/or relocation of our
offices and possible acquisitions. Please see
"Use of Proceeds".
- ------------------------------
(1) This information is based on shares of Common Stock outstanding on
September 30, 1998 and gives effect to (a) the conversion of all outstanding
shares of our Convertible Preferred Stock into shares of Common Stock
automatically upon the closing of this offering and (b) the sale of
11,730,948 shares of Series E Convertible Preferred Stock on December 4,
1998. This information excludes: (i) such number of shares to be determined
by us and iBaby prior to this offering that may be issuable in connection
with the acquisition of the minority interest in iBaby; (ii) 3,684,210
shares issuable to NBC over the next three years pursuant to our agreement
with NBC, plus an option granted to NBC to purchase additional shares;
(iii) 4,514,096 shares issuable upon the exercise of outstanding options
under our 1995 Amended and Restated Employee Stock Option Plan with a
weighted average exercise price of $1.92 per share; (iv) 1,082,180 shares
issuable upon the exercise of outstanding options under our 1997 Amended and
Restated Acquisition Stock Option Plan with a weighted average exercise
price of $1.70 per share; (v) 5% of the shares of Common Stock outstanding
at the end of each prior year to be reserved for future issuance under our
1999 Employee Stock Option Plan, which will take effect when this offering
is completed; (vi) shares to be reserved for future issuance under
our 1999 Director Option Plan, which will take effect when this offering is
completed; (vii) shares to be reserved for future issuance under our
1999 Employee Stock Purchase Plan, which will take effect when this offering
is completed; and (viii) 1,277,996 shares issuable upon the exercise of
outstanding warrants with a weighted average exercise price of $2.18 per
share.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
JULY 1, 1995 DECEMBER 31, SEPTEMBER 30,
(INCEPTION) TO -------------------- ---------------------
DECEMBER 31, 1995 1996(1) 1997(2) 1997(2) 1998(3)
----------------- ------- ---------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues........................................ $ -- $ 732 $ 6,019 $ 3,662 $ 9,126
------- ------- ---------- -------- ----------
Operating expenses:
Production, content and product................. 629 4,521 7,606 5,157 10,407
Sales and marketing............................. 329 2,709 8,771 5,399 19,931
General and administrative...................... 673 3,213 10,727 7,410 11,857
------- ------- ---------- -------- ----------
Total operating expenses...................... 1,631 10,443 27,104 17,966 42,195
------- ------- ---------- -------- ----------
Loss from operations............................ (1,631) (9,711) (21,085) (14,304) (33,069)
Interest (expense) income, net.................. (7) 28 (216) (205) 419
Loss on sale of Web site(4)..................... -- -- -- -- (165)
Minority interest(5)............................ -- -- -- -- 366
------- ------- ---------- -------- ----------
Net loss........................................ $(1,638) $(9,683) $ (21,301) $(14,509) $ (32,449)
------- ------- ---------- -------- ----------
------- ------- ---------- -------- ----------
Basic and diluted net loss per share(6)......... $ (0.50) $ (2.97) $ (4.55) $ (3.28) $ (5.21)
------- ------- ---------- -------- ----------
------- ------- ---------- -------- ----------
Weighted average shares of common stock
outstanding used in computing basic and
diluted net loss per share(6)................. 3,250 3,262 4,683 4,421 6,233
------- ------- ---------- -------- ----------
------- ------- ---------- -------- ----------
Pro forma basic and diluted net loss per
share(6)(7)(8)................................ $ (0.88) $ (0.64)
---------- ----------
---------- ----------
Shares of common stock used in computing pro
forma basic and diluted net loss per
share(6)(7)(8)................................ 24,308 50,506
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-------------------------------------------
PRO PRO FORMA
ACTUAL FORMA(7)(8) AS ADJUSTED(7)(8)(9)
------- -------- --------------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash................................................................. $ 8,768 $ 40,768
Working capital...................................................... 285 32,285
Total assets......................................................... 23,302 55,302
Long-term debt....................................................... 18 18
Minority interest.................................................... 220 220
Stockholders' equity................................................. 11,089 43,089
</TABLE>
- ------------------------------
(1) Includes the results of operations of ParentsPlace.com, Inc. from December
1996, the date of acquisition.
(2) Includes the results of operations of Health ResponseAbility Systems, Inc.
from May 1997, the date of acquisition.
(3) Includes the results of operations of iBaby, Inc. from April 1998, the date
of formation.
(4) Please see Note 5 and Note 11 to iVillage's Consolidated Financial
Statements.
(5) Minority interest represents the portion of the net loss of iBaby, Inc.
attributable to minority stockholders.
(Footnotes continued on next page)
5
<PAGE>
(Footnotes continued from previous page)
(6) Please see Note 2 to iVillage's Consolidated Financial Statements for
information concerning the calculation of weighted average shares of Common
Stock outstanding used in computing basic and diluted net loss per share.
(7) Excludes (i) such number of shares to be negotiated by iBaby and us prior to
this offering that may be issuable in connection with the acquisition of the
minority interest in iBaby and (ii) 3,684,210 shares issuable to NBC over
the next three years pursuant to our agreement with NBC, plus an option
granted to NBC to purchase additional shares.
(8) Gives pro forma effect to (i) the sale of 11,730,948 shares of Series E
Preferred Stock for net proceeds of approximately $32.0 million on December
4, 1998 and (ii) the conversion of all of the outstanding shares of our
Convertible Preferred Stock into 44,355,615 shares of Common Stock
automatically upon the closing of this offering. Please see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and Notes 9 and 12 of Notes to
iVillage's Consolidated Financial Statements.
(9) As adjusted to reflect the sale of shares of Common Stock at an
assumed initial public offering price of $ per share after deducting the
estimated underwriting discount and offering expenses. Please see "Use of
Proceeds" and "Capitalization".
iVillage(Registered), the iVillage logo and Parent Soup(Registered) are
registered marks of iVillage. Community Challenge; Community Challenges;
"iVillage.com. Honest Answers. For The Stuff That Really Matters"; Armchair
Millionaire; Parentsplace and Parentsplace.com are marks of iVillage. iBaby and
Internetbaby are marks of iBaby, Inc. All other trademarks and service marks are
the property of their respective owners.
Unless otherwise specifically stated, information throughout this
prospectus assumes the Underwriters' over-allotment option is not exercised and
gives effect to a for reverse stock split of Common
Stock that will be effective immediately prior to the effective date of this
prospectus. Please see "Capitalization", "Description of Capital Stock" and
"Underwriting".
6
<PAGE>
RISK FACTORS
You should consider carefully the following risks before you decide to buy
our Common Stock. The risks and uncertainties described below are not the only
ones facing our company. Additional risks and uncertainties may also adversely
affect our business operations. If any of the following risks actually occur,
our business, financial condition or results of operations would likely suffer.
In such case, the trading price of our Common Stock could decline, and you may
lose all or part of the money you paid to buy our Common Stock.
This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about iVillage and our
industry. These forward-looking statements involve risks and uncertainties.
iVillage'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 prospectus. iVillage 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.
LIMITED OPERATING HISTORY
We were incorporated in June 1995 and initiated our online operations in
January 1996. Accordingly, we have a limited operating history. An investor in
our Common Stock must consider the risks and difficulties frequently encountered
by early stage companies in new and rapidly evolving markets, including the
Internet advertising market. These risks include our ability to:
o attract a larger audience to our online network;
o increase awareness of our brand;
o strengthen user-loyalty;
o offer compelling content;
o maintain our current, and develop new, strategic relationships;
o attract a large number of advertisers from a variety of industries;
o respond effectively to competitive pressures;
o continue to develop and upgrade our technology; and
o attract, retain and motivate qualified personnel.
We also depend on the growing use of the Internet for advertising, commerce
and communication, and on general economic conditions. We cannot assure you that
our business strategy will be successful or that we will successfully address
these risks. Please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for detailed information on our limited
operating history.
HISTORY OF LOSSES AND ANTICIPATION OF CONTINUED LOSSES
We incurred net losses of $11.3 million for the period from July 1995
(inception) through December 31, 1996, $21.3 million for the year ended
December 31, 1997, and $32.4 million for the nine months ended September 30,
1998. As of September 30, 1998, our accumulated deficit was $65.1 million. We
have not achieved profitability and expect to continue to incur operating losses
for the foreseeable future. We expect to continue to incur significant operating
and capital expenditures and, as a result, we will need to generate significant
revenues to achieve and maintain profitability. Although our revenues have grown
in recent quarters, we cannot assure you that we will achieve sufficient
revenues for profitability. Even if we do achieve profitability, we cannot
assure you that we can sustain or increase profitability on a quarterly or
annual basis in the future. If revenues grow slower than we anticipate, or if
operating expenses exceed our expectations or cannot be adjusted accordingly,
our business, results of operations and financial condition will be materially
and adversely affected. Please see "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS AND
SEASONALITY
Our revenues and operating results may vary significantly from quarter to
quarter due to a number of factors, not all of which are in our control. These
factors include:
o our ability to attract and retain users and members;
7
<PAGE>
o our ability to attract and retain advertisers and sponsors and maintain
advertiser and sponsor satisfaction;
o our ability to attract and retain customers and maintain customer
satisfaction for our existing and future e-commerce businesses;
o new sites, services or products introduced by us or our competitors;
o the timing and uncertainty of sales cycles;
o the level of Web and online services usage;
o our ability to upgrade and develop our systems and infrastructure and
attract new personnel in a timely and effective manner;
o traffic levels on our Web sites;
o our ability to successfully integrate operations and technologies from
acquisitions or other business combinations;
o technical difficulties or system downtime affecting the Internet
generally or the operation of our Web sites; and
o economic conditions specific to the Internet as well as general economic
conditions; and
o the timing and magnitude of NBC-related charges.
Our revenues for the foreseeable future will remain dependent on user
traffic levels and advertising activity on iVillage.com. Such future revenues
are difficult to forecast. In addition, we plan to increase our sales and
marketing operations, to expand and develop content and to upgrade and enhance
our technology and infrastructure development in order to support our growth. We
may be unable to adjust spending quickly enough to offset any unexpected revenue
shortfall. If we have a shortfall in revenues in relation to our expenses, or if
our expenses precede increased revenues, then our business, results of
operations and financial condition would be materially and adversely affected.
This would likely affect the market price of our Common Stock in a manner which
may be unrelated to our long-term operating performance.
We believe that advertising sales in traditional media, such as television
and radio, generally are lower in the first and third calendar quarters of each
year. If our market makes the transition from an emerging to a more developed
market, seasonal and cyclical patterns may develop in our industry. Seasonal and
cyclical patterns in Internet advertising may also affect our revenues. In
addition, traffic levels on our Web sites typically fluctuate during the summer
and year-end vacation and holiday periods. Furthermore, we anticipate that sales
from iBaby, Inc. and any other future consumer goods we may sell will typically
increase during the fourth quarter as a result of the holiday season and may
decline during other periods.
Due to the potential impact of iVillage's future stock price movements on
the valuation of iVillage stock to be received by NBC in exchange for
advertisements, there will likely be significant non-cash charges to iVillage's
operating results with respect to the cost of these advertisements. Furthermore,
the timing of these charges is highly uncertain. This could severely impact the
predictability of iVillage's future operating results.
Due to the factors noted above and the other risks discussed in this
section, you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance. It is possible that in some
future periods our results of operations may be below the expectations of public
market analysts and investors. In this event, the price of our Common Stock may
fall. Please see "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business--Sales, Marketing and Public Relations"
for detailed information on our quarterly operating results.
8
<PAGE>
OUR RELIANCE ON SPONSOR AND ADVERTISING REVENUES AND THE UNPROVEN ACCEPTANCE AND
EFFECTIVENESS OF THE INTERNET AS AN ADVERTISING MEDIUM
Our future is highly dependent on an increase in the use of the Internet as
an advertising medium. We expect to derive a substantial amount of our revenues
from sponsorships and advertising for the foreseeable future. The Internet
advertising market is new and rapidly evolving, and we cannot yet gauge its
effectiveness as compared to traditional advertising media. As a result, demand
and market acceptance for Internet advertising solutions is uncertain. Most of
our current or potential advertising customers have little or no experience
using the Internet for advertising purposes and they have allocated only a
limited portion of their advertising budgets to Internet advertising. The
adoption of Internet advertising, particularly by those entities that have
historically relied upon traditional media for advertising, requires the
acceptance of a new way of conducting business, exchanging information and
advertising products and services. Such customers may find Internet advertising
to be less effective for promoting their products and services relative to
traditional advertising media. We cannot assure you that the market for Internet
advertising will continue to emerge or become sustainable. If the market for
Internet advertising fails to develop or develops more slowly than we expect,
then our business, results of operations and financial condition could be
materially and adversely affected.
There are currently no standards for the measurement of the effectiveness
of Internet advertising, and the industry may need to develop standard
measurements to support and promote Internet advertising as a significant
advertising medium. In addition, currently available software programs and other
tracking methodologies are rapidly evolving. However, we cannot assure you that
the development of the software will keep pace with our information needs,
particularly to support the growing needs of our internal business requirements
and advertising clients. The lack of this information could adversely impact our
ability to attract and retain advertisers and allocate corporate resources
efficiently.
Different pricing models are used to sell advertising on the Internet. It
is difficult to predict which, if any, will emerge as the industry standard.
This makes it difficult to project our future advertising rates and revenues.
Our advertising revenues could be adversely affected if we are unable to adapt
to new forms of Internet advertising. Moreover, "filter" software programs that
limit or prevent advertising from being delivered to an Internet user's computer
are available. Widespread adoption of this software could adversely affect the
commercial viability of Internet advertising.
It is important to our advertisers that we accurately measure the
demographics of our user base and the delivery of advertisements on our Web
site. We depend on third parties to provide certain of these measurement
services. If they are unable to provide these services in the future, we would
need to perform them ourselves or obtain them from another provider. This could
cause us to incur additional costs or cause interruptions in our business during
the time we are replacing these services. We are currently implementing
additional systems designed to record demographic data on our users. If we do
not implement these systems successfully, we may not be able to accurately
evaluate the demographic characteristics of our users. Companies may choose to
not advertise on our Web sites or may pay less for advertising if they do not
perceive our measurements or measurements made by third parties to be reliable.
NEED TO MANAGE GROWTH
We have experienced and are currently experiencing a period of significant
growth. This growth has placed, and our anticipated future growth in our
operations will continue to place, a significant strain on our resources. As
part of this growth, we will have to implement new operational and financial
systems and procedures and controls to expand, train and manage our employee
base and to maintain close coordination among our technical, accounting,
finance, marketing, sales and editorial staffs. If we are unable to manage our
growth effectively, our business could be adversely affected.
Several members of our senior management joined us in 1998, including
Craig T. Monaghan, Chief Financial Officer; Allison Abraham, Chief Operating
Officer; John W. Glascott, Senior Vice President, Sponsorship; Caterina A.
Conti, General
9
<PAGE>
Counsel; and Sanjay Muralidhar, Vice President, Finance. These individuals have
not previously worked together and are becoming integrated as a management team,
and there can be no assurance that they will be able to work together
effectively or successfully manage our growth. In addition, we are seeking to
hire a Chief Technology Officer and to hire additional technical personnel. We
believe this is critical to our ability to effectively manage our operations and
support our anticipated future growth.
OUR DEPENDENCE ON AOL
America Online, Inc. ("AOL") has and is expected to continue to account for
a significant portion of our online traffic and impression-based revenues. Our
existing agreement with AOL expires in February 1999. Although either party can
extend the agreement for an additional year, we cannot assure you that AOL will
continue to carry our channels beyond February 2000. Our agreement does not
prohibit AOL from providing carriage to certain online content sites that
compete with our sites, and AOL is currently providing carriage to additional
competing sites. We may not be able to continue to attract a sufficient amount
of traffic and advertising to our Web sites without carriage of our channels on
AOL. If carriage of our channels on AOL is discontinued, our business, results
of operations and financial condition would be materially adversely affected.
AOL has invested in Oxygen Media, Inc. a new Internet and television
company that is developing cable and interactive content for women and children.
In addition, Oxygen Media has acquired from AOL, the assets of electra.com, an
online women's network, and Thrive Partners LLC, the operator of
thriveonline.com, a health site. In addition, AOL has invested in Excite, Inc.
and in November 1998, announced a merger with Netscape Communications Corp. The
relationship between AOL and Oxygen Media and AOL and other internet companies
may result in potential conflicts of interest for AOL, which may not be resolved
in our favor. Please see "Certain Transactions".
OUR DEPENDENCE ON LARGE CUSTOMERS
Historically, a limited number of customers has accounted for a significant
percentage of our revenues. For the nine months ended September 30, 1997, two
advertisers each accounted for greater than 10% of total revenues. In addition,
iVillage's five largest advertisers accounted for 31% of total revenues.
Although no advertiser accounted for more than ten percent of total revenues for
the nine months ended September 30, 1998, iVillage's five largest advertisers
accounted for 22% of total revenues for the period. At September 30, 1998, one
advertiser accounted for greater than 10% of net accounts receivable. We
anticipate that our results of operations in any given period will continue to
depend to a significant extent upon revenues from a small number of customers.
In addition, we anticipate that such customers will continue to vary over time,
so that the achievement of our long-term goals will require us to obtain
additional significant customers on an ongoing basis. Our failure to enter into
a sufficient number of large contracts during a particular period could have a
material adverse effect on our business, financial condition and results of
operations. Please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OR INVESTMENTS
We may acquire or make investments in complementary businesses,
technologies, services or products if appropriate opportunities arise. From time
to time we have had discussions with companies regarding our acquiring, or
investing in, their businesses, products, services or technologies. However, we
have no contracts or letters of intent relating to any such acquisition or
investment. We cannot assure you that we will be able to identify suitable
acquisition or investment candidates. Even if we do identify suitable
candidates, we cannot assure you that we will be able to make such acquisitions
or investment on commercially acceptable terms. If we acquire a company, we
could have difficulty in assimilating that company's personnel, operations,
technology and software. In addition, the key personnel of the acquired company
may decide not to work for us. If we make other types of acquisitions, we could
have difficulty in integrating the acquired products, services or technologies
into our operations. These difficulties could disrupt our ongoing business,
distract our management and employees, increase our expenses and
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adversely affect our results of operations due to the amortization of goodwill.
Furthermore, we may incur indebtedness or issue equity securities to pay for any
future acquisitions. The issuance of equity securities could be dilutive to our
existing stockholders.
OUR LIABILITY FOR INFORMATION RETRIEVED FROM THE WEB
Because users of our Web sites may distribute our content to others, third
parties might sue us for defamation, negligence, copyright or trademark
infringement, personal injury or other matters. These types of claims have been
brought, sometimes successfully, against online services in the past. Others
could also sue us for the content that is accessible from our Web sites through
links to other Web sites or through content and materials that may be posted by
members in chat rooms or bulletin boards. We also offer e-mail services, which
may subject us to potential risks, such as liabilities or claims resulting from
unsolicited e-mail (spamming), lost or misdirected messages, illegal or
fraudulent use of e-mail or interruptions or delays in e-mail service.
We also enter into agreements with commerce partners and sponsors that
entitle us to receive a share of any revenue from the purchase of goods and
services through direct links from our Web sites to their Web sites. Such
arrangements may subject us to additional claims, including potential
liabilities to consumers of such products and services, because we provide
access to such products or services, even if we do not provide such products or
services ourselves. While our agreements with these parties often provide that
we will be indemnified against such liabilities, such indemnification, if
available, may not be adequate. Our insurance may not adequately protect us
against these types of claims.
E-COMMERCE AND POTENTIAL PRODUCT LIABILITY
We plan to develop a range of products targeted specifically at women
through our iBaby site and other e-commerce sites that we may acquire in the
future. We also may foster relationships with manufacturers or companies to
offer such products directly on iVillage.com. Such a strategy involves numerous
risks and uncertainties. We have very limited experience in the sale of products
online and the development of relationships with manufacturers or suppliers of
such products. Consumers may sue us if any of the products that we sell are
defective, fail to perform properly or injure the user. Our agreements with
manufacturers typically contain provisions intended to limit our exposure to
liability claims. These limitations may not however prevent all potential
claims. Liability claims could require us to spend significant time and money in
litigation or to pay significant damages. As a result, any such claims, whether
or not successful, could seriously damage our reputation and our business.
OUR MARKET IS HIGHLY COMPETITIVE
The number of Web sites competing for the attention and spending of
members, users and advertisers has increased and we expect it to continue to
increase.
We compete for members, users and advertisers with the following types of
companies:
o online services or Web sites targeted at women, such as women.com,
homearts.com, condenet.com and Oxygen Media's Web sites;
o Web retrieval and other Web "portal" companies, such as Excite, Inc.,
Infoseek Corporation, Lycos, Inc. and Yahoo! Inc.; and
o publishers and distributors of traditional media, such as television,
radio and print.
Increased competition could result in price reductions, reduced margins or
loss of market share, any of which could adversely affect our business. We also
compete for advertisers with traditional advertising media, such as print, radio
and television. Therefore, if advertisers do not view the Internet as an
effective advertising medium, they may be reluctant to advertise on our Web
sites.
Competition is likely to increase significantly as new companies enter the
market and current competitors expand their services. Many of these potential
competitors are likely to enjoy substantial competitive advantages, including:
o larger technical staffs;
o greater name recognition;
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o larger customer bases; and
o substantially greater financial, marketing, technical and other
resources.
To be competitive, we must respond promptly and effectively to the
challenges of technological change, evolving standards and our competitors'
innovations by continuing to enhance our services, as well as our sales and
marketing channels. Any pricing pressures, reduced margins or loss of market
share resulting from increased competition, or our failure to compete
effectively, could seriously damage our business. Please see "Business--
Competition".
UNCERTAINTY OF ADDITIONAL FINANCING
We currently anticipate that our available cash resources combined with the
net proceeds from this offering will be sufficient to meet our anticipated
working capital and capital expenditure requirements for at least the 12 months
after the date of this prospectus. We may need to raise additional funds,
however, to fund more rapid expansion, to develop new or enhance existing
services or products, to respond to competitive pressures or to acquire
complementary products, businesses or technologies. If additional funds are
raised through the issuance of equity or convertible debt securities, the
percentage ownership of our stockholders will be reduced and such securities may
have rights, preferences or privileges senior to those of our stockholders. We
cannot assure you that additional financing will be available on terms favorable
to us, or at all. If adequate funds are not available or are not available on
acceptable terms, our ability to fund our expansion, take advantage of
unanticipated opportunities, develop or enhance services or products or
otherwise respond to competitive pressures would be significantly limited. Our
business, results of operations and financial condition could be materially
adversely affected by such limitation. Please see "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" for a discussion of our working
capital and capital expenditures.
UNCERTAINTY OF SALES CYCLES
The time between the date of initial contact with a potential advertiser or
sponsor and the execution of a contract with the advertiser or sponsor, is often
lengthy, typically ranging from six weeks for smaller agreements to nine months
for larger agreements, and is subject to delays over which we have little or no
control, including customers' budgetary constraints, customers' internal
acceptance reviews, the success and continued internal support of advertisers'
and sponsors' own development efforts, and the possibility of cancellation or
delay of projects by advertisers or sponsors. During such sales cycle, we may
expend substantial funds and management resources and yet not obtain sponsorship
or advertising revenues. Therefore, our results of operations for a particular
period may be adversely affected if sales to such advertisers or sponsors
forecasted in a particular period are delayed or do not otherwise occur.
DEPENDENCE ON KEY PERSONNEL
Our future success depends to a significant extent on the continued
services of our senior management and other key personnel, particularly, Candice
Carpenter, Chief Executive Officer, and Nancy Evans, Editor-in-Chief. The loss
of the services of Mdmes. Carpenter or Evans, or certain other key employees,
would likely have a material adverse effect on our business, results of
operations and financial condition. We expect that we will need to hire
additional personnel in all areas. We have no employment agreements with either
of these executives. We do not maintain "key person" life insurance for any of
our personnel, other than Ms. Carpenter. Our future success also depends on our
continuing to attract, retain and motivate highly skilled employees. Competition
for personnel throughout our industry is intense. We may be unable to retain our
key employees or attract, assimilate or retain other highly qualified employees
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. If we do not succeed
in attracting new personnel or retaining and motivating our current personnel,
our business will be adversely affected. Please see "Business--Human Resources"
and "Management" for detailed information on our key personnel.
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DEPENDENCE ON CONTINUED GROWTH IN USE OF THE INTERNET
Our market is new and rapidly evolving. Our business would be adversely
affected if Internet usage does not continue to grow, particularly usage by
women. A number of factors may inhibit Internet usage, including inadequate
network infrastructure, security concerns, inconsistent quality of service, and
lack of availability of cost-effective, high-speed service. If Internet usage
grows, the Internet infrastructure may not be able to support the demands placed
on it by this growth and its performance and reliability may decline. In
addition, Web sites have experienced interruptions in their service as a result
of outages and other delays occurring throughout the Internet network
infrastructure. If these outages or delays frequently occur in the future,
Internet usage, as well as the usage of our Web sites, could grow more slowly or
decline.
RISKS ASSOCIATED WITH TECHNOLOGY AND TECHNOLOGICAL CHANGE
Our market is characterized by rapidly changing technologies, frequent new
product and service introductions and evolving industry standards. The recent
growth of the Internet and intense competition in our industry exacerbate these
market characteristics. To achieve our goals, we need to effectively integrate
the various software programs and tools required to enhance and improve our
product offerings and manage our business. Our future success will depend on our
ability to adapt to rapidly changing technologies by continually improving the
performance features and reliability of our services. We may experience
difficulties that could delay or prevent the successful development,
introduction or marketing of new products and services. In addition, our new
enhancements must meet the requirements of our current and prospective users and
must achieve significant market acceptance. We could also incur substantial
costs if we need to modify our service or infrastructures to adapt to these
changes.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
Laws and regulations directly applicable to Internet communications,
commerce and advertising are becoming more prevalent. The most recent session of
the United States Congress resulted in Internet laws regarding children's
privacy, copyrights and taxation. Such legislation could dampen the growth in
use of the Internet generally and decrease the acceptance of the Internet as a
communications, commercial and advertising medium. Although our transmissions
originate in New York, the governments of other states or foreign countries
might attempt to regulate our transmissions or levy sales or other taxes
relating to our activities. The European Union recently enacted its own privacy
regulations that may result in limits on the collection and use of certain user
information. The laws governing the Internet, however, remain largely unsettled,
even in areas where there has been some legislative action. It may take years to
determine whether and how existing laws such as those governing intellectual
property, privacy, libel and taxation apply to the Internet and Internet
advertising. In addition, the growth and development of the market for Internet
commerce may prompt calls for more stringent consumer protection laws, both in
the United States and abroad, that may impose additional burdens on companies
conducting business over the Internet. Furthermore, the Federal Trade Commission
has recently investigated the disclosure of personal identifying information
obtained from individuals by Internet companies. In the event the Federal Trade
Commission or other governmental authorities adopt or modify laws or regulations
relating to the Internet, our business, results of operations and financial
condition could be adversely affected.
RISK OF SYSTEM FAILURE AND CAPACITY CONSTRAINTS
Substantially all of our communications hardware and certain of our other
computer hardware operations are located at Exodus Communications, Inc.'s
facilities in Jersey City, New Jersey. Fire, floods, earthquakes, power loss,
telecommunications failures, break-ins and similar events could damage these
systems. Computer viruses, electronic break-ins or other similar disruptive
problems could also adversely affect our Web sites. Our business could be
adversely affected if our systems were affected by any of these occurrences. Our
insurance policies may not adequately compensate us for any losses that may
occur due to any failures or interruptions in our systems. We do not
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presently have any secondary "off-site" systems or a formal disaster recovery
plan.
Our Web sites must accommodate a high volume of traffic and deliver
frequently updated information. Our Web sites have in the past and may in the
future experience slower response times or decreased traffic for a variety of
reasons. In addition, our users depend on Internet service providers, online
service providers and other Web site operators for access to our Web sites. Many
of them have experienced significant outages in the past, and could experience
outages, delays and other difficulties due to system failures unrelated to our
systems. Moreover, the Internet infrastructure may not be able to support
continued growth in its use. Any of these problems could adversely affect our
business.
PRIVACY CONCERNS
Web sites typically place certain information ("cookies") on a user's hard
drive without the user's knowledge or consent. Web sites use cookies for a
variety of reasons. This technology also enables us to limit the frequency with
which a user is shown a particular ad. Certain currently available Internet
browsers allow users to modify their browser settings to remove cookies at any
time or to prevent cookies from being stored on their hard drives. In addition,
some Internet commentators, privacy advocates and governmental bodies have
suggested limiting or eliminating the use of cookies. The effectiveness of this
technology could be limited by any reduction or limitation in the use of
cookies.
INTERNET SECURITY AND E-COMMERCE RISKS
A significant barrier to e-commerce and communications over the Internet
has been the need for secure transmission of confidential information. Internet
usage could decline if any well-publicized compromise of security occurred. We
may incur significant costs to protect against the threat of security breaches
or to alleviate problems caused by such breaches. If a third person were able to
misappropriate our users' personal information or credit card information, users
could possibly sue us or bring claims against us.
INTELLECTUAL PROPERTY AND POTENTIAL LITIGATION
Trademarks and other proprietary rights are important to our success and
our competitive position. We seek to protect our trademarks and other
proprietary rights, but these actions may be inadequate to protect our
trademarks and other proprietary rights. We may also license content from third
parties in the future and it is possible that we could become subject to
infringement actions based upon the content licensed from these third parties.
Any of these claims, with or without merit, could subject us to costly
litigation and the diversion of our financial resources and technical and
management personnel. Further, if such claims are successful, we may be required
to change our trademarks, alter the content and pay financial damages. Please
see "Business--Intellectual Property, Proprietary Rights and Domain Names". We
cannot assure you that such changes of trademarks, alteration of content or
payment of financial damages will not adversely affect our business.
We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. We cannot assure you that the steps we have taken
will prevent misappropriation of our solutions or technologies, particularly in
foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.
We filed a service mark application for the mark PARENTSPLACE.COM. On
July 22, 1998, Jewish Family and Children's Services ("JFCS") filed a Notice of
Opposition in the Trademark Trial and Appeal Board ("TTAB") of the U.S. Patent
and Trademark Office. The TTAB improperly captioned the Opposition proceeding
and forwarded the Notice to a prior attorney (not the attorney of record). The
period to respond to the Notice passed before we or our trademark counsel became
aware of the Opposition proceeding. The TTAB was informed of its errors and
indicated that it would recaption the Opposition proceeding, forward it to our
trademark attorney and reset the date to respond. There has been no written
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confirmation from the TTAB of this proposed course of action. There can be no
assurance that JFCS will not be successful in the Opposition proceeding, thus
preventing us from securing a federal registration to the mark
"PARENTSPLACE.COM". Further, there can be no assurance that JFCS will not assert
a claim to trademark rights against us in the future with respect to the use of
"PARENTSPLACE.COM" or "PARENTSPLACE", either as currently used or as developed
in the future. We are not able at this time to evaluate the likelihood of an
unfavorable outcome in the event such claims are asserted, or to estimate the
amount or range of potential loss.
We may need to obtain licenses from others to refine, develop, market and
deliver new services. We cannot assure you that we will be able to obtain any
such license on commercially reasonable terms or at all or that rights granted
pursuant to any licenses will be valid and enforceable.
YEAR 2000 RISKS
Many currently installed computer systems and software products only accept
two digits to identify the year in any date. Thus, the year 2000 will appear as
"00", which the system might consider to be the year 1900 rather than the year
2000. This could result in system failures, delays or miscalculations. Computer
systems and software that have not been developed or enhanced recently may need
to be upgraded or replaced to comply with Year 2000 requirements.
We recognize the significance of these issues and have responded by
establishing a dedicated task force to manage a company-wide assessment of Year
2000 factors to ensure that our internal financial and administrative systems
are Year 2000 compliant. Our Year 2000 task force is currently conducting an
inventory, and developing testing procedures, for all software and other systems
that it believes might be affected by Year 2000 issues. Since third parties
developed and currently support many of the systems that we use, a significant
part of this effort will be to ensure that these third-party systems are Year
2000 compliant. We plan to confirm this compliance through a combination of the
representation by these third parties of their products' Year 2000 compliance,
as well as specific testing of these systems. The failure of systems maintained
by third parties to be Year 2000 compliant could cause us to incur significant
expense to remedy any problems, reduce our revenues from such third parties or
otherwise seriously damage our business.
We have not incurred significant costs to date complying with Year 2000
requirements, and we do not believe that we will incur significant costs for
such purposes in the foreseeable future. If we discover any Year 2000 errors or
defects in our internal systems, we could incur substantial costs in making
repairs. The resulting disruption of our operations could seriously damage our
business. Please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" for
detailed information on our state of readiness, potential risks and contingency
plans regarding the Year 2000 issue.
NO PRIOR PUBLIC MARKET AND DETERMINATION OF OFFERING PRICE
There has not been a public market for our Common Stock. We cannot predict
the extent to which investor interest in iVillage will lead to the development
of a trading market or how liquid that market might become. The initial public
offering price for the shares will be determined by negotiations between us and
the representatives of the Underwriters and may not be indicative of prices that
will prevail in the trading market.
POSSIBLE VOLATILITY OF STOCK PRICE
The stock market has experienced significant price and volume fluctuations,
and the market prices of technology companies, particularly Internet-related
companies, have been highly volatile. Investors may not be able to resell their
shares at or above the initial public offering price. Please see "Underwriting".
In the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted against
such a company. Such litigation could result in substantial costs and a
diversion of management's attention and resources.
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SHARES ELIGIBLE FOR FUTURE SALE
Sales of significant amounts of Common Stock in the public market after
this offering or the perception that such sales will occur could materially and
adversely affect the market price of the Common Stock or the future ability of
iVillage to raise capital through an offering of its equity securities. Of the
shares of Common Stock to be outstanding upon the closing of this
offering, the shares offered hereby will be eligible for immediate
sale in the public market without restriction, unless the shares are purchased
by "affiliates" of iVillage within the meaning of Rule 144 under the Securities
Act of 1933. The remaining shares of Common Stock held by existing
stockholders upon the closing of this offering will be "restricted securities",
as that term is defined in Rule 144. Restricted securities may be sold in the
public market only if registered or if they qualify for an exemption from
registration under Rules 144, 144(k) or 701 under the Securities Act. All of our
directors, officers and stockholders have agreed, subject to certain limited
exceptions, that they will not sell, directly or indirectly, any Common Stock
without the prior consent of Goldman, Sachs & Co. for a period of 180 days from
the date of this prospectus. Subject to the provisions of Rules 144, 144(k) and
701 additional shares totaling 50,692,771 will be available for sale in the
public market (subject in the case of shares held by affiliates to compliance
with certain volume restrictions) 180 days from the date of this prospectus.
In addition, there are outstanding options to purchase 5,596,276 shares of
Common Stock which will be eligible for sale in the public market from time to
time subject to vesting and the expiration of lock-up agreements. In addition,
certain stockholders, representing approximately 47,120,561 shares of Common
Stock (including shares issuable upon the exercise of certain warrants to
purchase Common Stock), will be entitled to certain demand registration rights
and certain stockholders, representing approximately 51,870,766 shares of
outstanding Common Stock (including shares issuable upon the exercise of certain
warrants to purchase Common Stock), will be entitled to certain piggyback
registration rights, subject to certain conditions. There are outstanding
warrants to purchase 1,277,996 shares of Common Stock which will be eligible for
sale in the public market from time to time subject to the expiration of lock-up
agreements and Rule 144. After the date of this prospectus, we intend to file a
Form S-8 registration statement under the Securities Act to register all shares
of Common Stock issuable under our 1995 Amended and Restated Employee Stock
Option Plan, the 1997 Amended and Restated Acquisition Stock Option Plan, the
1999 Employee Stock Option Plan, the 1999 Director Option Plan and the 1999
Employee Stock Purchase Plan. Such registration statement is expected to become
effective immediately upon filing, and shares covered by that registration
statement will thereupon be eligible for sale in the public markets, subject to
certain lock-up agreements and Rule 144 limitations applicable to affiliates.
Please see "Management--Stock Incentive Plans", "Description of Capital Stock--
Registration Rights", "Shares Eligible for Future Sale" and "Underwriting".
DILUTION AND ABSENCE OF DIVIDENDS
The initial public offering price of our Common Stock is substantially
higher than the net tangible book value per share of the Common Stock
immediately after this offering. Therefore, if you purchase our Common Stock in
this offering you will incur immediate dilution of approximately $ in the
net tangible book value per share of Common Stock from the price you pay for
such Common Stock (based upon an assumed initial public offering price of
$ per share). Please see "Dilution". The exercise of outstanding options
and warrants may result in further dilution. We have never declared or paid any
cash dividends on our capital stock. We do not currently anticipate paying cash
dividends in the foreseeable future.
BROAD DISCRETION IN USE OF PROCEEDS
We intend to use the net proceeds from the sale of the Common Stock offered
hereby for brand promotion, expansion of sales and marketing, acquisition of the
minority interest in iBaby, working capital and general corporate purposes,
including channel expansion and content development, expansion and/or relocation
of our offices and possible acquisitions. Accordingly, management will have
significant flexibility in applying the net proceeds of this offering. The
failure of management to apply such funds effectively could have a material
adverse
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effect on our business, results of operations and financial condition. Please
see "Use of Proceeds".
CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of our Amended and Restated Certificate of
Incorporation, Bylaws, other agreements and Delaware law could
make it more difficult for a third party to acquire us, even if a change in
control would be beneficial to our stockholders. This could discourage potential
takeover attempts and could adversely affect the market price of our Common
Stock. Please see "Description of Capital Stock".
USE OF PROCEEDS
The net proceeds to iVillage from the sale of the shares of Common Stock
offered hereby are estimated to be $ ($ if the
Underwriters' over-allotment option is exercised in full), assuming an initial
public offering price of $ per share, after deducting the estimated
underwriting discount and offering expenses payable by iVillage.
iVillage presently intends to use a portion of the net proceeds from this
offering to promote its brand, expand sales and marketing and purchase the
minority interest in iBaby. The balance of the net proceeds of this offering
will be used for working capital and general corporate purposes, including
channel expansion and content development, expansion and/or relocation of its
offices and possible acquisitions. iVillage believes opportunities may exist to
expand its current business through acquisitions and may utilize a portion of
the proceeds for such purpose. In addition, iVillage may consider acquisitions
of complementary businesses. iVillage is not currently a party to any contracts
or letters of intent with respect to any acquisitions, and there can be no
assurance that any of iVillage's expansion plans will be realized or, if
realized, will prove profitable for iVillage. Pending such uses, the net
proceeds of this offering will be invested in short-term, interest-bearing,
investment-grade securities.
DIVIDEND POLICY
iVillage has never declared or paid any cash dividends on its capital
stock. iVillage presently intends to retain future earnings, if any, to finance
the expansion of its business and does not expect to pay any cash dividends in
the foreseeable future.
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CAPITALIZATION
The following table sets forth iVillage's capitalization as of
September 30, 1998 (i) on an actual basis, (ii) on a pro forma basis to reflect
(a) the sale of 11,730,948 shares of Series E Convertible Preferred Stock for
net proceeds of approximately $32.0 million on December 4, 1998, (b) the
conversion of all of iVillage's Convertible Preferred Stock into Common Stock
and the filing of an amendment to iVillage's Certificate of Incorporation
eliminating all of the designated Convertible Preferred Stock and (iii) on a pro
forma as adjusted basis to reflect the estimated net proceeds from the sale of
the Common Stock offered by iVillage at an assumed initial public offering price
of $ per share, after deducting the estimated underwriting discount and
offering expenses payable by iVillage. Please see "Use of Proceeds". You should
read this information together with iVillage's Consolidated Financial Statements
and the Notes thereto appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
----------- ------------ -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Long-term obligations.............................................. $ 18 $ 18 $
----------- ------------ -------
Minority interest.................................................. 220 220
----------- ------------ -------
Stockholders' equity:
Series A convertible preferred stock, par value $.0005; 1,000,000
shares authorized, issued and outstanding (actual); no shares
authorized, issued or outstanding (pro forma and pro forma as
adjusted)...................................................... 1 -- --
Series B and B-1 convertible preferred stock, par value $.0005;
5,929,846 shares authorized, 4,777,746 shares issued and
outstanding (actual); no shares authorized, issued or
outstanding (pro forma and pro forma as adjusted).............. 2 -- --
Series C convertible preferred stock, par value $.0005;
13,528,762 shares authorized, 13,193,445 shares issued and
outstanding (actual); no shares authorized, issued or
outstanding (pro forma and pro forma as adjusted).............. 7
Series D convertible preferred stock, par value $.0005;
13,000,000 shares authorized, issued and outstanding (actual);
no shares authorized, issued or outstanding (pro forma and pro
forma as adjusted)............................................. 6 -- --
Series E convertible preferred stock, par value $.0005; no shares
authorized, issued or outstanding.............................. -- -- --
Preferred Stock, par value $.0005; no shares authorized, issued
or outstanding (actual); 5,000,000 shares authorized, no shares
issued or outstanding (pro forma and pro forma as adjusted).... -- -- --
Common Stock, par value $.0005; 45,000,000 shares authorized,
6,337,156 shares issued and outstanding (actual); 65,000,000
shares authorized (pro forma and pro forma as adjusted);
50,692,771 shares issued and outstanding (pro forma);
shares issued and outstanding (pro forma as
adjusted)(1)................................................... 3 25
Additional paid-in capital....................................... 76,784 108,778
Accumulated deficit.............................................. (65,070) (65,070)
Stockholders' notes receivable................................... (565) (565)
Unearned compensation............................................ (79) (79)
----------- ------------ -------
Total stockholders' equity....................................... 11,089 43,089
----------- ------------ -------
Total capitalization............................................. $ 11,327 $ 43,327 $
----------- ------------ -------
----------- ------------ -------
</TABLE>
- ------------------------------
(1) This information is based on shares of Common Stock outstanding
September 30, 1998. It excludes:
(i) such number of shares to be negotiated by us and iBaby prior to this
offering that may be issuable in connection with the acquisition of the
minority interest in iBaby; (ii) 3,684,210 shares
(Footnotes continued on next page)
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(Footnotes continued from previous page)
issuable to NBC over the next three years pursuant to our agreement with
NBC, plus an option granted to NBC to purchase additional shares; (iii)
4,514,096 shares issuable upon the exercise of options outstanding under
our 1995 Amended and Restated Employee Stock Option Plan with a weighted
average exercise price of $1.92 per share; (iv) 1,082,180 shares issuable
upon the exercise of outstanding options under our 1997 Amended and
Restated Acquisition Stock Option Plan with a weighted average exercise
price of $1.70 per share; (v) 5% of the shares of Common Stock outstanding
at the end of each prior year to be reserved for future issuance under our
1999 Employee Stock Option Plan, which will take effect when this offering
is completed; (vi) shares to be reserved for future issuance under
our 1999 Director Option Plan, which will take effect when this offering is
completed; (vii) shares to be reserved for future issuance
under our 1999 Employee Stock Purchase Plan, which will take effect when
this offering is completed; and (viii) 1,277,996 shares issuable upon the
exercise of outstanding warrants with a weighted average exercise price of
$2.18 per share.
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DILUTION
The pro forma net tangible book value of iVillage as of September 30, 1998
was approximately $37.7 million, or approximately $0.74 per share of Common
Stock. Pro forma net tangible book value per share represents the amount of
iVillage's total tangible assets less total liabilities and minority interest,
divided by the pro forma number of shares of Common Stock outstanding (a) after
giving effect to (i) the sale of 11,730,948 shares of Series E Convertible
Preferred Stock on December 4, 1998 and (ii) the conversion of the outstanding
shares of all of iVillage's Convertible Preferred Stock into Common Stock and
(b) without giving effect to the issuance of (i) such number of shares to be
determined by us and iBaby prior to this offering that may be issuable in
connection with the acquisition of the minority interest in iBaby and
(ii) 3,684,210 shares to NBC over the next three years pursuant to our agreement
with NBC, plus an option granted to NBC to purchase additional shares. After
giving effect to the sale of the Common Stock offered by iVillage hereby at an
assumed initial public offering price of $ per share, and after deducting
the estimated underwriting discount and offering expenses payable by iVillage,
the pro forma net tangible book value of iVillage, as adjusted, as of
September 30, 1998 would have been approximately $ , or $ per
pro forma share of Common Stock. This represents an immediate increase in net
tangible book value of $ per share to iVillage's existing stockholders and
an immediate dilution in net tangible book value of $ per share to new
investors of Common Stock in this offering. If the initial public offering price
is higher or lower, the dilution to the new investors will be greater or less,
respectively. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price................................................... $
Pro forma net tangible book value per share prior to this offering...................... $
Increase per share attributable to this offering........................................
--------
Adjusted pro forma net tangible book value per share after this offering................
--------
Dilution per share to new investors(1).................................................. $
--------
--------
</TABLE>
- ------------------------------
(1) Assuming the exercise in full of the Underwriters' over-allotment option,
the pro forma net tangible book value of iVillage at September 30, 1998
would have been approximately $ per share, representing an immediate
increase in net tangible book value of $ per share to iVillage's
existing stockholders and an immediate dilution in net tangible book value
of $ per share to new investors.
------------------------
The following table summarizes, on a pro forma basis, as of September 30,
1998, the number of shares of Common Stock purchased from iVillage, the total
consideration provided to iVillage and the average price per share provided
by existing stockholders and by investors purchasing shares in this
offering. The calculation below is based on an assumed initial public offering
price of $ per share, before deducting the estimated underwriting
discount and offering expenses payable by iVillage.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE PER
NUMBER PERCENTAGE AMOUNT PERCENTAGE SHARE
---------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Existing Stockholders.............................. 50,692,771 % $110,213,990 % $2.17
New Investors......................................
---------- ------ ------------ ------
Total......................................... 100.0% $ 100.0%
---------- ------ ------------ ------
---------- ------ ------------ ------
</TABLE>
------------------------
The foregoing discussion and table assumes no exercise of options
outstanding under iVillage's 1995 Amended and Restated Employee Stock Option
Plan and the 1997 Amended and Restated Acquisition Stock Option Plan and no
issuance of shares reserved for future issuance under iVillage's 1999 Employee
Stock Option Plan, 1999 Director Option Plan and 1999 Employee Stock Purchase
Plan. As of September 30, 1998, there were options outstanding to purchase a
total of 5,596,276 shares of Common Stock at a weighted average price of $1.88
per share and 1,277,996 shares issuable upon exercise of outstanding warrants
with a weighted average exercise price of $2.18 per share. To the extent that
any of these options are exercised, there will be further dilution to new
investors. Please see "Risk Factors--Dilution and Absence of Dividends",
"Capitalization", "Management--Stock Incentive Plans" and Note 6 and Note 9 to
iVillage's Consolidated Financial Statements.
20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and iVillage's Consolidated Financial Statements and Notes thereto
and other financial information included elsewhere in this prospectus. The
consolidated statement of operations data for the six-month period from July 1,
1995 (inception) to December 31, 1995 and the years ended December 31, 1996 and
1997 and the consolidated balance sheet data as of December 31, 1996 and 1997
are derived from the audited Consolidated Financial Statements of iVillage
included in this prospectus. The consolidated balance sheet data as of
December 31, 1995 are derived from the audited financial statements of iVillage
not included herein. The selected consolidated financial data as of
September 30, 1998 and for the nine months ended September 30, 1997 and 1998,
are derived from iVillage's unaudited Consolidated Financial Statements and
include, in the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the data for such
periods. The historical results presented here are not necessarily indicative of
future results. The results for the nine months ended September 30, 1998 are not
necessarily indicative of the results to be expected for the full fiscal year.
<TABLE>
<CAPTION>
JULY 1, 1995
(INCEPTION) YEAR ENDED NINE MONTHS ENDED
TO DECEMBER 31, SEPTEMBER 30,
DECEMBER 31, ------------------ -------------------
1995 1996(1) 1997(2) 1997(2) 1998(3)
------------ ------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues................................................... $ -- $ 732 $ 6,019 $ 3,662 $ 9,126
-------- ------- -------- -------- --------
Operating expenses:
Production, content and product.......................... 629 4,521 7,606 5,157 10,407
Sales and marketing...................................... 329 2,709 8,771 5,399 19,931
General and administrative............................... 673 3,213 10,727 7,410 11,857
-------- ------- -------- -------- --------
Total operating expenses............................... 1,631 10,443 27,104 17,966 42,195
-------- ------- -------- -------- --------
Loss from operations....................................... (1,631) (9,711) (21,085) (14,304) (33,069)
Interest (expense) income, net............................. (7) 28 (216) (205) 419
Loss on sale of Web site(4)................................ -- -- -- -- (165)
Minority interest(5)....................................... -- -- -- -- 366
-------- ------- -------- -------- --------
Net loss................................................... $ (1,638) $(9,683) $(21,301) $(14,509) $(32,449)
-------- ------- -------- -------- --------
-------- ------- -------- -------- --------
Basic and diluted net loss per share(6).................... $ (0.50) $ (2.97) $ (4.55) $ (3.28) $ (5.21)
-------- ------- -------- -------- --------
-------- ------- -------- -------- --------
Weighted average shares of common stock outstanding used in
computing basic and diluted net loss per share(6)........ 3,250 3,262 4,683 4,421 6,233
-------- ------- -------- -------- --------
-------- ------- -------- -------- --------
Pro forma basic and diluted net loss per share(6)(7)(8).... $ (0.88) $ (0.64)
-------- --------
-------- --------
Shares of common stock used in computing pro forma basic
and diluted net loss per share(6)(7)(8).................. 24,308 50,506
-------- --------
-------- --------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1998
---------------------------- ---------------------------
1995 1996 1997 ACTUAL PRO FORMA(7)(8)
----- ------ ------- ------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash.................................................. $ 162 $2,102 $ 4,335 $ 8,768 $40,768
Working (deficit) capital............................. (715) 1,006 1,260 285 32,285
Total assets.......................................... 275 4,997 16,236 23,302 55,302
Long-term debt........................................ -- -- 139 18 18
Minority interest..................................... -- -- -- 220 220
Stockholders' (deficit) equity........................ (629) 3,259 10,522 11,089 43,089
</TABLE>
- ------------------------------
(1) Includes the results of operations of ParentsPlace.com, Inc. from December
1996, the date of acquisition.
(2) Includes the results of operations of Health ResponseAbility Systems, Inc.
from May 1997, the date of acquisition.
(3) Includes the results of operations of iBaby, Inc. from April 1998, the date
of formation.
(4) Please see Notes 5 and 11 to iVillage's Consolidated Financial Statements.
(5) Minority interest represents the portion of the net loss of iBaby, Inc.
attributable to minority stockholders.
(6) Please see Note 2 to iVillage's Consolidated Financial Statements for
information concerning the calculation of weighted average shares of Common
Stock outstanding used in computing basic and diluted net loss per share.
(7) Excludes (i) such number of shares to be negotiated by iBaby and us prior to
this offering that may be issuable in connection with the acquisition of the
minority interest in iBaby and (ii) 3,684,210 shares issuable to NBC over
the next three years pursuant to our agreement with NBC, plus an option
granted to NBC to purchase additional shares.
(8) Gives pro forma effect to (i) the sale of 11,730,948 shares of Series E
Preferred Stock for net proceeds of approximately $32.0 million on December
4, 1998 and (ii) the conversion of all of the outstanding shares of
Convertible Preferred Stock into shares of Common Stock automatically upon
the closing of this offering. Please see "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" and Notes 9 and 12 of Notes to iVillage's Consolidated
Financial Statements.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with iVillage's
Consolidated Financial Statements and Notes thereto and the other financial
information appearing elsewhere in this prospectus. In addition to historical
information, the following discussion and other parts of this prospectus contain
forward-looking information that involves risks and uncertainties. iVillage's
actual results could differ materially from those anticipated by such
forward-looking information due to competitive factors, risks associated with
iVillage's expansion plans and other factors discussed under "Risk Factors" and
elsewhere in this prospectus.
OVERVIEW
The iVillage network, iVillage.com, provides an easy-to-use, comprehensive
destination tailored to the interests and needs of women using the Internet.
iVillage.com is organized into 12 channels covering the leading topics of
interest to women online, such as family, health, work, money, food,
relationships, shopping and travel. We facilitate channel usage by providing
common features and functionality within each channel, including experts, chats,
message boards and services.
To date, iVillage's revenues have been derived primarily from the sale of
sponsorship and advertising contracts. Sponsorship and advertising revenues
constituted 82% of revenues for the nine months ended September 30, 1998 and 93%
of revenues for the year ended December 31, 1997.
Sponsorship revenues are derived principally from contracts ranging from
six to thirty-six months in which iVillage commits to provide sponsors enhanced
promotional opportunities that go beyond traditional banner advertising.
Sponsorships are designed to support broad marketing objectives, including
branding, awareness, product introductions, research and transactions.
Sponsorship agreements typically include the delivery of impressions and the
design and development of customized sites that enhance the promotional
objectives of the sponsor. The portion of sponsorship revenues related to the
delivery of impressions are recognized ratably in the period in which the
advertisement is displayed provided that none of iVillage's significant
obligations remain. To the extent that minimum guaranteed page deliveries are
not met, iVillage defers recognition of the corresponding revenues until the
guaranteed page deliveries are achieved. The portion of sponsorship revenues
related to the up-front customized design work, as specified in the contract, is
recognized in the period in which the work is performed.
Advertising revenues are derived principally from short-term advertising
contracts in which iVillage typically guarantees a minimum number of impressions
to be delivered to users over a specified period of time for a fixed fee.
Advertising rates, measured on a cost per thousand impressions ("CPMs") basis,
are dependent on whether the impressions are for general rotation throughout
iVillage's Web sites or for targeted audiences and properties within specific
areas of iVillage.com. Advertising revenues are recognized ratably in the period
in which the advertisement is displayed, provided that no significant iVillage
obligations remain. To the extent that minimum guaranteed page deliveries are
not met, iVillage defers recognition of the corresponding revenues until the
guaranteed page deliveries are achieved.
Sponsorship and advertising revenues also include barter revenues, which
represent an exchange by iVillage of advertising space on iVillage's Web sites
for reciprocal advertising space or traffic on other Web sites. Revenues from
these barter transactions are recorded as advertising revenues at the lower of
estimated fair value of the advertisements received or delivered and are
recognized when the advertisements are run on iVillage.com. Barter expenses are
recognized when iVillage's advertisements are run on the reciprocal Web sites,
which is typically in the same period as when the advertisements are run on
iVillage.com. iVillage believes these barter transactions are important in the
marketing of the iVillage.com brand, and expects to continue to engage in these
transactions in the future.
iVillage has identified a strategic opportunity to generate new commerce
22
<PAGE>
revenues while also enhancing the iVillage.com brand by offering merchandising
services. In April 1998, iVillage formed a joint venture with and acquired a
majority interest in iBaby, Inc. ("iBaby"), an online distributor of baby gifts
and products. iVillage recognizes revenues from its product sales, net of any
discounts, when products are shipped to customers and the collection of the
receivable is reasonably assured.
iVillage also generates commerce revenues through alliances with leading
merchants interested in targeting iVillage's audience. Revenues from iVillage's
share of the proceeds from its commerce partners' sales are recognized by
iVillage upon notification from its commerce partners of sales attributable to
iVillage's Web sites. To date, revenues from such revenue-sharing arrangements
have not been material.
On December 9, 1996, iVillage acquired all of the outstanding stock of
ParentsPlace.com, Inc., an Internet content provider, in exchange for 200,000
shares of iVillage's Common Stock.
In May 1997, iVillage completed the acquisition of Health ResponseAbility
Systems, Inc. ("HRS"), an Internet content provider, in exchange for
$2.6 million in cash, 1.3 million shares of iVillage's Common Stock and cash
amounts contingent on future performance levels of HRS and iVillage. In
addition, iVillage issued to AOL 609,000 shares of Common Stock in exchange for
the release of all equity rights in HRS held by AOL. In January 1998, iVillage
agreed to pay approximately $1.6 million to the prior owners of HRS in
settlement of the cash amounts contingent on future performance levels, as
stipulated in the agreement for the acquisition of HRS, but not later than
January 15, 1999. This amount was recorded as additional goodwill to be
amortized over the remaining period of expected benefit.
In September 1997, iVillage acquired substantially all of the assets of
StudentCenter LLC ("StudentCenter"), an Internet content provider, for $125,000
and the issuance of options to purchase 125,000 shares of Common Stock at $1.70
per share. In addition, iVillage was required to make additional bonus payments,
based on a percentage of net revenues, as defined and based on the amount of
StudentCenter page views. iVillage sold the assets of StudentCenter in May 1998
as part of the sale of About Work and paid $520,000 in connection with bonus
payments and issued options to purchase an additional 100,000 shares of Common
Stock at $1.70 per share.
In April 1998, iVillage entered into a joint venture agreement with
Ourbaby, LLC, a California limited liability company, to form iBaby. iVillage
purchased 1,000,000 shares of iBaby (of the total 1,666,666 shares outstanding)
for $1,350,000 and for the delivery of certain promotional rights, including
impressions on iVillage.com. iVillage's equity ownership in iBaby may be altered
due to various provisions included in the joint venture agreement including:
o conversion of any convertible notes issued in connection with any bridge
loan financing provided to iBaby by iVillage;
o the issuance of iBaby shares upon exercise of stock options and grants of
restricted stock;
o iVillage's failure to meet certain promotional obligations; and
o the occurrence of an initial public offering of iVillage's stock or a
merger, consolidation or sale transaction.
iVillage plans to exercise its option to acquire the minority interest in
iBaby upon completion of this offering. iVillage may use a combination of cash
and shares of Common Stock to be determined prior to this offering to acquire
the minority interest.
Since the formation of iBaby in April 1998, the accounts of iBaby have been
consolidated into iVillage's financial statements, as iVillage holds a majority
interest and control of iBaby.
In May 1998, iVillage entered into a production and asset sale agreement
for one of its content channels, About Work, in exchange for net proceeds of
approximately $ 1.8 million, as adjusted based on the terms of the agreement. In
connection with this sale, iVillage reported a loss of approximately $165,000.
iVillage has a limited operating history and its prospects are subject to
the risks, expenses and uncertainties frequently encountered by companies in
the new and rapidly evolving
23
<PAGE>
markets for Internet products and services. These risks include the failure to
develop and extend iVillage's online service brands, the rejection of iVillage's
services by Web consumers, vendors and/or advertisers, the inability of iVillage
to maintain and increase the levels of traffic on its online services, as well
as other risks and uncertainties. In the event that iVillage does not
successfully implement its business plan, certain assets may not be recoverable.
iVillage has incurred significant net losses and negative cash flows from
operations since its inception, and as of September 30, 1998, had an accumulated
deficit of approximately $65.1 million. These losses have been funded primarily
through the issuance of preferred equity securities. iVillage intends to
continue to invest heavily in marketing and promotion, content development and
technology and infrastructure development. As a result, iVillage believes that
it will continue to incur operating losses and negative cash flows from
operations for the foreseeable future and that the rate at which such losses
will be incurred may increase from current levels.
RESULTS OF OPERATIONS
The following table sets forth the results of operations for iVillage
expressed as a percentage of total revenues:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
-------------------- ------------------
1996 1997 1997 1998
------ ---- ---- ----
<S> <C> <C> <C> <C>
Revenues................................................ 100% 100% 100% 100%
------ ---- ---- ----
Operating expenses:
Production, content and product....................... 618 126 141 114
Sales and marketing................................... 370 146 148 218
General and administrative............................ 439 178 202 130
------ ---- ---- ----
Total operating expenses........................... 1,427 450 491 462
------ ---- ---- ----
Loss from operations.................................... (1,327) (350) (391) (362)
------ ---- ---- ----
Net loss................................................ (1,323)% (354)% (396)% (356)%
------ ---- ---- ----
------ ---- ---- ----
</TABLE>
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 TO NINE MONTHS ENDED
SEPTEMBER 30, 1997
REVENUES
Revenues increased 149% to $9.1 million for the nine months ended September
30, 1998, from $3.7 million for the nine months ended September 30, 1997. The
increase in revenues was primarily due to iVillage's ability to generate
significantly higher sponsorship and advertising revenues. This resulted from
the increase in iVillage's Web site traffic (arising from aggressive
distribution and branding campaigns) expansion of iVillage's sales force and the
hiring of a Senior Vice President of Sponsorship, as well as the addition and
enhancement of content on iVillage's Web sites. The development of iVillage's
commerce strategy, primarily through its investment in iBaby, has provided an
additional revenue source during the nine months ended September 30, 1998.
Sponsorship and advertising revenues accounted for approximately 82% and 92% of
revenues for the nine months ended September 30, 1998 and 1997, respectively.
Commerce revenues accounted for approximately 16% of revenues for the nine
months ended September 30, 1998, with no such revenues for the comparable period
in 1997. Although no one advertiser accounted for greater than 10% of total
revenues for the nine months ended September 30, 1998, iVillage's five largest
advertisers accounted for 22% of total revenues for the period. At
September 30, 1998, one advertiser accounted for greater than 10% of net
accounts receivable. For the nine months ended September 30, 1997, two
advertisers each accounted for greater than 10% of total revenues. In addition,
iVillage's five largest advertisers accounted for 31% of total revenues for the
period. At September 30, 1997, four advertisers each accounted for greater than
10% of net accounts receivable. Included in sponsorship and advertising revenues
are barter transactions which accounted for approximately 20% and 5% of
revenues for the nine months ended September 30, 1998 and 1997, respectively.
24
<PAGE>
OPERATING EXPENSES
PRODUCTION, CONTENT AND PRODUCT. Production, content and product expenses
consist primarily of salaries, payroll taxes and benefits and expenditures
related to editorial content, community management and support personnel,
technology, software development and operations expenses, and product costs
related to merchandise sales. Production, content and product expenses increased
to $10.4 million, or 114% of revenues, for the nine months ended September 30,
1998 from $5.2 million, or 141% of revenues, for the nine months ended
September 30, 1997. The dollar increase was primarily attributable to increased
personnel and associated technology costs related to enhancing the content and
functionality of iVillage's Web sites. In addition, the increase was partially
attributable to product costs of $1.2 million arising from commerce transactions
that did not exist in 1997. Production, content and product expenses decreased
as a percentage of revenues because of the rapid growth in revenues relative to
the growth in iVillage's cost structure. iVillage believes that significant
investments in technology and content development are required to remain
competitive and, therefore, expects that its production, content and product
expenses will continue to increase in absolute dollars for the foreseeable
future.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
costs of distribution agreements, salaries, payroll taxes and benefits for sales
and marketing personnel, commissions, advertising and other marketing related
expenses. Sales and marketing expenses increased to $19.9 million, or 218% of
revenues, for the nine months ended September 30, 1998, from $5.4 million, or
148% of revenues, for the nine months ended September 30, 1997. The dollar
increase in sales and marketing expenses was primarily due to expanded
distribution agreements, increases in advertising expenses related to iVillage's
branding campaign and the hiring of additional sales personnel. iVillage has
invested heavily in distribution arrangements in the past twelve months and
currently has agreements with AOL, Excite, Lycos and Infoseek. Sales and
marketing expenses as a percentage of revenues increased due to iVillage's
branding campaign and distribution agreements. Included in sales and marketing
expenses are barter transactions, which accounted for approximately 9% and 4% of
sales and marketing expenses for the nine months ended September 30, 1998 and
September 30, 1997, respectively.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of depreciation and amortization, salaries, payroll taxes and benefits
and related costs for general corporate functions, including executive
management, finance, facilities, legal and fees for other professional services.
General and administrative expenses increased to $11.9 million, or 130% of
revenues, for the nine months ended September 30, 1998, from $7.4 million, or
202% of revenues, for the nine months ended September 30, 1997. The dollar
increase in general and administrative expenses was primarily due to increased
depreciation and amortization of goodwill and other intangible assets from
acquisitions, an increase in the number of personnel to support the growth of
iVillage's business and recruiting costs related to filling key senior executive
positions. Depreciation and amortization of goodwill and other intangible assets
from acquisitions accounted for $4.0 million and $2.2 million of general and
administrative expenses for the nine months ended September 30, 1998 and
September 30, 1997, respectively. General and administrative expenses decreased
as a percentage of total revenues because of the disproportionate growth in
revenues relative to the growth of general and administrative expenses. iVillage
expects that it will incur additional general and administrative expenses in
absolute dollars as iVillage continues to hire personnel and incurs expenses
related to the growth of the business and its operations as a public company.
INTEREST (EXPENSE) INCOME, NET
Interest (expense) income, net includes interest income from iVillage's
cash balances and interest expense related to iVillage's financing obligations,
including non-cash expenses related to the issuance of warrants associated with
a bridge financing in 1997. Interest (expense) income, net improved to an
income of $0.4 million for the nine months ended September 30, 1998, from an
expense of $(0.2) million for the nine months ended
25
<PAGE>
September 30, 1997 primarily due to a higher average net cash balance as a
result of the receipt of the proceeds from the issuance of shares of iVillage's
Series D Convertible Preferred Stock from February through June 1998.
MINORITY INTEREST
Minority interest represents the portion of the net loss of iBaby, Inc.
attributable to minority stockholders.
COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996 AND THE PERIOD FROM
JULY 1, 1995 (INCEPTION) TO DECEMBER 31, 1995
REVENUES
Revenues were $6.0 million and $0.7 million for the years ended
December 31, 1997 and 1996, respectively. iVillage did not generate any revenues
in 1995. The absolute dollar increases from year to year were due primarily to
the growth in sponsorship and advertising revenues since 1995, which was largely
attributable to the increased use of the Internet, acceptance of the Internet as
an advertising medium and increased viewer traffic on iVillage.com. Sponsorship
and advertising revenues accounted for 93% and 74% of revenues for the years
ended December 31, 1997 and 1996, respectively. Included in advertising and
sponsorship revenues were barter transactions, which accounted for approximately
10% and approximately 1% of revenues for the years ended December 31, 1997 and
1996, respectively. Although iVillage's five largest sponsorship and advertising
customers accounted for 26% of revenues for the year ended December 31, 1997, no
one advertiser accounted for greater than 10% of total revenues. At
December 31, 1996, four customers each represented greater than 10% of the net
accounts receivable balance. At December 31, 1997, one customer accounted for
approximately 31% of the net accounts receivable balance. For the years ended
December 31, 1997 and 1996, iVillage derived revenues from usage fees paid by
AOL based on visitation to iVillage.com on the AOL service. Usage fees were
$0.4 million and $0.2 million for the years ended December 31, 1997 and 1996,
respectively. During the year ended December 31, 1997, iVillage entered into a
new agreement with AOL that eliminated usage fees.
OPERATING EXPENSES
PRODUCTION, CONTENT AND PRODUCT. Production, content and product expenses
were $7.6 million, or 126% of revenues, $4.5 million, or 618% of revenues, and
$0.6 million for the years ended December 31, 1997 and 1996 and the period from
July 1, 1995 (inception) through December 31, 1995, respectively. The dollar
increases from year to year in production, content and product expenses were
primarily attributable to increases in personnel and related costs to support
enhancement of iVillage's Web site technology and content. Production, content
and product expenses as a percentage of revenues have decreased because of the
growth in revenues.
SALES AND MARKETING. Sales and marketing expenses were $8.8 million, or
146% of revenues, $2.7 million, or 370% of revenues, and $0.3 million for the
years ended December 31, 1997 and 1996 and the period from July 1, 1995
(inception) through December 31, 1995, respectively. The dollar increases from
year to year in sales and marketing expenses were primarily due to expanded
distribution arrangements, the addition of a direct sales force, which iVillage
began building in the second half of 1996, and increases in marketing expenses.
Included in sales and marketing are barter transactions, which accounted for
approximately 10% of sales and marketing in the year ended December 31, 1997.
Sales and marketing expenses as a percentage of revenues have decreased because
of the growth in revenues.
GENERAL AND ADMINISTRATIVE. General and administrative expenses were $10.7
million, or 178% of revenues, $3.2 million, or 439% of revenues, and $0.7
million for the years ended December 31, 1997 and 1996 and the period from July
1, 1995 (inception) through December 31, 1995, respectively. The dollar
increases from year to year in general and administrative expenses were
primarily due to increases in depreciation and amortization expense, the number
of general and administrative personnel and professional services and facility
expenses to support the growth of iVillage's operations. General and
administrative expenses as a percentage of
26
<PAGE>
revenues have decreased because of the growth in revenues. Depreciation and
amortization of goodwill and other intangible assets from acquisitions accounted
for $1.4 million and $0.1 million for the years ended December 31, 1997 and
1996, respectively.
INTEREST (EXPENSE) INCOME, NET
Interest (expense) income, net was approximately $216,000 expense, $28,000
income and $7,000 expense for the years ended December 31, 1997 and 1996 and the
period from July 1, 1995 (inception) through December 31, 1995, respectively.
The increase in interest expense, net for the year ended December 31, 1997 was
primarily due to warrants issued in connection with the issuance of bridge
financing resulting in an interest charge of approximately $650,000.
INCOME TAXES
As of December 31, 1997, iVillage had approximately $26.5 million of
federal net operating loss carryforwards for tax reporting purposes available to
offset future taxable income. iVillage's federal net operating loss
carryforwards expire beginning in 2012. Certain future changes in the share
ownership of iVillage, as defined in the Tax Reform Act of 1986, may restrict
the utilization of carryforwards. A valuation allowance has been recorded for
the entire deferred tax asset as a result of uncertainties regarding the
realization of the asset due to the lack of iVillage's earnings history.
RECENT EVENTS
On November 11, 1998, iVillage entered into an agreement with National
Broadcasting Company, Inc. ("NBC") pursuant to which NBC will promote
iVillage.com on television primarily during prime time programs, as well as
through its Web sites. The terms of the NBC agreement provide for the following:
o NBC to provide iVillage with the use of advertising spots having an aggregate
value of $3.5 million per annum over a three-year period. For each
$3.5 million of advertising spots, iVillage will issue 1,228,070 shares of
Series E Convertible Preferred Stock (or shares of Common Stock after this
offering).
o NBC will have the option, exercisable at its sole discretion, to provide
iVillage with additional spots having an aggregate value of $5 million for
each of the three years. Upon exercise of NBC's option, iVillage will issue
shares of Series E Convertible Preferred Stock (or shares of Common Stock
after this offering) equal to the aggregate value of additional spots divided
by $4.15 in the first year, $5.15 in the second year and $6.15 in the third
year.
In accordance with Emerging Issues Task Force Abstract No. 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services", iVillage will
record the value of spots to be received based on fair value of the stock
provided to NBC or the fair value of the spots received, whichever is more
reliably measured, at the earlier of when the stock is provided to NBC or either
a performance commitment by NBC is reached or the performance is complete.
Amounts recorded prior to the receipt of the advertising spots will be
classified on the balance sheet as deferred advertising costs with the offset to
Series E Convertible Preferred Stock (or Common Stock after this offering) and
additional paid-in capital. As the advertising spots are run, iVillage will
amortize the deferred advertising costs.
NBC may terminate the agreement in the event that a change of control of
iVillage, as defined in the agreement, occurs involving a television broadcast
network entity or its affiliate that directly competes with NBC.
Due to the potential impact of future stock price movements on the
valuation of advertisements received, there may be significant non-cash charges
with respect to the cost of these advertisements. Further, the timing of such
charges is highly uncertain. This could severely impact the predictability of
future operating results.
SEASONALITY AND FLUCTUATIONS
IN OPERATING RESULTS
iVillage's operating results may fluctuate significantly in the future as a
result of a variety of factors, many of which are beyond iVillage's
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control. Factors that may adversely affect iVillage's quarterly results of
operations include:
o iVillage's ability to attract and retain users and members;
o iVillage's ability to attract and retain advertisers and sponsors and
maintain advertiser and sponsor satisfaction;
o iVillage's ability to attract and retain customers and maintain customer
satisfaction for its existing and future e-commerce businesses;
o the development, announcement and introduction of new sites, services and
products by iVillage or its competitors;
o the timing and uncertainty of sales cycles;
o the level of Web usage and online service usage;
o iVillage's ability to upgrade and develop its systems and infrastructure
and attract new personnel in a timely and effective manner;
o the level of traffic on iVillage's Web sites;
o iVillage's ability to successfully integrate the operations and
technologies from acquisitions or other business combinations;
o technical difficulties or system downtime affecting the Internet
generally or the operation of iVillage's Web sites;
o economic conditions specific to the Internet, as well as general economic
conditions; and
o the timing and magnitude of NBC-related charges.
iVillage believes that advertising sales in traditional media, such as
television and radio, generally are lower in the first and third calendar
quarters of each year. If iVillage's market makes the transition from an
emerging to a more developed market, seasonal and cyclical patterns may develop
in its industry. Seasonal and cyclical patterns in Internet advertising may also
affect iVillage's revenues. Traffic levels on iVillage's Web sites typically
fluctuate during the summer and year-end vacation and holiday periods. In
addition, we anticipate that sales from iBaby and any other future consumer
goods we may sell will typically increase during the fourth quarter as a result
of the holiday season and may decline during other periods. Seasonality in the
retail industry, Internet and commercial online service usage and advertising
expenditures are likely to cause quarterly fluctuations in our results of
operations and could have a material adverse effect on our business, results of
operations and financial condition.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, iVillage has financed its operations primarily through
the private placement of its Convertible Preferred Stock. As of September 30,
1998, iVillage had approximately $8.8 million in cash.
Net cash used in operating activities increased to $15.3 million for the
year ended December 31, 1997 from $8.7 million for 1996, and increased to
$24.4 million for the nine months ended September 30, 1998 from $11.1 million
for the nine months ended September 30, 1997. The increase in net cash used
resulted primarily from increasing net losses, offset by the timing of payable
settlements and increased depreciation and amortization expense.
Net cash used in investing activities increased to $6.9 million for the
year ended December 31, 1997 from $0.7 million for 1996, resulting primarily
from increased purchases of property and equipment and the $2.6 million cash
portion of the acquisition of iVillage's health channel. Net cash used in
investing activities decreased to $3.7 million for the nine months ended
September 30, 1998, compared to $6.6 million for the nine months ended
September 30, 1997, primarily due to the acquisition of iVillage's health
channel in 1997 and fewer purchases of property and equipment in 1998.
Net cash provided by financing activities increased to $24.4 million for
1997 compared to $11.3 million for 1996 primarily due to the $24.8 million of
net cash proceeds from the sale of shares of iVillage's Series C Convertible
Preferred Stock in 1997, inclusive of convertible notes, versus net cash
proceeds of $11.3 million from the sale of iVillage's Series B and B-1
Convertible Preferred Stock in 1996, inclusive of convertible notes. Net cash
provided by financing activities increased to
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$32.5 million for the nine months ended September 30, 1998 compared to $21.0
million, inclusive of convertible notes, for the nine months ended September 30,
1997, primarily due to the $31.5 million of net cash proceeds from the sale of
iVillage's Series D Convertible Preferred Stock and $1.7 million of cash
proceeds from the sale of Common Stock in the first nine months of 1998 versus
cash proceeds of $17.6 million from the sale of iVillage's Series C Convertible
Preferred Stock and $3.8 million from the proceeds from convertible notes
payable in the first nine months of 1997.
In December 1998, iVillage sold 11,730,948 shares of Series E Convertible
Preferred Stock through a private placement in exchange for net proceeds of
approximately $32.0 million. Holders of Series E Convertible Preferred Stock
have participating preferred rights and the same conversion and dividend rights
as well as anti-dilution protection as the pre-existing holders of iVillage's
Convertible Preferred Stock. Holders of Series E Convertible Preferred Stock
also have the same liquidation preference as the holders of the Series C and D
Convertible Preferred Stock. The Series E Convertible Preferred Stock will
convert into Common Stock upon the closing of this offering.
iVillage's capital requirements depend on numerous factors, including
market acceptance of iVillage's services, the amount of resources iVillage
devotes to investments in the iVillage.com network, the resources iVillage
devotes to marketing, selling its services and its brand promotions and other
factors. iVillage has experienced a substantial increase in its expenditures
since its inception consistent with growth in iVillage's operations and
staffing, and anticipates that this will continue for the foreseeable future.
Additionally, iVillage will continue to evaluate possible investments in
businesses, products and technologies, and plans to expand its sales and
marketing programs and conduct more aggressive brand promotions. iVillage
currently anticipates that its available cash resources combined with the net
proceeds from this offering will be sufficient to meet its anticipated needs for
working capital and capital expenditures for at least the 12 months following
the date of this prospectus. We may need to raise additional funds, however, in
order to fund more rapid expansion, to develop new or enhance existing services
or products, to respond to competitive pressures or to acquire complementary
products, businesses or technologies. If additional funds are raised through the
issuance of equity or convertible debt securities, the percentage ownership of
our stockholders will be reduced, our stockholders may experience additional
dilution and such securities may have rights, preferences or privileges senior
to those of our stockholders. We cannot assure you that additional financing
will be available on terms favorable to us, or at all. If adequate funds are not
available or are not available on acceptable terms, our ability to fund our
expansion, take advantage of unanticipated opportunities, develop or enhance
services or products or otherwise respond to competitive pressures would be
significantly limited. Our business, results of operations and financial
condition could be materially adversely affected by such limitation.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS No. 131"), which
establishes standards for reporting information about operating segments in
annual financial statements. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
SFAS No. 131 will be adopted by us at December 31, 1998. The adoption of SFAS
No. 131 is not expected to have an impact on iVillage's results of operations,
financial position or cash flows.
In February 1998, FASB issued SFAS No. 132, "Employers' Disclosures about
Pension and Other Postretirement Benefits" ("SFAS No. 132"), which revises
employers' disclosures about pension and other postretirement benefit plans.
SFAS No. 132 does not change the measurement or recognition of those plans. SFAS
No. 132 is effective for fiscal years beginning after December 15, 1997. The
adoption of SFAS No. 132 is not expected to have an impact on iVillage's
results of operations, financial position or cash flows.
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In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1
is effective for financial statements for years beginning after December 15,
1998. SOP 98-1 provides guidance over accounting for computer software
development or obtained for internal use including the requirement to capitalize
specified costs and amortization of such costs. iVillage does not expect the
adoption of this standard to have a material effect on iVillage's capitalization
policy.
In April 1998, AICPA issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"). SOP 98-5, which is effective for fiscal years
beginning after December 15, 1998, provides guidance on the financial reporting
of start-up costs and organization costs. It requires costs of start up
activities and organization costs to be expensed as incurred. As iVillage has
expensed these costs historically, the adoption of this standard is not expected
to have a significant impact on iVillage's results of operations, financial
position or cash flows.
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities" ("SFAS No. 133"), which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as derivatives) and for
hedging activities. SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. The adoption of SFAS No. 133 is not
expected to have an impact on iVillage's results of operations, financial
position or cash flows upon the adoption of this standard.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept or recognize only two digit entries in the date code field. These
systems and software products will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and/or software used by many companies and governmental agencies may
need to be upgraded to comply with such Year 2000 requirements or risk system
failure or miscalculations causing disruptions of normal business activities.
STATE OF READINESS
iVillage has made a preliminary assessment of the Year 2000 readiness of
its operating financial and administrative systems, including the hardware and
software that support iVillage's systems. iVillage's assessment plan consists of
(i) quality assurance testing of its internally developed proprietary software;
(ii) contacting third-party vendors and licensors of material hardware, software
and services that are both directly and indirectly related to the delivery of
iVillage's services to its users; (iii) contacting vendors of third-party
systems; (iv) assessing repair or replacement requirements; (v) implementing
repair or replacement; (vi) implementation; and (vii) creating of contingency
plans in the event of Year 2000 failures. iVillage plans to perform a Year 2000
simulation on its systems during the first quarter of 1999 to test system
readiness. Based on the results of its Year 2000 simulation test, iVillage
intends to revise its internally developed proprietary software as necessary to
improve the Year 2000 compliance of its internally developed proprietary
software. Many vendors of material hardware and software components of its
systems have indicated that the products used by iVillage are currently Year
2000 compliant. iVillage will require vendors of its other material hardware and
software components of its systems to provide assurances of their Year 2000
compliance. iVillage plans to complete this process during the first half of
1999. Until such testing is completed and such vendors and providers are
contacted, iVillage will not be able to completely evaluate whether its systems
will need to be revised or replaced.
COSTS
To date, iVillage has not incurred any material expenditures in connection
with identifying, evaluating or addressing Year 2000 compliance issues. Most of
iVillage's expenses have related to, and are expected to continue to relate to,
the operating costs associated with time spent by employees in the evaluation
process and Year 2000 compliance matters generally. At this time, iVillage does
not possess the information necessary to estimate the potential costs of
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revisions to its systems should such revisions be required or the replacement of
third-party software, hardware or services that are determined not to be Year
2000 compliant. Although iVillage does not anticipate that such expenses will be
material, such expenses, if higher than anticipated, could have a material
adverse effect on iVillage's business, results of operations and financial
condition.
RISKS
iVillage is not currently aware of any Year 2000 compliance problems
relating to its systems that would have a material adverse effect on iVillage's
business, results of operations and financial condition, without taking into
account iVillage's efforts to avoid or fix such problems. There can be no
assurance that iVillage will not discover Year 2000 compliance problems in its
systems that will require substantial revision. In addition, there can be no
assurance that third-party software, hardware or services incorporated into
iVillage's material systems will not need to be revised or replaced, all of
which could be time-consuming and expensive. The failure of iVillage to fix or
replace its internally developed proprietary software or third-party software,
hardware or services on a timely basis could result in lost revenues, increased
operating costs, the loss of customers and other business interruptions, any of
which could have a material adverse effect on iVillage's business, results of
operations and financial condition. Moreover, the failure to adequately address
Year 2000 compliance issues in its internally developed proprietary software
could result in claims of mismanagement, misrepresentation or breach of contract
and related litigation, which could be costly and time-consuming to defend.
In addition, there can be no assurance that governmental agencies, utility
companies, Internet access companies, third-party service providers and others
outside of iVillage's control will be Year 2000 compliant. The failure by such
entities to be Year 2000 compliant could result in a systemic failure beyond the
control of iVillage, such as a prolonged Internet, telecommunications or
electrical failure, which could also prevent iVillage from delivering its
services to its customers, decrease the use of the Internet or prevent users
from accessing its Web sites which could have a material adverse effect on
iVillage's business, results of operations and financial condition.
CONTINGENCY PLAN
As discussed above, iVillage is engaged in an ongoing Year 2000 assessment
and has not yet developed any contingency plans. The results of iVillage's Year
2000 simulation testing and the responses received from third-party vendors and
service providers will be taken into account in determining the nature and
extent of any contingency plans.
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BUSINESS
IVILLAGE INC.
iVillage is a leading online women's network and one of the most
demographically targeted online communities on the World Wide Web. iVillage's
network, "iVillage.com", provides an easy-to-use, comprehensive destination
tailored to the interests and needs of women aged 25 through 49. We provide
advertisers and merchants with targeted access to women using the Web. During
October 1998 iVillage.com was the only top 100 Web site with a female audience
greater than 65%.
iVillage's network consists of 12 channels covering the leading topics of
interest to women online, such as family, health, work, money, food,
relationships, shopping and travel. We facilitate channel usage by providing
common features and functionality within each channel, including experts, chats,
message boards and services.
As of October 31, 1998, iVillage's membership, its core audience and most
valuable users, was 84% female and consisted of approximately 740,000 unique
members as compared to approximately 170,000 unique members as of January 31,
1998. For the month ended October 31, 1998, iVillage.com had 2.7 million unique
visitors. We believe that iVillage.com appeals to advertisers, consumers and
merchants because it combines the following attributes to create a powerful
environment for advertising and commerce: (i) a highly targeted and attractive
demographic user group, (ii) a high degree of member involvement and (iii) an
interactive sponsorship model that integrates advertising and commerce into each
of the site's content.
INDUSTRY BACKGROUND
GROWTH OF THE INTERNET AND ONLINE COMMERCE
The Internet has emerged as a significant global communications medium,
enabling millions of people to share information and conduct business
electronically and providing advertisers and businesses with an attractive means
of marketing and selling their products and services. International Data
Corporation ("IDC") estimates the number of users associated with accessing the
Web to increase from approximately 69 million at the end of 1997 to
approximately 320 million by the end of 2002. According to IDC, worldwide
commerce revenue on the Internet is expected to increase from approximately
$12.4 billion at the end of 1997 to more than $425 billion in 2002. Accordingly,
Jupiter Communications, Inc. ("Jupiter") estimates that the amount of
advertising dollars spent on the Internet is expected to increase from
approximately $1.9 billion in 1998 to $7.7 billion by 2002, a compound annual
growth rate of 42%. The Internet enables features and functions that are
unavailable in traditional media, permitting online retailers to interact
effectively with customers and advertisers to target specific demographic groups
by capturing valuable data on customer tastes, preferences and shopping and
buying patterns.
WOMEN'S INCREASING USE OF THE INTERNET AND THEIR IMPORTANCE IN THE ECONOMY
Women represent an attractive demographic group for advertisers and
businesses. The number of female AOL subscribers increased from 16% of total
subscribers in 1994 to 51% in June 1998. According to Jupiter, 45% of the
Internet audience was female as of January 1998. These trends are important to
advertisers because women are estimated to have disproportionate control or
influence over consumer spending in the United States, controlling or
influencing $2.4 trillion of the $3.0 trillion in annual consumer spending. For
example, according to Advertising Age in November 1997, women controlled or
influenced purchases of 80% of new cars, 66% of home computers, 46% of men's
wear and 70% of appliance choices. We believe that women are increasing their
use of the Internet for commercial purposes. Although women are underrepresented
in the online spending category, accounting for only 25% of online sales in
1996, as reported by Jupiter Webtrack, this gap is expected to narrow over the
next several years and grow to 47% by 2000.
Spending on advertising targeted to women is generally considered to
represent the largest single category of advertising in the
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United States. Also, industry analysts believe that women online spend fewer
hours watching television or reading print media than they did prior to using
the Internet in comparison to their male counterparts. Thus, as women move
online, advertisers will likely follow suit.
NEED FOR WOMEN'S NETWORK
For advertisers to effectively reach women online, they need to address the
fact that women use the Internet differently than men. iVillage believes that
women want an environment built to meet their needs for problem-solving,
time-efficiency, integration of information, peer advice and simple navigation.
Accordingly, women appear to spend less time "surfing" the Internet than men and
more of their online time at a single destination. In addition, the varied
social roles of women create additional stress and underscore the need for
efficient problem-solving mechanisms. For example, a working mother might find
herself at midnight applying for a mortgage, trading stocks or researching a
disease on the Internet, a time when traditional service providers cannot be
reached. The Internet provides a powerful communications vehicle where a woman
can find answers and seek advice from women with relevant life experiences at
any time of the day and from work or home.
iVillage believes that the major navigational hubs are generally designed
for all major demographic audiences, and, therefore, have historically not
created an environment focused on the specific programming needs and buying
habits of women. Consequently, iVillage believes that women online and
advertisers and merchants seeking to reach concentrations of women online are
underserved.
THE iVILLAGE SOLUTION
iVillage.com is the largest online women's network and one of the most
demographically targeted online communities on the Web. iVillage focuses on the
needs of women online and has created an environment that solves everyday
problems quickly in those areas of life most important to women, including
family, parenting, work, money and health. The user's experience on iVillage.com
centers on solving these problems in one destination through targeted community,
access to experts, useful interactive tools and commerce opportunities.
iVillage believes its success to date can be attributed to the following
factors:
FOCUS ON HIGHLY TARGETED DEMOGRAPHIC GROUP
iVillage.com is primarily tailored to the interests and needs of women
online between the ages of 25 and 49. iVillage believes that these women want:
o powerful, quick and easily accessible problem-solving content;
o emotional support, a sense of identification and access to sympathetic
listeners; and
o a consistent navigation and programming experience.
iVillage believes that its network creates the experience women are seeking
and distinguishes iVillage.com from portals, AOL and other women's networks.
iVillage.com offers a series of integrated tools, community resources, experts
and information databases to help women solve their everyday problems quickly
and effectively. For example, a woman who learns that she has a disease can
quickly:
o access other members who have lived through this experience and can
provide both guidance and emotional relief;
o access Healthwise Knowledgebase, a medical database to research the
topic; and
o select and purchase books on the topic.
iVillage.com provides a place where women can find support from like-minded
women and the comfort of knowing that other women have shared similar
experiences and have come through them successfully. This program enables women
to work together towards breaking the cycle of dieting and weight gain.
iVillage.com also offers daily polls that provide women with an immediate sense
of belonging and connection.
iVillage.com has a consistent navigation and programming experience across
all channels and functions. Each channel is organized in a consistent manner
around tools, experts, resources and community. During October 1998,
iVillage.com's home page on both the Internet and AOL provided users with
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links each week to approximately 50 experts, 700 chats and 1,500 message boards.
In content partnerships, iVillage generally maintains responsibility for
creating the content's look and feel to assure a consistent organization within
the network. For example, in an agreement with Amazon.com, Inc., iVillage
created the Book Club channel where iVillage.com members review the books and
organize discussions. In an alliance with Intuit Inc., Armchair Millionaire was
created within the iVillage.com template and is managed by iVillage's staff.
ACTIVE MEMBERSHIP AND COMMUNITY PARTICIPATION
iVillage encourages active participation in its community and offers a
number of programs to increase levels of participation. Believing that members
form iVillage.com's core audience and are its most valuable customers, iVillage
created a membership services group in January 1998. As of October 31, 1998, the
network had approximately 740,000 unique members, up from approximately 170,000
unique members as of January 31, 1998. iVillage has built an organization of
over approximately 1,000 community leaders who volunteer a significant amount of
time hosting message boards and chats and contributing to iVillage.com's
proprietary content and innovative bottoms-up programming. iVillage.com also
sends 5.5 million electronic newsletters per week to its members, visitors and
newsletter subscribers.
POSITIVE ENVIRONMENT FOR ADVERTISING AND COMMERCE
iVillage believes that iVillage.com appeals to advertisers and consumers
because it combines the following attributes:
o a high degree of member involvement with the site, through polls, boards,
chats, community challenges and personalized interactive services;
o an interactive sponsorship model that integrates advertising and commerce
into the site;
o a highly-targeted demographic group; and
o a consistency of brand and navigation throughout the network.
iVillage believes that this combination has resulted in effective CPMs
(iVillage's standard cost per thousand impressions) above the industry average,
and above the average for other women's sites. In addition, iVillage.com offers
a scalable business platform from which iVillage can generate multiple revenue
streams including:
o banner advertising;
o sponsorship;
o production; and
o e-commerce.
BUSINESS STRATEGY
iVillage's objective is to continue to be the premier site for women
online. Key elements of iVillage's strategy are as follows:
BUILD STRONG BRAND RECOGNITION
iVillage believes that building brand recognition of iVillage.com is
critical to attracting and expanding its global Internet user base. iVillage's
market leadership position has been driven by partnership and distribution
agreements with other leading Internet-based companies. iVillage believes
aggressive brand-building will become increasingly important to sustain its
leadership position and has begun to allocate some of its branding expenditures
toward offline branding on television and radio, through direct media spending
and through strategic alliances with traditional media partners. These alliances
are relatively new and iVillage is just beginning to see their benefits.
iVillage believes that it can build offline brand awareness and attract traffic
by leveraging the reach of traditional media partners. For example, in November
1998 iVillage entered into a contract with NBC pursuant to which NBC will
promote iVillage.com during prime time programs as well as through its Web
sites. iVillage also entered into an agreement with AT&T in October 1998 where
AT&T will promote iVillage through TV and mass media marketing.
iVillage also plans to build brand recognition and develop new commerce
opportunities through the marketing and packaging of its content. For example,
iVillage currently runs a syndicated column with Copley News Services based upon
its content and has arranged to publish four books under the
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Parent Soup brand in order to reach offline audiences.
AGGRESSIVELY GROW MEMBERSHIP
iVillage intends to grow its membership base and increase member usage
through member promotions, interactive services, community building and
relationships with national women's organizations. iVillage also plans to offer
additional members-only services, such as personal home pages, instant messaging
and multi-player games, and to transition portions of its programming to
member-only areas. Once the user has visited iVillage.com, iVillage's mission is
to convert that user to a member.
ENHANCE AND EXPAND THE NETWORK
iVillage intends to offer additional functionality such as personalized
home pages and instant messaging and to expand the network by developing
additional channels such as computers and finance and expand the content of its
existing channels. iVillage intends to develop these additional channels with
sponsors and media partners in order to maintain low development costs while
creating high utility for users.
PURSUE STRATEGIC ACQUISITIONS AND
ALLIANCES
iVillage plans to bolster its traffic, market share and revenues through
strategic acquisitions that offer opportunities to increase market share in
iVillage's content categories, offer high traffic or are sites categorized by
high retention statistics. iVillage also intends to form alliances with larger
companies to leverage their brands, while incorporating content that is
consistent with the network. For instance, iVillage created Armchair Millionaire
through an alliance with Intuit Inc. and created the Book Club channel, which
provides content and offers selected books for sale through an agreement with
Amazon.com, Inc. iVillage may also expand its revenue opportunities through
alliances with other retailers, online service and content providers, commerce
providers and advertisers.
INCREASE SPONSOR AND ADVERTISING REVENUES
iVillage views its relationships with its sponsors and advertisers as
critical to its success. iVillage has been a pioneer in developing innovative
sponsorship advertising relationships with leading brand marketers which go
beyond traditional banner advertising to support broad marketing objectives,
including branding, awareness, product introductions, online research and
editorial integration. iVillage plans to continue to seek additional sponsorship
arrangements, which have longer-term contracts and higher dollar values than
typical banner deals and independence from page views as the sole measurement
basis. In addition, iVillage intends to continue to attract banner advertising
and has recently created a discrete sales force to concentrate on this area of
the business, which is sold primarily through agencies. iVillage has recently
increased the size of its sales force to concentrate on increasing iVillage's
advertising and sponsorship relationships with leading brand marketers.
GENERATE E-COMMERCE REVENUES
iVillage currently owns a majority interest in iBaby, Inc., an online
retailer of baby gifts and products, and intends to identify new commerce,
revenue and acquisition opportunities that enhance iVillage.com by offering
transaction services in categories that (i) have a high degree of relevance to
iVillage.com members, (ii) are appropriate for the Internet and (iii) fit with a
current or complementary iVillage.com content site. iVillage also generates
e-commerce revenues through agreements with leading merchants interested in
targeting iVillage.com members, such as Amazon.com, Inc., N2K Inc. and
1-800-Flowers, Inc. These merchants receive exposure through banner advertising,
editorial integration and promotional offers in exchange for a fixed fee and a
share of the sales revenue from iVillage.com users. iVillage also plans to
create relationships with key retailers and manufacturers interested in building
new channels while protecting their core distribution channels. In addition to
enhancing user retention, these retailing opportunities can be used to identify
valuable purchasing trends that can be used in future advertising and commerce.
In connection with and subject to this offering, iVillage anticipates exercising
its right to acquire the minority interest in iBaby.
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THE iVILLAGE NETWORK
iVillage's network is organized around 12 content specific channels.
iVillage.com is a single point of entry to the iVillage network of sites and is
updated daily to promote content and community, including channel highlights.
The following table provides a brief description of each channel's features as
of October 31, 1998:
<TABLE>
<CAPTION>
CHANNEL DESCRIPTION
- ------- -----------
<S> <C>
Parent Soup(Registered) A parenting site providing users branded online community where parents share
[LOGO] parenting solutions, talk with experts and find answers and support.
ParentsPlace A parenting community center site that includes approximately 700 bulletin boards
[LOGO] and approximately 80 weekly chats in addition to information regarding childhood diseases.
Health A health channel to assist users in becoming better health care decision makers that
[LOGO] includes approximately 200 weekly chats on AOL and the Web and approximately 84,000
message board posts per month on AOL.
Armchair Millionaire A financial planning site providing users with information on savings and investment
[LOGO] strategies and includes Five Steps to Financial Freedom, The Model Portfolio, an
Armchair Millionaire plan for getting rich, slowly but surely and Charles Schwab
Investment Center.
Book Club A book and reading site for readers interested in a wide range of books that allows
[LOGO] users to discuss featured books and offers Monthly Book Picks, Question of the Week,
Reading Groups and iVillage.com Bestsellers.
Career A career planning site that provides women with tools and resources relating to
[LOGO] professional development and career-related issues.
Fitness & Beauty A fitness and beauty site which includes Body Calculators, Nutrition Experts and
[LOGO] Community Challenges to improve one's fitness level.
Food A food site providing information on meal planning, nutrition and recipes and
[LOGO] includes Food Experts and Cooking Basics.
Relationships A site offering users information and conversation on love, marriage, sex and
[LOGO] family.
Shopping A one-stop online shopping destination offering users easy access to retail Web
[LOGO] sites such as Virtual Vineyards, Gymboree, Music Boulevard, Godiva and iBaby.
Travel A travel site that offers tools for planning a vacation, articles on travel- related
[LOGO] issues, a link to a travel reservation center and a currency converter.
Work From Home A site providing women who work from home with tools and resources such as Home
[LOGO] Office Basics, a Tax Guide and a Software Library.
</TABLE>
iVillage believes that user support is critical in order to attract and
retain users. iVillage provides user support primarily through e-mail-based
correspondence. Help and feedback buttons are prominently displayed throughout
iVillage.com, and iVillage's user support staff attempts to respond to all
e-mail queries within 24 hours. In addition, community leaders provide on-site
and e-mail support for broad-ranging issues. iVillage does not charge for these
services.
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ADVERTISING AND SPONSORSHIP REVENUES
iVillage has derived a significant amount of its revenues to date from the
sale of sponsorships and advertisements. For the nine months ended
September 30, 1998 and the year ended December 31, 1997, sponsorship and
advertising revenues represented 82% and 93%, respectively, of iVillage's
revenues.
iVillage's strategy is focused in part on generating a majority of its
advertising revenues from sponsors and merchants who seek a cost-effective means
to reach women online. iVillage is aggressively building its leadership position
as the preeminent women's brand to the advertising community. iVillage's
sponsorship arrangements typically differ from traditional banner advertising in
that they are designed to achieve broad marketing objectives such as branding,
awareness, product introductions, online research and editorial content
integration. Sponsorships allow iVillage.com to cater to the specific goals of
advertisers in the areas of impressions, product research, market research, new
product launches, list development, product information, repositioning, new
account openings, lead generation and transactions. Sponsors also have the
opportunity to talk one-on-one with members on the network's message boards,
chats, polls and special events, which allow sponsors the opportunity to gain
insights into their customers. iVillage's sponsorship arrangements generally
have longer terms than typical banner advertising placements and provide for
CPMs per advertiser and independence from page-views as the measure of value. In
addition, iVillage can develop extensive editorial and marketing content to
support the marketing initiatives of advertisers. iVillage's sponsorship
agreements are typically exclusive and are for a period of one to three years.
To a lesser extent, iVillage also derives a portion of its sponsorship and
advertising revenues from banner advertisements that are prominently displayed
at the top of pages throughout the iVillage.com network. From each banner
advertisement, viewers can hyperlink directly to the advertiser's own Web site,
thus providing the advertiser the opportunity to directly interact with an
interested customer. iVillage has recently created a discrete sales force to
concentrate on banner advertising, which is sold primarily through agencies. As
a result of its sales and advertising strategy, iVillage believes that it has
CPMs significantly above the industry average, and above the reported average
for other women's sites.
During the year ended December 31, 1997 and the nine months ended
September 30, 1998, iVillage's five largest advertisers accounted for
approximately 26% and 22%, respectively, of iVillage's revenues. No advertiser
accounted for more than 10% of iVillage's revenues during either period. The
following is a select list of iVillage's advertisers:
Amazon.com, Inc.
Astra Pharmaceuticals,
L.P.
Charles Schwab & Co.,
Inc.
First USA, Inc.
Glaxo Wellcome Inc.
Green Tree Nutrition,
Inc.
Kimberly-Clark
Corporation
MovieStreet, Inc.
Re.Store, Inc.
Ortho-McNeil, Ortho
Dermatological &
McNeil-PPC, Inc.
Westpoint Stevens, Inc.
MEMBERSHIP
iVillage believes a large and active membership base is critical to its
success. Membership is free and available to iVillage.com visitors who disclose
their name, e-mail address, zip code, age and gender and choose a member name
and password to be used throughout members-only areas. Members form
iVillage.com's core audience and are its most valuable users. iVillage is
mounting an aggressive member-acquisition campaign, which includes the creation
of free services and support for members. Since the creation of iVillage's
member services group in January 1998, membership has increased from
approximately 170,000 unique members as of January 31, 1998 to approximately
740,000 unique members as of October 31, 1998.
iVillage recognizes the importance of maintaining confidentiality of member
information and has established a privacy policy to protect such information.
iVillage's current Privacy Policy (the "Policy") is set forth on iVillage.com in
a member's Terms of Service, which is linked to the site where a person
initially registers for membership. When a user registers as an iVillage.com
member,
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iVillage requests the user to provide, among other things, his or her name,
address, e-mail address, zip code, gender and a private password. iVillage's
current Policy is to never sell to any third party any member's personal
identifying information, such as his or her name or address, unless the member
has provided written consent. In certain situations, iVillage does allow a
third-party partner access to database information if it is necessary for the
delivery of a member service, such as e-mail. In these instances, the partner
has agreed to be bound by iVillage's current Policy. iVillage does share
aggregated member information with third parties, such as a member's zip code,
gender or age. iVillage also reserves the right to offer members products and
services. iVillage may use information revealed by members and information built
from user behavior to target advertising, content and e-mail. For instance,
iVillage may, on behalf of an advertiser, send e-mail offers to all members from
a certain region or target advertisements to all users who frequent a specific
area of the site.
E-COMMERCE
OVERVIEW
iVillage has identified the opportunity to generate new commerce revenues
by selling products or services that (i) have a high degree of relevance to its
members, (ii) fit with a current content area or provide an opportunity for
future development and (iii) are appropriate for the Internet. iVillage also
generates commerce revenues through agreements with leading merchants from which
iVillage collects a fixed fee and a share of sales from its members.
iBABY
iVillage acquired a majority interest in iBaby by entering into a joint
venture in April 1998 with Kid's Warehouse, a San Diego retailer. iBaby offers
an extensive assortment of products for children under three years of age with
over 400 national brands representing more than 20,000 items. The site's
comprehensive selection, combined with easy site navigation and time-saving
features such as a baby registry, superior product search and a gift-finder
service, makes iBaby convenient for new and expectant parents. iBaby had 24
full-time employees as of October 31, 1998. In connection with and subject to
this offering, iVillage anticipates exercising its right to acquire the minority
interest in iBaby. Please see Note 11 of Notes to iVillage's Consolidated
Financial Statements.
iBaby targets parents through newsletters, message boards, content
integration, banner ads and key word buys. iBaby has distribution agreements
with portals such as AOL and the Microsoft Network.
Online orders are taken 24 hours a day, seven days per week and products
are shipped within 48 hours of placement of most orders. Substantially all of
iBaby's products are currently sourced through Kid's Warehouse. Although iBaby
holds no inventory, iVillage anticipates that it may maintain in the future an
inventory of a small amount of the most popular products.
MERCHANT ALLIANCE PROGRAMS
iVillage receives a fixed fee and commerce revenues through agreements with
leading merchants who receive exposure through banner advertising, editorial
integration and newsletters. iVillage currently has alliances with companies
such as Amazon.com, Inc., N2K Inc. and 1-800-Flowers, Inc. Contracts with such
merchants generally provide for one- or two-year terms.
ALLIANCES
iVillage pursues strategic relationships to increase its access to online
customers, build brand recognition and expand iVillage's online presence.
Historically, iVillage has pursued strategic alliances to reach online
customers. iVillage currently plans to shift its focus to building offline brand
recognition and to increasing its access to offline customers. iVillage's
principal strategic alliances and relationships include the following:
MEDIA ARRANGEMENT
In November 1998, iVillage entered into an agreement with NBC pursuant to
which NBC will promote iVillage.com on television, primarily during prime-time
programs, as well as through
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its Web sites. In addition, NBC has agreed to promote the content centers
programmed by iVillage on Snap LLC ("Snap"). In exchange for such advertising,
iVillage has agreed to issue NBC shares of Series E Convertible Preferred Stock
(or shares of Common Stock after this offering) equal to the value of such
advertising spots. NBC will have the option to provide iVillage with additional
advertising spots and to receive additional shares of stock at predetermined
exercise prices, which may result in significant non-cash charges in the future.
Please see "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Recent Events".
SPONSORSHIP ARRANGEMENTS
In October 1998, iVillage entered into a two-year agreement with AT&T
pursuant to which AT&T will be the exclusive provider of telecommunications
services on iVillage.com. iVillage will promote and market certain AT&T
telecommunication services that combine Web-based services with both traditional
and non-traditional (e.g., Internet Protocol) communication services on its Web
sites. In return, AT&T will display a text link for iVillage.com on the AT&T
WorldNet Service and promote and market iVillage.com through AT&T television,
mass media marketing or other mass media.
iVillage entered into an Online Services Agreement with Charles Schwab &
Co., Inc. ("Schwab") in December 1997, pursuant to which Schwab was granted the
right to an exclusive sponsorship of the brokerage and mutual fund areas on
armchairmillionaire.com, the co-branded site developed by iVillage and Intuit.
iVillage and Schwab also developed The Investor Center, a co-branded site,
located within armchairmillionaire.com. The agreement's term is for a period of
three years; however, Schwab may terminate the agreement by providing notice to
iVillage at least ninety days prior to each one-year anniversary of the
agreement.
iVillage entered into a one-year agreement with Amazon.com, Inc. in
February 1998, pursuant to which Amazon.com, Inc. was granted the right to
become the exclusive book sponsor and retailer throughout the iVillage.com
network. In addition, iVillage.com users are offered book-related features and
content across all the iVillage.com channels. Each of the channels provides
recommended reading lists, book reviews, online book chats and access to an
interactive Book Club. The agreement may be renewed for additional 12-month
periods upon the mutual agreement of iVillage and Amazon.com, Inc.
DISTRIBUTION ARRANGEMENTS
iVillage believes that its most effective means of generating traffic and
building brand recognition has resulted from its online media and distribution
relationships. iVillage considers branding an important aspect of its
distribution arrangements and seeks distribution relationships where its brand
is promoted. iVillage has also entered into distribution and content
relationships with most of the major portals on the Internet.
iVillage and Snap, a search and aggregation portal site on the Web, entered
into a two-year promotion agreement in November 1998, pursuant to which iVillage
has been granted the exclusive right to program the content portals on the front
pages of the Health Center, with health-related content from iVillage.com and
Snap's Family Center and with content from Parent Soup. Snap may in its
discretion, promote iBaby throughout the Kids and Family, Health, Living and
Shopping channels. In addition, iVillage's health channel and Parent Soup
content and links will be included as an initial default option for Snap's "My
Snap!" personalized home page. Snap is required to deliver a minimum number of
impressions during the term of the agreement and Snap's ability to display
content promoting other health and parenting sites is limited.
In July 1997, iVillage entered into a strategic alliance with AOL pursuant
to an interactive services agreement, which provides, among other things, for
iVillage to have three anchor tenant positions on three channels of the AOL
service (Lifestyle, Health and Family), participate in a variety of banner
advertising opportunities and be assigned specific keywords within the AOL
service. iVillage pays AOL a carriage fee and AOL guarantees iVillage a minimum
number of impressions per year. In addition, the contract provides that AOL is
entitled to a portion of advertising
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revenues from certain pages on iVillage.com, which to date has been immaterial.
The agreement terminates in February 1999 and is renewable by either party for a
successive one-year term. Please see "Risk Factors--Our Dependence on AOL".
CONTENT CHANNELS
iVillage has entered into agreements with third parties in order to expand
its channel offerings. Such agreements provide iVillage with a cost-effective
means of acquiring content and provides iVillage's users with high utility.
In June 1998, iVillage entered into an agreement with Intel Corporation
("Intel"), pursuant to which Intel purchased shares of iVillage's Series D
Convertible Preferred Stock. iVillage agreed to use the proceeds from Intel's
purchase of Series D Convertible Preferred Stock to add new features to the
site, such as a health profiling tool, personal home health pages and a ranking
of health organizations. Personal Health Profile, which was introduced in June
1998, allows users to assess potential health risks by entering lifestyle and
hereditary information. Customized information, from risk rankings to a disease
screening guide to tips for improving one's "Health Quotient", is bundled with a
Reuters news feed tailored to specific conditions and health interests. iVillage
plans to provide users with their own password-protected sites designed to
deliver to each user timely, comprehensive information on issues that directly
impact the user's personal health. In addition, iVillage.com's health channel
now lists health plan quality rankings by J.D. Power & Associates.
In September 1997, iVillage entered into an agreement with Intuit Inc. to
develop, launch and maintain armchairmillionaire.com, an interactive online
financial education and planning service. By accessing the Armchair Millionaire
Plan by Intuit Inc., users can customize their retirement plans and refer to a
model portfolio to chart their savings progress.
SALES, MARKETING AND PUBLIC RELATIONS
SALES
As of October 31, 1998, iVillage had a direct sales organization,
consisting of 13 sales professionals with an average of 15 years of experience,
nine of whom were hired since April 1998 and 23 sales operations staff.
iVillage's sales organization consults regularly with advertisers and agencies
on design and placement of its Web-based advertising and the production and
management of bridge sites, provides customers with advertising management
analysis and focuses on providing a high level of customer satisfaction. Ten
sales professionals focus on sponsorship relationships and two are responsible
for banner advertising. iVillage generally seeks to hire individuals with
significant experience in selling advertising and preexisting relationships with
advertisers in a variety of media.
MARKETING AND PUBLIC RELATIONS
iVillage employs a variety of methods to promote the iVillage.com brand and
to attract traffic and new members, including advertising on other Internet
sites, targeted publications, radio stations, cable television cross promotional
arrangements to secure advertising and other promotional considerations.
iVillage distributes promotional materials at selected targeted events (such as
PTA conferences) and engages in an ongoing public relations campaign. To extend
the iVillage.com brand, iVillage has also entered into several strategic
alliances with offline partners. Please see "--Alliances". In addition, iVillage
leverages other audience building strategies, including working closely with
search engine submissions, news group postings and cross-promotion with affinity
sites to properly index materials. iVillage's marketing department consisted of
26 marketing professionals as of October 31, 1998.
iVillage has recently begun to market its brand offline. In November 1998,
iVillage entered into an agreement with NBC, pursuant to which iVillage will
receive advertising on the NBC network. iVillage has, from time to time,
advertised on cable television in New York, San Francisco and Chicago and
intends to advertise on the radio as well. iVillage focuses
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on leveraging its community leaders and membership for offline brand building
and membership acquisition. iVillage plans to meet with local community leaders
and leaders of local women's organizations to identify sponsorship and
grassroots marketing opportunities. In addition, iVillage is identifying live
events and conferences for sponsorships.
iVillage's internal public relations staff oversees a comprehensive public
relations program which iVillage believes is a key component of its marketing
and brand recognition strategy. Organized into two primary components that
promote iVillage and the iVillage.com brand, the program targets a
trade/business and consumer audience, respectively. iVillage has developed a
consumer outreach effort which centers on providing non-technology reporters
with "news-you-can-use" information taken directly from iVillage.com, to
demonstrate to readers/viewers the content's utility and service, and usage of
and traffic to the network. iVillage has also implemented national long-lead
consumer initiatives, such as radio media tours, regional broadcast media tours,
consumer publicity of iVillage's Parent Soup book series and other related
activities, and multiple daily media advisories sent to consumer outlets
throughout the United States.
OPERATING INFRASTRUCTURE
iVillage's operating infrastructure has been designed and implemented to
support the reliable and swift delivery of millions of page views a day. Web
pages are generated and delivered, in response to end-users requests, by any one
of nearly 20 front-end Web and applications servers. Key attributes of this
infrastructure include scalability, performance and service availability.
iVillage makes its Web sites available through multiple servers. iVillage's
servers run on the Sun Solaris and Microsoft NT operating systems and use
Netscape Enterprise, Apachie and Microsoft Corporation's IIS Web server
software.
iVillage uses a variety of Web-based applications software to provide the
services it offers. These currently include Verity, Inc. for full text search,
Acuity Corporation (formerly iChat Inc.) for real-time chat, Proxicom, Inc. and
Lundeen & Associates for message boards, Vignette Corporation's StoryServer for
content management and Web publishing, NetPerceptions Inc. for collaborative
filtering, NetGravity, Inc. for ad serving, Andromedia, Inc. for Web-traffic
measurement, Informix Software Inc. for databases, Box Hill Systems Corp. and
Legato Systems, Inc. for backups and recovery and Keynote Systems, Inc. for
server performance monitoring. iVillage also contracts with WhoWhere? Inc. to
provide HTML-based e-mail and personal home pages as a free service to its
users.
iVillage maintains all of its production servers at the New Jersey Data
Center of Exodus Communications, Inc. ("Exodus"). iVillage's operations are
dependent upon Exodus's ability to protect its systems against damage from fire,
hurricanes, power loss, telecommunications failure, break-ins and other events.
Exodus provides a comprehensive facilities management services including
human and technical monitoring of all production servers 24 hours per day, seven
days per week. Exodus provides the means of connectivity for iVillage's servers
to end-users via the Internet through multiple DS3 and OC12 connections. These
connections link to many different parts of the Internet via a combination of
public and private peering agreements. The facility is connected to two
independent power grids, has two independent uninterruptible power supplies
("UPSs"), which are battery-powered, as well as two independent diesel
generators designed to provide power to the UPS systems within seconds of a
power outage. Please see "Risk Factors--Risks Associated with Technology and
Technological Change" and "--Internet Security and Electronic Commerce Risks".
All of iVillage's production data are copied to backup tapes each night and
stored at a third party, off-site storage facility. iVillage is in the process
of developing a comprehensive disaster recovery plan to respond to system
failures. iVillage keeps all of its production servers behind firewalls for
security purposes and does not allow outside access, at the operating systems
level, except via special secure channels. Strict password management and
physical security measures are followed.
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Computer Security Response Team alerts are read, and, where appropriate,
recommended action is taken to address security risks and vulnerabilities.
COMPETITION
The market for members, visitors and Internet advertising is new and
rapidly evolving, and competition for members, visitors and advertisers is
intense and is expected to increase significantly in the future. With no
substantial barriers to entry, iVillage expects that competition will continue
to intensify.
iVillage believes that the primary competitive factors in creating
community on the Internet are functionality, brand recognition, member affinity
and loyalty, demographic focus, variety of value-added services, ease-of-use,
quality of service, reliability and critical mass. Other companies or sites
which are primarily focused on targeting women online are women.com,
homearts.com, condenet.com and Oxygen Media's Web sites. iVillage will likely
also face competition in the future from developers of Web directories, search
engine providers, shareware archives, content sites, commercial online services,
sites maintained by ISPs and other entities that attempt to or establish
communities on the Internet by developing their own or purchasing one of
iVillage's competitors. In addition, iVillage could face competition in the
future from traditional media companies, a number of which, including Disney,
CBS and NBC, have recently made significant acquisitions of or investments in
Internet companies. Further, there can be no assurance that iVillage's
competitors and potential competitors will not develop communities that are
equal or superior to those of iVillage or that achieve greater market acceptance
than iVillage's community.
iVillage also competes with traditional forms of media such as newspapers,
magazines, radio and television, for advertisers and advertising revenues.
iVillage believes that the principal competitive factors in attracting
advertisers include the amount of traffic on its Web sites, brand recognition,
customer service, the demographics of iVillage's members and visitors,
iVillage's ability to offer targeted audiences and the overall
cost-effectiveness of the advertising medium offered by iVillage. iVillage
believes that the number of Internet companies relying on Web-based advertising
revenues will increase greatly in the future. Accordingly, iVillage will likely
face increased competition, resulting in increased pricing pressures on its
advertising rates which could in turn have a material adverse effect on
iVillage's business, results of operations and financial condition.
Many of iVillage's current and potential competitors, including developers
of Web directories and search engines, have longer operating histories,
significantly greater financial, technical and marketing resources, greater name
recognition and larger existing customer bases than iVillage. Such competitors
are able to undertake more extensive marketing campaigns for their brands and
services, adopt more aggressive advertising pricing policies and make more
attractive offers to potential employees, distribution partners, commerce
companies, advertisers and third-party content providers. There can be no
assurance that Internet content providers and ISPs, including developers of Web
directories, search engines, sites that offer professional editorial content and
commercial online services, will not be perceived by advertisers as having more
desirable Web sites for placement of advertisements. In addition, many of
iVillage's current advertising customers and strategic partners also have
established collaborative relationships with certain of iVillage's competitors
or potential competitors, and other high-traffic Web sites. Accordingly, there
can be no assurance that iVillage will be able to grow its memberships, traffic
levels and advertiser customer-base at historical levels or retain its current
members, traffic levels or advertiser customers, or that competitors will not
experience greater growth in traffic than iVillage as a result of such
relationships which could have the effect of making their Web sites more
attractive to advertisers, or that iVillage's strategic partners will not sever
or will elect not to renew their agreements with iVillage. There can be no
assurance that iVillage will be able to compete successfully against its current
or future competitors or that competitive pressures faced by iVillage will not
have a material adverse effect on iVillage's business, results of operations and
financial condition.
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INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS
AND DOMAIN NAMES
iVillage regards its copyrights, service marks, trademarks, trade dress,
trade secrets, proprietary technology and similar intellectual property as
critical to its success, and relies on trademark and copyright law, trade secret
protection and confidentiality and/or license agreements with its employees,
customers, independent contractors, partners and others to protect its
proprietary rights. iVillage strategically pursues the registration of its
trademarks and service marks in the United States, and has applied for and
obtained registration in the United States for certain of its trademarks and
service marks, including "iVillage". Effective trademark, service mark,
copyright and trade secret protection may not be available in every country in
which iVillage's products and services are made available online.
iVillage has licensed in the past, and expects that it may license in the
future, certain of its proprietary rights, such as trademarks or copyrighted
material, to third parties. While iVillage attempts to ensure that the quality
of its brand is maintained by such licenses, there can be no assurance that such
licensees will not take actions that might materially adversely affect the value
of iVillage's proprietary rights or reputation, which could have a material
adverse effect on iVillage's business, financial condition and results of
operations. There can be no assurance that the steps taken by iVillage to
protect its proprietary rights will be adequate or that third parties will not
infringe or misappropriate iVillage's copyrights, trademarks, trade dress and
similar proprietary rights. In addition, there can be no assurance that other
parties will not assert claims of infringement of intellectual property or alter
proprietary rights against iVillage.
iVillage has been subject to claims and expects to be subject to legal
proceedings and claims from time to time in the ordinary course of its business,
including claims of alleged infringement of the trademarks and other
intellectual property rights of third parties by iVillage and its licensees.
Such claims, even if not meritorious, could result in the expenditure of
significant financial and managerial resources. Further, if such claims are
successful, iVillage may be required to change its trademarks, alter its content
and pay financial damages. There can be no assurance that such changes of
trademarks, alteration of content or payment of financial damages will not
adversely affect iVillage's business.
iVillage's ability to use and successfully develop its channels will depend
upon its ability to continue to use, develop and protect its proprietary marks.
iVillage currently uses the term "better health" in connection with its online
operation of a channel including information concerning health-related topics
and iVillage, or HRS, the company iVillage acquired in May 1997, has made use of
the term since 1996. iVillage currently holds the domain name
"betterhealth.com". The Hospital of Saint Raphael (the "Hospital") owns federal
trademark registrations for the marks "Better Health" and "St. Raphael's Better
Health". On August 26, 1998, iVillage received notice from counsel for the
Hospital objecting, among other things, to iVillage's use of the term "better
health". iVillage has agreed in principle with the Hospital to phase out use of
the term "better health" other than in a descriptive, non-trademark sense by
March 30, 1999. iVillage is in the process of developing a new, proprietary
brand for its channel concerning health-related matters.
iVillage filed a service mark application for the mark "PARENTSPLACE.COM".
On July 22, 1998, Jewish Family and Children's Services ("JFCS") filed a Notice
of Opposition in the Trademark Trial and Appeal Board ("TTAB") of the U.S.
Patent and Trademark Office. The TTAB improperly captioned the Opposition
proceeding and forwarded the Notice to a prior attorney (not the attorney of
record). The period to respond to the Notice passed before iVillage or its
trademark counsel became aware of the Opposition proceeding. The TTAB was
informed of its errors and indicated that it would recaption the Opposition
proceeding, forward it to iVillage's trademark attorney and reset the date to
respond. There has been no written confirmation from the TTAB of this proposed
course of action. There can be no assurance that JFCS will not be successful in
the Opposition proceeding, thus preventing iVillage from securing a federal
registration to the mark "PARENTSPLACE.COM". Further, there can
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be no assurance that JFCS will not assert a claim to trademark rights against
iVillage in the future with respect to the use of "PARENTSPLACE.COM" or
"PARENTSPLACE", either as currently used or as developed in the future. iVillage
is not able at this time to evaluate the likelihood of an unfavorable outcome in
the event such claims are asserted, or to estimate the amount or range of
potential loss.
iVillage may be required to obtain licenses from others to refine, develop,
market and deliver new services. There can be no assurance that iVillage will be
able to obtain any such license on commercially reasonable terms or at all or
that rights granted pursuant to any licenses will be valid and enforceable.
HUMAN RESOURCES
As of October 31, 1998, iVillage employed 193 full-time employees, of whom
64 were in sales and marketing, 59 were in editorial and community, 28 were in
administration and 42 were in operations and support. As iVillage continues to
grow and introduce more products, it expects to hire more personnel,
particularly in the areas of product development and sponsorship. None of
iVillage's current employees is represented by a labor union or is the subject
of a collective bargaining agreement. iVillage believes that relations with its
employees are good.
FACILITIES
iVillage is headquartered in New York, New York, where it leases an
aggregate of approximately 31,000 square feet of space primarily in two
buildings located across the street from each other. These leases are short
term, expiring between 1999 and 2000, and cover three floors at 170 Fifth Avenue
that are approximately 3,650 square feet each and two floors at 149 Fifth Avenue
that are approximately 10,000 square feet each. iVillage currently anticipates
that it will require additional space as more personnel are hired. iVillage is
actively searching for larger space in New York City to serve as a permanent
space for the long-term future of iVillage.
iVillage leases approximately 3,370 square feet of space at 585 Grove
Street, Herndon, Virginia where it houses part of the Health Channel staff.
iVillage has closed this facility and currently plans to sublease the space
until its lease expires on September 30, 2000. iVillage also leases a house in
Palo Alto, California from a non-affiliated third party to provide its employees
with housing on business trips to Silicon Valley. iVillage currently plans to
terminate this lease. iVillage's lease for such space expires on August 31,
2001. In addition, iBaby is currently leasing approximately 5,115 square feet on
a month-to-month basis at 8400 Miramar Road, San Diego, California.
LEGAL PROCEEDINGS
iVillage is not currently subject to any material legal proceedings other
than as set forth in "--Intellectual Property, Proprietary Rights and Domain
Names". iVillage may from time to time become a party to various legal
proceedings arising in the ordinary course of its business.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the directors and executive officers of
iVillage, their ages and the positions held by them with iVillage as of
November 30, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Candice Carpenter..................................... 46 Co-Chairperson of the Board and Chief Executive
Officer
Nancy Evans........................................... 48 Co-Chairperson of the Board and Editor-
in-Chief
Craig T. Monaghan..................................... 41 Chief Financial Officer
Allison Abraham....................................... 36 Chief Operating Officer
John W. Glascott...................................... 45 Senior Vice President, Sponsorship
Caterina A. Conti..................................... 36 General Counsel and Secretary
Sanjay Muralidhar..................................... 36 Vice President, Finance and Assistant Secretary
Lennert J. Leader..................................... 43 Director
Michael Levy.......................................... 52 Director
Habib Kairouz......................................... 32 Director
William L. Killen, Jr................................. 46 Director
Lori Koffman.......................................... 39 Director
Philip Schlein........................................ 64 Director
</TABLE>
CANDICE CARPENTER is a founder of iVillage and has been Chairperson of the
Board and Chief Executive Officer since inception of iVillage in June 1995 and
Co-Chairperson of the Board since December 1998. Prior to founding iVillage,
Ms. Carpenter was President of Q2, the upscale QVC, Inc., shopping channel, from
1993 through 1995. Ms. Carpenter was also a consultant to AOL and Discovery
Communications, Inc. in 1995. From 1989 to 1993, Ms. Carpenter was President of
Time Life Inc.'s Time Life Video and Television and previously was Vice
President in Consumer Marketing at American Express Company. Ms. Carpenter
received an M.B.A. from Harvard Business School and a B.A. from Stanford
University.
NANCY EVANS is a founder of iVillage and has been Editor-in-Chief since
inception in June 1995 and Co-Chairperson of the Board since December 1998.
Ms. Evans is primarily responsible for the editorial quality and content for all
of iVillage's editorial products online, in print or on television. Prior to
founding iVillage, Ms. Evans created Family Life magazine in 1991, which she
published in partnership with Jann Wenner. From 1987 to 1991, Ms. Evans served
as President and Publisher of Doubleday. Prior to her employment at Doubleday,
Ms. Evans was Vice President and Editor-In-Chief of the Book-of-the-Month Club,
where she launched the Children's Book-of-the-Month Club. Ms. Evans graduated
from Skidmore College with a B.A. and is also a graduate fellow at Columbia
University.
CRAIG T. MONAGHAN has been Chief Financial Officer of iVillage since June
1998. From 1991 to June 1998, Mr. Monaghan held various positions at Reader's
Digest Association Inc. ("Reader's Digest"), including Vice President and
Treasurer, Vice President, Business Development and Controller, Reader's Digest
Europe. Prior to joining Reader's Digest, Mr. Monaghan served as Director of
International Finance and Director of Corporate Finance at Bristol-Myers Squibb
Company. Mr. Monaghan received an M.B.A. from The Wharton School at the
University of Pennsylvania and a B.S. in Engineering from Lehigh University.
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ALLISON ABRAHAM has been Chief Operating Officer since June 1998. From
August 1996 to May 1998, Ms. Abraham was President and Chief Operating Officer
of OnCart, an online grocery shopping service. From 1992 to 1996, she served as
Vice President of Marketing for Ameritech Corporation, a telephone and cellular
telecommunications company, as well as other sales and marketing positions. From
1988 to 1992, Ms. Abraham was employed by American Express Travel Related
Services, where she focused on loyalty programs and new product development.
Ms. Abraham received an M.B.A. from The Darden School at the University of
Virginia and a B.A. from Tufts University.
JOHN W. GLASCOTT has been Senior Vice President, Sponsorship since April
1998. From September 1996 to March 1998, Mr. Glascott was Senior Vice President
and Director of Corporate Marketing and Sales for Hearst Magazines. From August
1994 to September 1996, Mr. Glascott was a publisher and partner of SmartHealth
at Meigher Communications L.P., a magazine publisher. Prior to such time,
Mr. Glascott held various sales management positions at Whittle Communications
L.P., a media company, from 1982 to 1994. Mr. Glascott received an M.B.A. from
New York University and a B.A. from Ohio Wesleyan University.
CATERINA A. CONTI has been General Counsel and Secretary since November
1998. From January 1998 to November 1998, Ms. Conti was a partner with the law
firm of Orrick, Herrington & Sutcliffe LLP. From December 1995 to January 1998,
she was an associate with the same firm. From September 1988 to December 1995,
Ms. Conti was an associate with the law firm of Kelley, Drye & Warren LLP.
Ms. Conti received her J.D. from St. John's University School of Law and her
B.S. from St. John's University.
SANJAY MURALIDHAR has been Vice President, Finance and Assistant Secretary
since September 1998. From 1992 to 1998, Mr. Muralidhar held various positions
at Reader's Digest Association Inc., including Vice President, Finance-Reader's
Digest U.S.A., Vice President, Controller of QSP Inc., a division of Reader's
Digest and Director, Corporate Financial Planning. Prior to joining Reader's
Digest, Mr. Muralidhar held various positions in Financial Analysis and
Corporate Finance at Bristol-Myers Squibb Company between 1987 and 1992.
Mr. Muralidhar received an M.B.A. from the Wharton School at the University of
Pennsylvania and a Bachelor of Commerce from Bombay University.
LENNERT J. LEADER has been a director of iVillage since July 1998.
Currently, Mr. Leader is President of America Online, Inc. ("AOL") Investments.
Mr. Leader served as Senior Vice President, Chief Financial Officer and
Treasurer of AOL from September 1989 until July 1998 and was Chief Accounting
Officer from October 1993 until July 1998. Prior to joining AOL, Mr. Leader was
Vice President, Finance, of LEGENT Corporation, a computer software and services
company, from March 1989 to September 1989, and Chief Financial Officer of
Morino, Inc., a computer software and services company, from 1986 to March 1989
and its Director of Finance from 1984 to 1986. Prior to joining Morino, Inc. in
1984, he was an audit manager at Price Waterhouse. Mr. Leader graduated with a
B.S. in Accounting in 1977 from the University of Baltimore.
MICHAEL LEVY has been a director of iVillage since November 1998. Mr. Levy
currently serves as President and Chief Executive Officer at Sportsline USA,
Inc., a position he has held since February 1994. Prior to joining Sportsline
USA, Inc., Mr. Levy was a private investor. Mr. Levy received a B.S. in
Electrical Engineering from the Georgia Institute of Technology.
HABIB KAIROUZ has been a director of iVillage since March 1998. Currently,
Mr. Kairouz is Managing Director of Rho Management Company, Inc. ("Rho"), an
investment company, and has been with Rho since 1993. He also serves as a
director at Bellwether Exploration Company, Inc., an oil drilling company, and a
number of other private companies. Mr. Kairouz received a B.S. in Engineering
and a B.A. in Economics from Cornell University and an M.B.A. in Finance from
Columbia University.
WILLIAM L. KILLEN, JR. has been a director of iVillage since May 1997. He
is the Vice President of New Media Development for Cox Enterprises, Inc.
("Cox"), a media company in
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Atlanta, Georgia, a position he has held since 1995. He was previously Vice
President of Planning and Analysis for Cox. He also serves on the Board of other
private companies, including Digital Domain, Inc., Mpath Interactive, Inc.,
Optical Data Corp. and Telecom Towers, Inc. Mr. Killen holds an M.B.A. in
Finance from the Wharton School at the University of Pennsylvania and a B.S.E.E.
from Union College.
LORI KOFFMAN has been a director of iVillage since May 1997. Since November
1996, Ms. Koffman has also served as a director of LifeCell Corporation, a
tissue engineering firm, and serves as a director of numerous private companies.
Ms. Koffman currently holds the position of Managing Director of Merchant
Banking at Canadian Imperial Bank of Commerce ("CIBC") and has been with CIBC
since 1995. She was employed at Lehman Brothers Inc. from 1984 to 1994, most
recently as Senior Vice President of Merchant Banking. Ms. Koffman received an
M.B.A. from the Wharton School at the University of Pennsylvania, an M.A. from
the University of California at Berkeley and a B.A. from Tufts University.
PHILIP SCHLEIN has been a director of iVillage since May 1996 and a Venture
Partner in U.S. Venture Partners since 1985. From 1957 to 1985, Mr. Schlein held
various positions with R.H. Macy Inc., most recently as President and CEO of
Macy's California. Mr. Schlein served as director of R.H. Macy from 1979 to 1985
and of Apple Computer Inc. from 1979 to 1987. Mr. Schlein currently is a
director of Ross Stores, Inc., ReSound Corporation, Quick Response Services,
Burnham Pacific Properties, Inc., bebe Stores, Inc., Xoom.com Inc.,
Homegrocer.com Inc., Una Mas, Inc. and HomeChef Corporation. He also serves on
the Advisory Boards of the Business School of California State University at San
Francisco and the Retail Management Institute of Santa Clara University.
Mr. Schlein received a B.S. from the University of Pennsylvania.
BOARD COMPOSITION
iVillage currently has authorized ten directors. In accordance with the
terms of iVillage's Amended and Restated Certificate of Incorporation, effective
upon the closing of this offering, the terms of office of the members of the
Board of Directors will be divided into three classes: Class I, whose term will
expire at the annual meeting of stockholders to be held in 1999; Class II, whose
term will expire at the annual meeting of stockholders to be held in 2000; and
Class III, whose term will expire at the annual meeting of stockholders to be
held in 2001. The Class I directors are and
, the Class II directors are ,
and and the Class III directors are Candice
Carpenter, and . At each annual meeting of
stockholders after the initial classification, the successors to directors whose
term will then expire will be elected to serve from the time of election and
qualification until the third annual meeting following election. In addition,
iVillage's Bylaws provide that the authorized number of directors may be changed
only by resolution of the Board of Directors. Any additional directorships
resulting from an increase in the number of directors will be distributed among
the three classes so that, as nearly as possible, each class will consist of
one-third of the total number of directors. This classification of the Board of
Directors may have the effect of delaying or preventing changes in control or
management of iVillage. The composition of the Board of Directors is expected to
change in connection with this offering. Please see "Certain Transactions".
Each officer is elected by, and serves at the discretion of, the Board of
Directors. Each of iVillage's officers and directors, other than nonemployee
directors, devotes full time to the affairs of iVillage. iVillage's nonemployee
directors devote such time to the affairs of iVillage as is necessary to
discharge their duties. There are no family relationships among any of the
directors, officers or key employees of iVillage.
BOARD COMMITTEES
The Audit Committee of the Board of Directors reviews the internal
accounting procedures of iVillage and consults with and reviews the services
provided by iVillage's independent accountants. The Audit Committee
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currently consists of William L. Killen, Jr. and Philip Schlein.
The Compensation Committee of the Board of Directors reviews and recommends
to the Board the compensation and benefits of all executive officers of
iVillage, administers iVillage's stock option plan and establishes and reviews
general policies relating to compensation and benefits of employees of iVillage.
The Compensation Committee currently consists of Habib Kairouz, Lennert Leader
and Lori Koffman. Except as set forth in "Certain Transactions", no interlocking
relationships exist between iVillage's Board of Directors or Compensation
Committee and the board of directors or compensation committee of any other
company, nor has any such interlocking relationship existed in the past.
The composition of the Audit Committee and the Compensation Committee is
subject to change prior to completion of this offering.
DIRECTOR COMPENSATION
Directors do not currently receive cash compensation from iVillage for
their service as members of the Board of Directors, although they are reimbursed
for certain expenses in connection with attendance at Board and Committee
meetings. iVillage does not provide additional compensation for committee
participation or special assignments of the Board of Directors. From time to
time, certain directors of iVillage have received grants of options to purchase
shares of iVillage's Common Stock pursuant to the 1995 Amended and Restated
Employee Stock Option Plan. Beginning on the date of this offering, nonemployee
directors of iVillage will be eligible to receive nondiscretionary, automatic
grants of options to purchase shares of iVillage's Common Stock pursuant to the
1999 Director Option Plan. Please see "--Stock Incentive Plans" and "Certain
Transactions".
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued for
the year ended December 31, 1997 for iVillage's Chief Executive Officer and
certain other executive officers of iVillage whose salary and bonus for such
fiscal year were in excess of $100,000 (the "Named Executive Officers").
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
----------------------- OPTIONS/SARS
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) (#)
- ------------------------------------------------------------------------ ---------- --------- ------------
<S> <C> <C> <C>
Candice Carpenter
Chief Executive Officer............................................... $266,250 $50,000 280,000(1)
Nancy Evans
Editor-in-Chief....................................................... 247,708 25,000 --
Robert Levitan
President, Health Channel............................................. 135,000 15,000 87,500(2)
Stephen Lake
Vice President, Business Development.................................. 123,750 45,000 175,000(1)
Steven Elkes
Vice President, Business Affairs...................................... 135,000 40,000 85,000(1)
</TABLE>
- ------------------
(1) Options were granted under iVillage's 1995 Amended and Restated Employee
Stock Option Plan and vest 1/4 of the total after one year and 1/4 of the
total at the end of each year thereafter.
(2) Options were granted under iVillage's 1995 Amended and Restated Employee
Stock Option Plan and were fully vested on the date of grant.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth grants of stock options to each of the Named
Executive Officers for the year ended December 31, 1997. iVillage has never
granted any stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------- ANNUAL RATES OF
PERCENT OF TOTAL STOCK
NUMBER OF OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE FOR
UNDERLYING EMPLOYEES IN PRICE PER OPTION TERM(5)
OPTIONS FISCAL SHARE EXPIRATION --------------------
NAME GRANTED (#) YEAR (%)(3) ($/SH)(4) DATE 5%($) 10%($)
- ------------------------------- ----------- ---------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Candice Carpenter.............. 280,000(1) 9% $1.70 9/8/04 $193,780 $451,589
Nancy Evans.................... -- -- -- -- -- --
Robert Levitan................. 87,500(2) 3 1.70 9/8/04 60,556 141,122
Stephen Lake................... 175,000(1) 6 1.70 9/8/04 121,112 282,243
Steven Elkes................... 85,000(1) 3 1.70 9/8/04 58,826 137,090
</TABLE>
- ------------------
(1) Options were granted under iVillage's 1995 Amended and Restated Employee
Stock Option Plan and vest 1/4 of the total after one year and 1/4 of the
total at the end of each year thereafter. In each case, vesting is subject
to the optionee's continued employment with iVillage.
(2) Options were granted under iVillage's 1995 Amended and Restated Employee
Stock Option Plan and the 1997 Amended and Restated Acquisition Stock Option
Plan and were fully vested on the date of grant.
(3) Based on options to purchase an aggregate of 3,163,680 shares of Common
Stock granted under the 1995 Amended and Restated Employee Stock Option Plan
and the 1997 Amended and Restated Acquisition Stock Option Plan by iVillage
in the year ended December 31, 1997 to employees of iVillage, including the
Named Executive Officers.
(Footnotes continued on next page)
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<PAGE>
(Footnotes continued from previous page)
(4) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant as determined by the Board of
Directors.
(5) The potential realizable value is calculated based on the term of the option
at its time of grant (seven years). It is calculated assuming that the fair
market value of Common Stock on the date of grant appreciates at the
indicated annual rate compounded annually for the entire term of the option
and that the option is exercised and sold on the last day of its term for
the appreciated stock price. These numbers are calculated based on the
requirements promulgated by the Securities and Exchange Commission and do
not reflect iVillage's estimate of future stock price growth.
FISCAL YEAR END OPTION VALUES
The following table provides certain summary information concerning stock
options held as of December 31, 1997 by each of the Named Executive Officers.
None of the Named Executive Officers exercised options in fiscal 1997.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED OPTIONS
AT FISCAL YEAR-END (#)(1)
------------------------------
NAME EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Candice Carpenter................................................................ -- 280,000
Nancy Evans...................................................................... -- --
Robert Levitan................................................................... -- --
Stephen Lake..................................................................... -- 175,000
Steven Elkes..................................................................... 15,000 85,000
</TABLE>
- ---------------------------
(1) All of the options have an exercise price equal to the fair market value of
iVillage's Common Stock as of December 31, 1997 as determined by the Board
of Directors. None of the Named Executive Officers held in-the-money options
as of December 31, 1997.
STOCK INCENTIVE PLANS
1995 AMENDED AND RESTATED EMPLOYEE STOCK OPTION PLAN
iVillage's 1995 Amended and Restated Employee Stock Option Plan (the "1995
Plan") provides for the grant of incentive stock options to employees (including
employee directors) and non-qualified stock options to employees, nonemployee
directors and consultants. A total of 4,540,500 shares of Common Stock have been
reserved for issuance pursuant to the 1995 Plan. As of September 30, 1998,
125,000 shares had been issued upon the exercise of stock options granted under
the 1995 Plan and 4,514,096 shares were subject to outstanding options. The 1995
Plan is administered by the Board of Directors and the Compensation Committee
thereof. Options granted under the 1995 Plan will vest as determined by the
Board, and may accelerate and become fully vested in the event of an acquisition
of iVillage if so determined. The exercise price of options granted under the
1995 Plan will be as determined by the Board, although the exercise price of
incentive stock options must be at least equal to the fair market value of
iVillage's Common Stock on the date of grant. The Board of Directors may amend
or modify the 1995 Plan at any time. The 1995 Plan will terminate in October
2005, unless terminated earlier by the Board of Directors.
1997 AMENDED AND RESTATED ACQUISITION STOCK OPTION PLAN
iVillage's 1997 Amended and Restated Acquisition Stock Option Plan (the
"1997 Plan") provides for the grant of incentive stock options to employees
(including employee directors) and non-qualified stock options to employees,
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nonemployee directors and consultants. A total of 1,082,180 shares of Common
Stock have been reserved for issuance pursuant to the 1997 Plan. As of
September 30, 1998, no shares had been issued upon the exercise of stock options
granted under the 1997 Plan and 1,082,180 shares were subject to outstanding
options. The 1997 Plan is administered by the Board of Directors and the
Compensation Committee thereof. Options granted under the 1997 Plan will vest as
determined by the Board, and may accelerate and become fully vested in the event
of an acquisition of iVillage if so determined. The exercise price of options
granted under the 1997 Plan will be as determined by the Board, although the
exercise price of incentive stock options must be at least equal to the fair
market value of iVillage's Common Stock on the date of grant. The Board of
Directors may amend or modify the 1997 Plan at any time. The 1997 Plan will
terminate in May 2007, unless terminated earlier by the Board of Directors.
1999 EMPLOYEE STOCK OPTION PLAN
iVillage intends to adopt the 1999 Employee Stock Option Plan (the "1999
Plan") which provides for the granting to employees of incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), and for the granting to employees and
consultants of nonstatutory stock options and stock purchase rights ("SPRs").
Unless terminated sooner, the 1999 Plan will terminate automatically in January
2009. Five percent of the shares of Common Stock outstanding at the end of each
prior fiscal year will be reserved for issuance pursuant to the 1999 Plan.
The 1999 Plan may be administered by the Board of Directors or a committee
of the Board (the "Administrator"), which Administrator shall, in the case of
options intended to qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Code, consist of two or more "outside
directors" within the meaning of Section 162(m). The Administrator has the power
to determine the terms of the options or SPRs granted, including, but not
limited to, the exercise price, the number of shares subject to each option or
SPR, the exercisability thereof, and the form of consideration payable upon such
exercise. In addition, the Board has the authority to amend, suspend or
terminate the 1999 Plan, provided that no such action may affect any share of
Common Stock previously issued and sold or any option previously granted under
the 1999 Plan.
Options and SPRs granted under the 1999 Plan are not generally transferable
by the optionee, other than by will or the laws of descent and distribution, and
each option and SPR is exercisable during the lifetime of the optionee only by
such optionee. Options granted under the 1999 Plan must generally be exercised
within three months of the end of optionee's status as an employee or consultant
of iVillage, or within twelve months after such optionee's termination by death
or disability, but in no event later than the expiration of the option's
ten-year term. In the case of SPRs, unless the Administrator determines
otherwise, the restricted stock purchase agreement shall grant iVillage a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with iVillage for any reason (including death or
disability). The purchase price for shares repurchased pursuant to the
restricted stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to iVillage. The repurchase option shall lapse at a rate determined by the
Administrator.
The exercise price of all incentive stock options granted under the 1999
Plan must be at least equal to the fair market value of the Common Stock on the
date of grant, unless adjusted by the Administrator to the fair market value on
the date of such adjustment if the fair market value of Common Stock shall have
declined since the date the option was granted. The exercise price of
nonstatutory stock options and SPRs granted under the 1999 Plan is determined by
the Administrator, but with respect to nonstatutory stock options intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code, the exercise price must at least be equal to the fair market value
of the Common Stock on the date of grant, unless adjusted by the Administrator
to the fair market value on the date of such adjustment if the fair market value
of iVillage's Common Stock shall have declined since the date the option was
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granted. With respect to any participant who owns stock possessing more than 10%
of the voting power of all classes of iVillage's outstanding capital stock or
any parent or subsidiary, the exercise price of any incentive stock option
granted must equal at least 110% of the fair market value on the grant date and
the term of such incentive stock option must not exceed five years. The term of
all other options granted under the 1999 Plan may not exceed ten years.
The 1999 Plan provides that in the event of a merger of iVillage with or
into another corporation, a sale of substantially all of iVillage's assets or a
like transaction involving iVillage, options may be granted with a per share
exercise price of less than fair market value on the date of the grant and each
option shall be assumed or an equivalent option substituted by the successor
corporation. If the outstanding options are not assumed or substituted as
described in the preceding sentence, the Administrator shall provide for the
optionee to have the right to exercise the option or SPR as to all of the
optioned stock, including shares as to which it would not otherwise be
exercisable. If the administrator makes an option or SPR exercisable in full in
the event of a merger or sale of assets, the administrator shall notify the
optionee that the option or SPR shall be fully exercisable for a period of 15
days from the date of such notice, and the option or SPR will terminate upon the
expiration of such period.
1999 DIRECTOR OPTION PLAN
iVillage intends to adopt the 1999 Director Option Plan (the "Director
Plan"), and will reserve a total of shares of Common Stock for issuance
thereunder. On the date of each year's annual stockholders meeting, commencing
with the 1999 annual meeting of stockholders, each nonemployee director will
automatically be granted a nonstatutory option to purchase 5,000 shares of
Common Stock, providing that he or she shall have served on the Board of
Directors for at least the preceding six months. The exercise price of each of
these options will be equal to fair market value of the Common Stock on the date
of grant. Each option granted under the Director Plan will vest on a cumulative
monthly basis over a four-year period. In the event of a change in control of
iVillage, including a merger of iVillage with or into another corporation, or
the sale of all or substantially all of the assets of iVillage, then all shares
subject to options granted under the Director Plan will become fully vested and
exercisable unless such options are assumed by the successor or acquiring
company. In the event that a nonemployee director is involuntarily terminated
following such an option assumption, such option becomes fully vested and
exercisable. The Director Plan will terminate in December 2009, unless
terminated earlier in accordance with the provisions of the Director Plan.
1999 EMPLOYEE STOCK PURCHASE PLAN
iVillage intends to adopt the 1999 Employee Stock Purchase Plan (the
"Purchase Plan"), and will reserve a total of shares of Common Stock
for issuance thereunder. No shares have been issued under the Purchase Plan to
date. The Purchase Plan, which is intended to qualify under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"), will be administered by
the Board of Directors of iVillage or by the Compensation Committee. Under the
Purchase Plan, iVillage will withhold a specified percentage (not to exceed 15%)
of each salary payment to participating employees over certain offering periods.
Any employee who is currently employed for at least 20 hours per week and for at
least five consecutive months in a calendar year, with or by iVillage or by a
majority-owned subsidiary of iVillage, will be eligible to participate in the
Purchase Plan. Unless the Board of Directors or its committee determines
otherwise, each offering period will run for 24 months and will be divided into
four consecutive purchase periods of approximately six months. The first
offering period and the first purchase period will commence three months from
the date of this prospectus. New 24-month offering periods will commence every
six months thereafter. In the event of a change in control of iVillage,
including a merger of iVillage with or into another corporation, or the sale of
all or substantially all of the assets of iVillage, the offering and purchase
periods then in progress will be shortened unless the rights to purchase stock
are assumed by the successor or acquiring company. The price at which Common
Stock will be purchased under the Purchase Plan is equal to 85% of the fair
market value of the Common Stock on the first
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<PAGE>
day of the applicable offering period or the last day of the applicable purchase
period, whichever is lower. Employees may end their participation in the
offering at any time during the offering period, and participation ends
automatically on termination of employment with iVillage. The maximum number of
shares that a participant may purchase on the last day of any offering period is
determined by dividing the payroll deductions accumulated during the purchase
period by the purchase price. However, no person may purchase shares under the
Purchase Plan to the extent such person would own 5% or more of the total
combined value or voting power of all classes of the capital stock of iVillage
or of any of its subsidiaries, or to the extent that such person's rights to
purchase stock under all employee stock purchase plans would accrue at a rate
that exceeds $25,000 worth of stock for any calendar year. The Board of
Directors may amend the Purchase Plan at any time. The Purchase Plan will
terminate in December 2009, unless terminated earlier in accordance with the
provisions of the Purchase Plan.
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CERTAIN TRANSACTIONS
In August 1995, iVillage issued to Candice Carpenter, Nancy Evans and
Robert Levitan 2,000,005, 1,000,000 and 250,000 shares of Common Stock,
respectively, at a purchase price of $.0005 per share. Ms. Carpenter and
Ms. Evans currently serve as officers and directors of iVillage.
In August 1995, iVillage entered into a promissory note agreement with AOL,
a principal stockholder of iVillage, whereby iVillage issued a note in the
principal amount of $500,000, with interest payable at the rate of 8% per annum
(the "August 1995 Note").
In September 1995, iVillage and AOL entered into a securities purchase
agreement pursuant to which (i) iVillage issued 1,000,000 shares of Series A
Convertible Preferred Stock to AOL in exchange for the cancellation of the
August 1995 Note and the payment by AOL to iVillage of $496,494 and (ii) AOL
agreed to make an additional loan to iVillage in the form of a Convertible
Secured Note in an aggregate principal amount not to exceed $1 million (the
"September 1995 Note"), whereby iVillage received $650,000. In connection with
such agreement, iVillage also issued to AOL a stock subscription warrant
representing the right to purchase 52,100 shares of iVillage's Series B
Convertible Preferred Stock at an exercise price of $2.50 per share. In February
1996, the September 1995 Note was cancelled in exchange for a new Convertible
Secured Note (the "February 1996 Note") in an aggregate principal amount not to
exceed $1.75 million, whereby iVillage received $1.1 million. Upon completion of
this offering, the Series A Convertible Preferred Stock will automatically
convert into an aggregate of 1,000,000 shares of Common Stock.
In September 1995, iVillage entered into an information provider agreement
with AOL, whereby AOL agreed to carry iVillage's programming material on AOL for
a period of one year. As a result of this agreement, AOL received a percentage
of iVillage's revenues and paid iVillage a usage fee based upon hours of
viewership of the iVillage site on the AOL network.
In April 1996, iVillage issued to AOL a Promissory Note (the "April 1996
Note") in the principal amount of $500,000 with interest payable at the rate of
10% per annum.
In May 1996, iVillage entered into another information provider agreement
with AOL, pursuant to which AOL agreed to carry up to four additional iVillage
channels for a period of two years. As an inducement to, and in consideration
of, AOL entering into such agreement, iVillage issued to AOL a warrant to
purchase 800,000 shares of Series B Convertible Preferred Stock at an exercise
price of $2.50 per share.
In May 1996, iVillage issued shares of Series B Convertible Preferred Stock
and Series B-1 Convertible Preferred Stock to certain investors, including AOL,
at a purchase price of $2.50 per share. iVillage issued to AOL 797,130 shares of
Series B Convertible Preferred Stock and 300,000 shares of Series B-1
Convertible Preferred Stock. iVillage issued such shares to AOL in exchange for
the cancellation of the February 1996 Note and the April 1996 Note. Upon
completion of this offering, the Series B Convertible Preferred Stock and
Series B-1 Convertible Preferred Stock will automatically convert into an
aggregate of 5,431,222 shares of Common Stock.
In February 1997, iVillage entered into a note and warrant purchase
agreement with AOL and several other investors. iVillage issued to AOL a
Convertible Secured Promissory Note (the "February 1997 Note") in an aggregate
principal amount of $900,000. In connection with the issuance of these notes,
iVillage issued a stock subscription warrant to AOL, representing the right to
purchase 200,625 shares of Series C Convertible Preferred Stock at an exercise
price of $1.954 per share.
In April 1997, iVillage issued to AOL a Convertible Secured Promissory Note
(the "April 1997 Note") in an aggregate principal amount of $1 million. In April
1997, AOL exchanged the February 1997 Note for an Amended and Restated
Convertible Secured Promissory Note in an aggregate principal amount of
approximately $1.3 million (the "Amended Note").
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In May 1997, iVillage issued shares of Series C Convertible Preferred Stock
to certain investors, including AOL, CIBC Wood Gundy Ventures, Inc., Cox
Interactive Media, Inc. and Rho Management Trust I, at a purchase price of
$1.954 per share. AOL converted the Amended Note and a portion of the April 1997
Note in an aggregate principal amount of $200,000 for 793,245 shares of Series C
Convertible Preferred Stock. Upon completion of this offering, the Series C
Convertible Preferred Stock will automatically convert into an aggregate of
13,193,445 shares of Common Stock.
NUMBER OF SHARES
OF SERIES C
NAME OF INVESTOR PREFERRED STOCK
- ---------------- ----------------
ENTITIES AFFILIATED WITH DIRECTORS
America Online, Inc............... 1,202,661
Rho Management Trust I............ 3,070,624
Cox Interactive Media, Inc........ 2,047,083
CIBC Wood Gundy Ventures, Inc..... 2,047,083
In connection with the acquisition of Health ResponseAbility Systems, Inc.
("HRS") in May 1997, iVillage issued to AOL 609,000 shares of Common Stock for
AOL's equity rights in HRS.
In July 1997, iVillage entered into an interactive services agreement with
AOL (the "AOL Agreement"), whereby iVillage received anchor tenant distribution
within the AOL service. The AOL Agreement supersedes any prior services
agreements between iVillage and AOL and expires February 28, 1999. However, both
parties have a right to extend the agreement for an additional year. In
consideration for AOL carrying certain channels of iVillage, iVillage received a
guaranty of a minimum number of impressions per year. iVillage is obligated to
pay AOL monthly payments and to make certain additional payments based on
revenues and to provide in-kind commitments to AOL. Lennert Leader, a director
of iVillage, currently serves as President of AOL Investments.
In July 1997, iVillage entered into a one-year agreement with Tenet
Healthcare Corporation ("Tenet"), a principal stockholder of iVillage, whereby
Tenet sponsored one of iVillage's channels and developed content for use on the
channel in exchange for a fee paid in quarterly installments.
In December 1997, AOL converted its April 1997 Note in an aggregate
principal amount of $800,000 into 409,416 shares of Series C Convertible
Preferred Stock.
In January 1998, iVillage entered into a shopping channel promotional
agreement with AOL (the "Shopping Channel Agreement"), whereby AOL agreed to
promote iVillage and its services on the AOL shopping channel and provide access
to iVillage's online sites. The Shopping Channel Agreement expires on
December 31, 1998. iVillage makes payments to AOL in monthly installments for
AOL's promotion of the Company.
In February 1998, iVillage issued 852,951 shares of Common Stock to Tenet.
In February 1998, March 1998 and May 1998, iVillage issued shares of
Series D Convertible Preferred Stock to certain entities affiliated with
directors of iVillage and certain 5% stockholders of iVillage at a purchase
price of $2.50 per share. The number of shares of Series D Convertible Preferred
Stock issued to each entity is set forth below. Upon completion of this
offering, the Series D Convertible Preferred Stock will automatically convert
into an aggregate of 13,000,000 shares of Common Stock.
NUMBER OF SHARES
OF SERIES D
NAME OF INVESTOR PREFERRED STOCK
- ---------------- ----------------
ENTITIES AFFILIATED WITH DIRECTORS
America Online, Inc............... 1,200,000
Rho Management Trust I............ 1,080,000
Cox Interactive Media, Inc........ 400,000
CIBC Wood Gundy Ventures, Inc..... 400,000
OTHER 5% STOCKHOLDERS
Tenet Healthcare Corporation...... 1,333,334
On June 5, 1998, Candice Carpenter executed a promissory note in favor of
iVillage (the "Note") for borrowings up to a maximum principal amount of
$500,000, of which $500,000 was outstanding at September 30, 1998. Subject to
prepayment or acceleration, any loans made to Ms. Carpenter under the Note
mature on December 31, 2001. Borrowings made under the Note bear interest at
5.58% per annum and is payable on an annual basis on December 31 of each year
commencing on December 31, 1998. The Note
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is secured by a pledge by Ms. Carpenter of 500,000 shares of Common Stock.
In November 1998, iVillage entered into a one-year content distribution
agreement with Cox Interactive Media ("Cox"), a principal stockholder of
iVillage, whereby iVillage agreed to provide content for Cox's Web sites in
return for displaying the iVillage logo on the Cox Web sites and establishing
links on Cox Web sites to iVillage's network. William L. Killen, Jr., a director
of iVillage, currently serves as Vice-President of New Media Development for
Cox.
In December 1998, iVillage issued shares of Series E Convertible Preferred
Stock to certain entities affiliated with directors of the Company and certain
5% stockholders of the Company at a purchase price of $2.85 per share. The
number of shares of Series E Convertible Preferred Stock issued to each entity
is set forth below. Upon completion of this offering, the Series E Convertible
Preferred Stock will automatically convert into an aggregate of 11,730,948
shares of Common Stock.
NUMBER OF SHARES
OF SERIES E
NAME OF INVESTOR PREFERRED STOCK
- ---------------- ----------------
ENTITIES AFFILIATED WITH DIRECTORS
America Online, Inc............... 701,754
Rho Management Trust I............ 477,079
Cox Interactive Media, Inc........ 289,473
CIBC Wood Gundy Ventures, Inc..... 281,271
OTHER 5% STOCKHOLDERS
Tenet Healthcare Corporation...... 701,754
On September 19, 1995, Candice Carpenter, Nancy Evans and Robert Levitan
(the "Depositors") and certain other stockholders executed a Voting Trust
Agreement (the "Voting Trust Agreement") whereby each deposited his or her
shares of Common Stock (the "Shares") with Ms. Carpenter, as trustee (the
"Trustee"), in exchange for the receipt of voting trust certificates. The Voting
Trust Agreement provides the Trustee with the unqualified right and power to
vote and to act in the same manner as if she was the absolute owner of the
Shares, except the Trustee has no rights with respect to any pledge or transfer
of the Shares. The Depositors are entitled to all distributions paid upon the
Common Stock and may transfer the voting trust certificates, subject to any
other agreement restricting their transfer. The Voting Trust Agreement may be
terminated by the Trustee 10 days after written notice of termination is mailed
to the Depositors or by written agreement among all the Depositors.
Pursuant to the Fourth Amended and Restated Stockholders' Agreement dated
December 4, 1998, the holders of iVillage's Preferred Stock agreed to vote their
shares to fix the number of directors at fifteen. Pursuant to this agreement,
the board was to consist of one director designated by the holders of iVillage's
Series A Convertible Preferred Stock; two directors to be designated by the
holders of iVillage's Series B Convertible Preferred Stock; two directors to be
designated by the holders of iVillage's Series C Convertible Preferred Stock;
one director to be designated by the holders of iVillage's Series D Convertible
Preferred Stock; one director to be designated by NBC; two directors to be
designated by Candice Carpenter, Nancy Evans and Robert Levitan; one director to
be designated jointly by the Chairman of the Board and all holders of iVillage's
outstanding capital stock; one director to be designated by Rho Management
Trust I; and two directors (or two-sevenths of the Board of Directors if the
Board consists of more than seven directors) to be designated by certain of the
stockholders each of whom hold at least two and one-half percent of the
outstanding capital stock of iVillage immediately prior to this offering, which
right to designate shall commence upon this offering for a period of six months
after this offering. The agreement terminates upon completion of an initial
public offering at an offering price to the public of not less than $3.93 per
share and with aggregate proceeds to iVillage of not less than $20,000,000.
iVillage has entered into indemnification agreements with its officers and
directors containing provisions which may require iVillage, among other things,
to indemnify its officers and directors against certain liabilities that may
arise by reason of their status or service as officers or directors (other than
liabilities arising from willful misconduct of a culpable nature) and to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to beneficial
ownership of the Common Stock, as of December 4, 1998 and as adjusted to reflect
the sale of Common Stock offered by iVillage hereby and conversion of all
outstanding shares of Convertible Preferred Stock into shares of Common Stock,
for (i) each person known by iVillage to beneficially own more than 5% of the
Common Stock, (ii) each director of iVillage, (iii) each Named Executive Officer
named in the Summary Compensation Table, and (iv) all directors and executive
officers of iVillage as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY
OWNED(1)
SHARES -------------------------
BENEFICIALLY PRIOR TO AFTER
OWNED OFFERING OFFERING
------------ ---------- ----------
<S> <C> <C> <C>
NAME OF BENEFICIAL OWNER(1)
America Online, Inc.(2) ................................................ 7,089,524 13.7%
22000 AOL Way
Dulles, Virginia 20166-9323
CIBC Wood Gundy Ventures, Inc. ......................................... 2,728,354 5.4
425 Lexington Avenue
New York, New York 10017
Cox Interactive Media, Inc. ............................................ 2,736,556 5.4
1400 Lake Hearn Drive
Atlanta, Georgia 30319
Rho Management Trust I ................................................. 4,627,703 9.1
767 Fifth Avenue
New York, New York 10153
Tenet Healthcare Corporation ........................................... 2,888,039 5.7
3820 State Street
Santa Barbara, California 93105
Candice Carpenter(3).................................................... 2,070,005 4.1
Nancy Evans(4).......................................................... 1,000,000 2.0
Habib Kairouz(5)........................................................ 4,627,703 9.1
William L. Killen, Jr.(6)............................................... 2,736,556 5.4
Lori Koffman(7)......................................................... 2,728,354 5.4
Lennert J. Leader(8) ................................................... 7,089,524 13.7
Michael Levy(9)......................................................... 100,000 *
Philip Schlein(10)...................................................... 33,000 *
Steven Elkes(11)........................................................ 32,500 *
Stephen Lake(12)........................................................ 43,750 *
Robert Levitan(13)...................................................... 362,500 *
All directors and executive officers as a group (13 persons)(14)........ 20,385,142 39.2
</TABLE>
- ------------------------------
* Represents beneficial ownership of less than one percent of the Common
Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power
with respect to the securities. The address for each listed director and
officer is c/o iVillage Inc., 170 Fifth Avenue, New York, New York 10010.
Except as indicated by footnote, and subject to applicable community
(Footnotes continued on next page)
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<PAGE>
(Footnotes continued from previous page)
property laws, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them. The number of shares of Common Stock
outstanding used in calculating the percentage for each listed person
includes the shares of Common Stock underlying options or warrants held by
such person that are exercisable within 60 days of December 4, 1998, but
excludes shares of Common Stock underlying options or warrants held by any
other person. Percentage of beneficial ownership is based on 50,692,771
shares of Common Stock outstanding as of December 4, 1998 (after giving
effect to the conversion of the Convertible Preferred Stock) and
shares of Common Stock outstanding after completion of this offering.
(2) Includes 1,052,725 shares of Common Stock issuable upon the exercise of
warrants.
(3) Includes 70,000 shares of Common Stock issuable upon the exercise of stock
options. Excludes 670,000 shares of Common Stock issuable upon the exercise
of stock options that do not vest within 60 days after December 4, 1998.
(4) Excludes 230,000 shares of Common Stock issuable upon the exercise of stock
options that do not vest within 60 days after December 4, 1998.
(5) Consists of 4,627,703 shares of Common Stock beneficially owned by Rho
Management Trust I. Mr. Kairouz disclaims beneficial ownership of the
shares of Common Stock beneficially owned by Rho Management Trust I.
(6) Consists of 2,736,556 shares of Common Stock beneficially owned by Cox
Interactive Media, Inc. Mr. Killen disclaims beneficial ownership of the
shares of Common Stock beneficially owned by Cox Interactive Media, Inc.
(7) Consists of 2,728,354 shares of Common Stock beneficially owned by CIBC
Wood Gundy Ventures, Inc. Ms. Koffman disclaims beneficial ownership of the
shares of Common Stock beneficially owned by CIBC Wood Gundy Ventures, Inc.
(8) Consists of 7,089,524 shares of Common Stock beneficially owned by America
Online, Inc., including 1,052,725 shares of Common Stock issuable upon the
exercise of warrants. Mr. Leader disclaims beneficial ownership of the
shares of Common Stock beneficially owned by America Online, Inc.
(9) Consists of 100,000 shares of Common Stock issuable upon the exercise of
stock options.
(10) Consists of 33,000 shares of Common Stock issuable upon the exercise of
stock options. Excludes 42,000 shares of Common Stock issuable upon the
exercise of stock options that do not vest within 60 days after
December 4, 1998.
(11) Consists of 32,500 shares of Common Stock issuable upon the exercise of
stock options. Excludes 117,500 shares of Common Stock issuable upon the
exercise of stock options that do not vest within 60 days of December 4,
1998.
(12) Consists of 43,750 shares of Common Stock issuable upon the exercise of
stock options. Excludes 156,250 shares of Common Stock issuable upon the
exercise of stock options that do not vest within 60 days after
December 4, 1998.
(13) Consists of 250,000 shares of Common Stock and 112,500 shares of Common
Stock issuable upon the exercise of stock options.
(14) See notes 3 through 10 above.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
iVillage's Amended and Restated Certificate of Incorporation, which will
become effective upon the closing of this offering, authorizes the issuance of
up to 65,000,000 shares of Common Stock, par value $0.0005 per share, and
5,000,000 shares of preferred stock, par value $0.0005 per share, the rights and
preferences of which may be established from time to time by iVillage's Board of
Directors. As of December 4, 1998, 6,337,156 shares of Common Stock were
outstanding and 43,702,139 shares of Convertible Preferred Stock convertible
into 44,355,615 shares of Common Stock upon the completion of this offering were
issued and outstanding. As of December 4, 1998, iVillage had 72 stockholders.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share on all
matters to be voted upon by the stockholders and there are no cumulative voting
rights. Subject to preferences to which holders of Preferred Stock issued after
the sale of the Common Stock offered hereby may be entitled, holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. Please see "Dividend Policy". In the event of a liquidation,
dissolution or winding up of iVillage, holders of Common Stock would be entitled
to share in iVillage's assets remaining after the payment of liabilities and the
satisfaction of any liquidation preference granted the holders of any
outstanding shares of Preferred Stock. Holders of Common Stock have no
preemptive or conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are, and the shares of Common Stock offered
by iVillage in this offering, when issued and paid for, will be, fully paid and
nonassessable. The rights, preferences and privileges of the holders of Common
Stock are subject to, and may be adversely affected by the rights of the holders
of shares of any series of Preferred Stock, which iVillage may designate in the
future.
PREFERRED STOCK
Upon the closing of this offering, the Board of Directors will be
authorized, subject to any limitations prescribed by law, without stockholder
approval, from time to time to issue up to an aggregate of 5,000,000 shares of
Preferred Stock, $0.0005 par value per share, in one or more series, each of
such series to have such rights and preferences, including voting rights,
dividend rights, conversion rights, redemption privileges and liquidation
preferences, as shall be determined by the Board of Directors. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of holders of any Preferred Stock that may be issued in the future.
Issuance of Preferred Stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire a majority of the outstanding voting
stock of iVillage. iVillage has no present plans to issue any shares of
Preferred Stock.
WARRANTS
Upon the completion of this offering, iVillage will have outstanding
warrants to purchase 1,277,996 shares of Common Stock at a weighted average
exercise price of $2.18 per share. These warrants have net exercise provisions
under which the holder may, in lieu of payment of the exercise price in cash,
surrender the warrant and receive a net amount of shares, based on their fair
market value of iVillage's Common Stock at the time of the exercise of the
warrant, after deducting the aggregate exercise price. These warrants expire on
dates ranging from September 2000 to May 2003.
REGISTRATION RIGHTS
Pursuant to the terms of the Fourth Amended and Restated Rights Agreement,
as amended (the "Registration Rights Agreement"), after the closing of the
offering, the holders of 40% of the outstanding shares of Common Stock
(including shares issuable upon the exercise of certain warrants to purchase
Common Stock) will be entitled to certain demand registration rights with
respect to the registration of such shares under the Securities Act, subject to
certain limitations, including the
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inclusion thereon of a minimum number of shares held by the initiating holders
of the demand registration. iVillage is not required to effect (i) more than
four such registrations pursuant to such demand registration rights; (ii) a
registration during any period in which any other registration statement has
been filed or has been declared effective within the prior 180 days; (iii) a
registration within 60 days following the determination of the Board of
Directors of iVillage to file a registration statement; or (iv) a registration
for a period not to exceed 60 days, if the Board of Directors of iVillage has
made a good faith determination that it would be seriously detrimental to
iVillage or the holders of registration rights for a registration statement to
be filed. In addition, one stockholder is entitled to one separate demand
registration right with respect to the registration of its shares of Common
Stock under the Securities Act, subject to the limitations set forth above.
Furthermore, pursuant to the terms of the Registration Rights Agreement, after
the closing of this offering, the holders of 51,870,766 shares of Common Stock
(including shares issuable upon the exercise of certain warrants to purchase
Common Stock) will be entitled to certain piggyback registration rights in
connection with any registration by iVillage of its securities for its own
account or the account of other securityholders. In the event that iVillage
proposes to register any shares of Common Stock under the Securities Act, the
holders of such piggyback registration rights are entitled to receive notice of
such registration and are entitled to include their shares therein, subject to
certain limitations.
At any time after iVillage becomes eligible to file a registration
statement on Form S-3, certain holders of demand registration rights may require
iVillage to file an unlimited number of registration statements on Form S-3
under the Securities Act with respect to their shares of Common Stock. iVillage
is not required to effect more than one such registration in any six-month
period.
Each of the foregoing registration rights is subject to certain conditions
and limitations, among them the right of the underwriters in any underwritten
offering to limit the number of shares of Common Stock held by securityholders
with registration rights to be included in such registration. The registration
rights with respect to any holder thereof terminate when the shares held by such
holder may be sold under Rule 144 during any three-month period. iVillage is
generally required to bear all of the expenses of all such registrations, except
underwriting discounts and commissions. Registration of any of the shares of
Common Stock held by securityholders with registration rights would result in
such shares becoming freely tradable without restriction under the Securities
Act immediately upon effectiveness of such registration. The Registration Rights
Agreement also contains a commitment of iVillage to indemnify the holders of
registration rights, subject to certain limitations.
CERTAIN CHARTER AND BYLAWS PROVISIONS AND DELAWARE ANTI-TAKEOVER STATUE
Certain provisions of iVillage's Amended and Restated Certificate of
Incorporation and Bylaws may have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from attempting to
acquire, control of iVillage. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of iVillage's Common
Stock. Certain of these provisions allow iVillage to issue Preferred Stock
without any vote or further action by the stockholders, eliminate the right of
stockholders to act by written consent without a meeting and eliminate
cumulative voting in the election of directors. These provisions may make it
more difficult for stockholders to take certain corporate actions and could have
the effect of delaying or preventing a change in control of iVillage. In
addition, iVillage is subject to Section 203 of the Delaware General Corporation
Law which, subject to certain exceptions, prohibits a Delaware corporation from
engaging in any business combination with any interested stockholder, unless:
(i) prior to such date, the Board of Directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder; (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced, excluding
for purposes of determining the number of shares outstanding those shares owned
by persons who are directors and also officers and by employee stock plans in
which employee participants do not have the right to
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determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or (iii) on or subsequent to such date,
the business combination is approved by the Board of Directors and authorized at
an annual or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder.
iVillage's Amended and Restated Certificate of Incorporation provides that,
upon the closing of this offering, the Board of Directors will be divided into
three classes of directors with each class serving a staggered three-year term.
The classification system of electing directors may tend to discourage a third
party from making a tender offer or otherwise attempting to obtain control of
iVillage and may maintain the incumbency of the Board of Directors, as the
classification of the Board of Directors generally increases the difficulty of
replacing a majority of the directors. iVillage's Amended and Restated
Certificate of Incorporation eliminates the right of stockholders to act by
written consent without a meeting and iVillage's Bylaws eliminate the right of
stockholders to call special meetings of stockholders. The Amended and Restated
Certificate of Incorporation and Bylaws do not provide for cumulative voting in
the election of directors. The authorization of undesignated Preferred Stock
makes it possible for the Board of Directors to issue Preferred Stock with
voting or other rights or preferences that could impede the success of any
attempt to change control of iVillage. These and other provisions may have the
effect of deferring hostile takeovers or delaying changes in control or
management of iVillage. The amendment of any of these provisions would require
approval by holders of at least 66 2/3% of the outstanding Common Stock.
On September 19, 1995, Candice Carpenter, Nancy Evans and Robert Levitan
(the "Depositors") executed a Voting Trust Agreement (the "Voting Trust
Agreement") whereby each deposited his or her respective shares of Common Stock
(the "Shares") with Ms. Carpenter, as trustee (the "Trustee"), in exchange for
the receipt of voting trust certificates. The Voting Trust Agreement provides
the Trustee with the unqualified right and power to vote and to act in the same
manner as if she was the absolute owner of the Shares, except the Trustee has no
rights with respect to any pledge or transfer of the Shares. The Depositors are
entitled to all distributions paid upon the Common Stock and may transfer the
voting trust certificates, subject to any other agreement restricting their
transfer. The Voting Trust Agreement may be terminated by the Trustee 10 days
after written notice of termination is mailed to the Depositors or by written
agreement among all the Depositors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is
.
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering there has been no public market for iVillage's
Common Stock. Future sales of substantial amounts of iVillage's Common Stock in
the public market or the availability of such shares for sale, could adversely
affect the prevailing market price and the ability of iVillage to raise equity
capital in the future.
Upon the closing of this offering, iVillage will have an aggregate of
shares of Common Stock outstanding, assuming no exercise of the
underwriters' over-allotment option and no exercise of outstanding options to
purchase Common Stock.
Of the shares of Common Stock to be outstanding upon the
closing of this offering, the shares offered hereby will be
eligible for immediate sale in the public market without restriction, unless the
shares are purchased by "affiliates" of iVillage within the meaning of Rule 144
promulgated under the Securities Act of 1933. The remaining shares
of Common Stock held by existing stockholders upon the closing of this offering
will be "restricted securities", as that term is defined in Rule 144. Restricted
securities may be sold in the public market only if registered or if they
qualify for an exemption from registration under Rules 144, 144(k) or 701 under
the Securities Act. All of our directors, officers and stockholders have agreed
that, subject to certain limited exceptions, they will not sell, directly or
indirectly, any Common Stock without the prior consent of the representatives of
Goldman, Sachs & Co. for a period of 180 days from the date of this prospectus.
Subject to the provisions of Rules 144, 144(k) and 701, additional shares
totaling 50,692,771 will be available for sale in the public market (subject in
the case of shares held by affiliates to compliance with certain volume
restrictions) 180 days from the date of this prospectus.
In general, under Rule 144, a person (or persons whose shares are
aggregated), including an affiliate who has beneficially owned shares for at
least one year is entitled to sell within any three-month period a number of
shares that does not exceed the greater of (i) 1% of the number of shares of
Common Stock or (ii) the average weekly trading volume of the Common Stock
during the four calendar weeks preceding the date on which notice of such sale
is filed, subject to certain restrictions. In addition, a person who is not
deemed to have been an affiliate of iVillage at any time during the three months
preceding a sale, and who has beneficially owned the shares proposed to be sold
for at least two years would be entitled to sell such shares under Rule 144(k)
without regard to the requirements described above. To the extent that shares
were acquired from an affiliate of iVillage, such affiliates' holding period for
the purpose of effecting a sale under Rule 144 commences on the date of transfer
from the affiliate. As of September 30, 1998, there were outstanding options to
purchase 5,596,276 shares of Common Stock which will be eligible for sale in the
public market from time to time subject to the expiration of lock-up agreements
and Rule 144. As of September 30, 1998, there were outstanding warrants to
purchase 1,277,996 shares of Common Stock which will be eligible for sale in the
public market from time to time subject to the expiration of lock-up agreements
and Rule 144. These stock options and warrants generally have exercise prices
below the current market price of the Common Stock. The possible sale of a
significant number of shares by the holders thereof may have an adverse effect
on the price of the Common Stock.
iVillage is unable to estimate the number of shares that will be sold under
Rule 144, as this will depend on the market price for the Common Stock of
iVillage, the personal circumstances of the sellers and other factors. Prior to
this offering, there has been no public market for the Common Stock, and there
can be no assurance that a significant public market for the Common Stock will
develop or be sustained after this offering. Any future sale of substantial
amounts of Common Stock in the open market may adversely affect the market price
of the Common Stock offered hereby.
iVillage will file a registration statement on Form S-8 under the
Securities Act to register the shares of Common Stock reserved for
issuance under its 1995 Amended
62
<PAGE>
and Restated Employee Stock Option Plan, 1997 Stock Acquisition Plan, 1999
Employee Stock Option Plan, 1999 Director Option Plan and 1999 Employee Stock
Purchase Plan. As a result, shares issued upon exercise of stock options granted
under the Stock Option Plan will be available, subject to special rules for
affiliates, for resale in the public market after the effective date of such
registration statement. Please see "Management--Stock Incentive Plans".
Pursuant to the Fourth Amended and Restated Registration Rights Agreement,
after the closing of this offering, subject to certain conditions, the holders
of 47,120,561 shares of outstanding Common Stock (including shares issuable upon
the exercise of certain warrants to purchase Common Stock) will be entitled to
certain demand registration rights and the holders of 51,870,766 shares of
outstanding Common Stock (including shares issuable upon the exercise of certain
warrants to purchase Common Stock) will be entitled to certain piggyback
registration rights. Registration of such shares under the Securities Act would
result in such shares becoming freely tradable without restriction under the
Securities Act (except for shares purchased by Affiliates). Please see
"Description of Capital Stock--Registration Rights".
Pursuant to the Fourth Amended and Restated Stockholders' Agreement dated
as of December 4, 1998, subject to certain conditions, Candice Carpenter, Nancy
Evans and Robert Levitan and the other stockholders of iVillage are limited in
their ability to transfer their Common Stock and/or Preferred Stock of iVillage
prior to the earlier to occur of this offering or a change of control.
iVillage will issue 3,684,210 shares to NBC over the next three years
pursuant to iVillage's agreement with NBC. Such shares will be entitled to
certain demand and piggyback registration rights.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
iVillage by Orrick, Herrington & Sutcliffe LLP, New York, New York. Certain
legal matters will be passed upon for the Underwriters by Hale and Dorr LLP,
Boston, Massachusetts. A partner of Orrick, Herrington & Sutcliffe LLP owns
13,229 shares of iVillage's Series C and Series E Convertible Preferred Stock.
EXPERTS
The consolidated balance sheets of iVillage Inc. as of December 31, 1996
and 1997 and the consolidated statements of operations, stockholders' equity and
cash flows for the two years ended December 31, 1997 and the period from
July 1, 1995 (inception) to December 31, 1995 has been included in reliance on
the report of PricewaterhouseCoopers LLP, iVillage's independent accountants,
given on the authority of that firm as experts in accounting and auditing.
63
<PAGE>
AVAILABLE INFORMATION
iVillage has filed with the Securities and Exchange Commission, a
Registration Statement on Form S-1 (including the exhibits and schedules
thereto) under the Securities Act with respect to the shares to be sold in this
offering. This prospectus does not contain all the information set forth in the
Registration Statement. For further information with respect to iVillage and the
shares to be sold in this offering, reference is made to the Registration
Statement. Statements contained in this prospectus as to the contents of any
contract, agreement or other document referred to, are not necessarily complete,
and in each instance reference is made to the copy of such contract, agreement
or other document filed as an exhibit to the Registration Statement, each
statement being qualified in all respects a more complete description of the
matter involved, and each such statement shall be deemed by such reference.
You may read and copy all or any portion of the Registration Statement or
any reports, statements or other information iVillage files at the Commission's
public reference room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.C.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You can request copies of
these documents upon payment of a duplicating fee, by writing to the Commission.
Please call the Commission at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. iVillage's Commission filings,
including the Registration Statement will also be available to you on the
Commission's Internet site (http://www.sec.gov).
iVillage intends to send to its stockholders annual reports containing
audited consolidated financial statements and quarterly reports containing
unaudited Consolidated Financial Statements for the first three quarters of each
fiscal year.
64
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE(S)
--------
<S> <C>
Report of Independent Accountants..................................................................... F-2
Consolidated Balance Sheets at December 31, 1996 and 1997 and September 30, 1998 (unaudited).......... F-3
Consolidated Statements of Operations for the period from July 1, 1995 (inception) to December 31,
1995 and the years ended December 31, 1996 and 1997 and the nine months ended September 30, 1997 and
1998 (unaudited).................................................................................... F-4
Consolidated Statements of Stockholders' Equity for the period from July 1, 1995 (inception) to
December 31, 1995 and the years ended December 31, 1996 and 1997 and the nine months ended
September 30, 1998 (unaudited)...................................................................... F-5
Consolidated Statements of Cash Flows for the period from July 1, 1995 (inception) to December 31,
1995 and the years ended December 31, 1996 and 1997 and the nine months ended September 30, 1997 and
1998 (unaudited).................................................................................... F-6
Notes to Consolidated Financial Statements............................................................ F-7-F-20
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
iVillage Inc. and Subsidiaries:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholders' equity and cash flows
present fairly, in all material respects, the financial position of iVillage
Inc. and Subsidiaries (the "Company") at December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1997 and the period from July 1, 1995 (inception)
to December 31, 1995, in conformity with generally accepted accounting
principles. In addition, in our opinion, the accompanying financial statement
schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. These financial statements and financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
New York, New York
July 17, 1998
F-2
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PRO
FORMA
DECEMBER 31, AS OF
---------------------------- SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1998 1998
------------ ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash............................................... $ 2,101,779 $ 4,334,721 $ 8,767,570 $ 40,767,570
Accounts receivable, less allowance of $0, $279,839
and $723,074 (unaudited), respectively........... 535,620 2,199,520 2,854,181 2,854,181
Other current assets............................... 106,005 300,786 638,309 638,309
------------ ------------ ------------- -------------
Total current assets........................... 2,743,404 6,835,027 12,260,060 44,260,060
Fixed assets, net.................................. 660,831 3,802,823 5,675,689 5,675,689
Prepaid distribution costs......................... 1,034,838 -- -- --
Goodwill and intangible assets, net................ 557,597 5,598,233 5,366,506 5,366,506
------------ ------------ ------------- -------------
Total assets................................... $ 4,996,670 $ 16,236,083 $ 23,302,255 $ 55,302,255
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C>
Current liabilities:
Accounts payable and accrued expenses.............. $ 1,378,008 $ 3,989,945 $ 8,951,322 $ 8,951,322
Capital leases payable............................. -- 247,943 217,136 217,136
Deferred revenue................................... 294,998 1,004,199 2,479,777 2,479,777
Other current liabilities.......................... 64,236 332,531 326,582 326,582
------------ ------------ ------------- -------------
Total current liabilities...................... 1,737,242 5,574,618 11,974,817 11,974,817
Capital leases payable, net of current portion..... -- 139,346 18,072 18,072
------------ ------------ ------------- -------------
Total liabilities.............................. 1,737,242 5,713,964 11,992,889 11,992,889
------------ ------------ ------------- -------------
Minority interest.................................. -- -- 220,344 220,344
Commitments
Stockholders' equity:
Series A convertible preferred stock--par value
$.0005, 1,000,000 shares authorized, issued and
outstanding...................................... 500 500 500 --
Series B and B-1 convertible preferred stock--par
value $.0005, 5,929,846 shares authorized,
4,777,746 issued and outstanding................. 2,389 2,389 2,389 --
Series C convertible preferred stock--par value
$.0005, 13,528,765 authorized, 13,193,445 shares
issued and outstanding shares.................... -- 6,597 6,597 --
Series D convertible preferred stock--par value
$.0005, 13,000,000 shares authorized, issued and
outstanding (unaudited).......................... -- -- 6,500 --
Series E convertible preferred stock--par value
$.0005, 12,280,702 shares authorized, none issued
and outstanding (unaudited)...................... -- -- -- --
Common stock, par value $.0005, 25,000,000,
35,000,000 and 45,000,000 (unaudited) shares
authorized, 3,450,005, 5,459,205 and 6,337,156
(unaudited), issued and outstanding at
December 31, 1996 and 1997 and September 30,
1998, respectively, 65,000,000 shares authorized,
50,692,771 issued and outstanding pro forma
(unaudited)...................................... 1,725 2,730 3,169 25,347
Additional paid-in capital......................... 14,575,067 43,196,116 76,783,926 108,777,734
Accumulated deficit................................ (11,320,253) (32,621,213) (65,070,047) (65,070,047)
Stockholders' notes receivable..................... -- (65,000) (565,000) (565,000)
Unearned compensation.............................. -- -- (79,012) (79,012)
------------ ------------ ------------- -------------
Total stockholders' equity..................... 3,259,428 10,522,119 11,089,022 43,089,022
------------ ------------ ------------- -------------
Total liabilities and stockholders' equity..... $ 4,996,670 $ 16,236,083 $ 23,302,255 $ 55,302,255
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
JULY 1, 1995
(INCEPTION) NINE MONTHS ENDED
TO YEAR ENDED DECEMBER 31, SEPTEMBER 30,
DECEMBER 31, --------------------------- ----------------------------
1995 1996 1997 1997 1998
------------ ----------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................................ $ -- $ 732,045 $ 6,018,696 $ 3,661,850 $ 9,125,692
------------ ----------- ------------ ------------ ------------
Operating expenses:
Production, content and product....... 629,041 4,521,410 7,606,355 5,156,952 10,407,508
Sales and marketing................... 329,213 2,708,779 8,770,581 5,399,027 19,930,698
General and administrative............ 672,572 3,212,820 10,726,844 7,409,857 11,856,625
------------ ----------- ------------ ------------ ------------
Total operating expenses............ 1,630,826 10,443,009 27,103,780 17,965,836 42,194,831
------------ ----------- ------------ ------------ ------------
Loss from operations.................... (1,630,826) (9,710,964) (21,085,084) (14,303,986) (33,069,139)
Interest (expense) income, net.......... (6,745) 28,282 (215,876) (205,426) 418,608
Loss on sale of Web site................ -- -- -- -- (164,558)
Minority interest....................... -- -- -- -- 366,255
------------ ----------- ------------ ------------ ------------
Net loss................................ $(1,637,571) $(9,682,682) $(21,300,960) $(14,509,412) $(32,448,834)
------------ ----------- ------------ ------------ ------------
------------ ----------- ------------ ------------ ------------
Basic and diluted net loss per share.... $ (0.50) $ (2.97) $ (4.55) $ (3.28) $ (5.21)
------------ ----------- ------------ ------------ ------------
------------ ----------- ------------ ------------ ------------
Weighted average shares of common stock
outstanding used in computing basic
and diluted net loss per share........ 3,250,005 3,262,060 4,682,872 4,421,250 6,232,500
------------ ----------- ------------ ------------ ------------
------------ ----------- ------------ ------------ ------------
Pro forma basic and diluted net loss per
share................................. $ (0.88) $ (0.64)
------------ ------------
------------ ------------
Shares of common stock used in computing
pro forma basic and diluted net loss
per share............................. 24,307,540 50,506,297
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CONVERTIBLE CONVERTIBLE CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK COMMON
SERIES A SERIES B AND B-1 SERIES C SERIES D STOCK
----------------- ----------------- ------------------ ------------------ ---------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
--------- ------ --------- ------ ---------- ------ ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1995 (inception)
Issuance of common stock to founders....... 3,250,005
Issuance of Series A convertible preferred
stock..................................... 1,000,000 $500
Issuance of warrants in connection with
interest on convertible notes.............
Net loss...................................
--------- ---- --------- ------ ---------- ------ ---------- ------ ---------
Balance at December 31, 1995............... 1,000,000 500 3,250,005
Issuance of warrants in connection with
interest on convertible notes.............
Issuance of common stock in connection with
acquisition............................... 200,000
Issuance of Series B and Series B-1
convertible preferred stock............... 4,777,746 $2,389
Issuance of stock options to consultants
and directors.............................
Issuance of warrants to AOL for channel
services..................................
Net loss...................................
--------- ---- --------- ------ ---------- ------ ---------- ------ ---------
Balance at December 31, 1996............... 1,000,000 500 4,777,746 2,389 3,450,005
Issuance of common stock in connection with
exercise of stock options................. 100,000
Notes receivable due from stockholders in
connection with exercise of options.......
Issuance of Series C convertible preferred
stock..................................... 13,193,445 $6,597
Issuance of warrants in connection with
interest on convertible notes.............
Issuance of common stock and options in
connection with business acquisitions..... 1,909,200
Issuance of stock options to consultants
and directors.............................
Net loss...................................
--------- ---- --------- ------ ---------- ------ ---------- ------ ---------
Balance at December 31, 1997............... 1,000,000 500 4,777,746 2,389 13,193,445 6,597 5,459,205
Issuance of common stock for cash
(unaudited)............................... 852,951
Issuance of Series D convertible preferred
stock (unaudited)......................... 13,000,000 6,500
Issuance of stock options to consultants
and directors (unaudited).................
Issuance of common stock in connection with
exercise of stock options (unaudited)..... 25,000
Issuance of stock options in connection
with business transactions (unaudited)....
Officer's loan receivable (unaudited)......
Net loss (unaudited).......................
--------- ---- --------- ------ ---------- ------ ---------- ------ ---------
Balance at September 30, 1998
(unaudited)............................... 1,000,000 $500 4,777,746 $2,389 13,193,445 $6,597 13,000,000 $6,500 6,337,156
--------- ---- --------- ------ ---------- ------ ---------- ------ ---------
--------- ---- --------- ------ ---------- ------ ---------- ------ ---------
<CAPTION>
COMMON
STOCK ADDITIONAL STOCKHOLDERS'
------ PAID IN NOTES UNEARNED ACCUMULATED
AMOUNT CAPITAL RECEIVABLE COMPENSATION DEFICIT TOTAL
------ ----------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1995 (inception)
Issuance of common stock to founders....... $1,625 $ 1,625
Issuance of Series A convertible preferred
stock..................................... $ 999,500 1,000,000
Issuance of warrants in connection with
interest on convertible notes............. 6,745 6,745
Net loss................................... $ (1,637,571) (1,637,571)
------ ----------- --------- -------- ------------ ------------
Balance at December 31, 1995............... 1,625 1,006,245 (1,637,571) (629,201)
Issuance of warrants in connection with
interest on convertible notes............. 30,101 30,101
Issuance of common stock in connection with
acquisition............................... 100 499,900 500,000
Issuance of Series B and Series B-1
convertible preferred stock............... 11,941,976 11,944,365
Issuance of stock options to consultants
and directors............................. 62,007 62,007
Issuance of warrants to AOL for channel
services.................................. 1,034,838 1,034,838
Net loss................................... (9,682,682) (9,682,682)
------ ----------- --------- -------- ------------ ------------
Balance at December 31, 1996............... 1,725 14,575,067 (11,320,253) 3,259,428
Issuance of common stock in connection with
exercise of stock options................. 50 99,950 100,000
Notes receivable due from stockholders in
connection with exercise of options....... $ (65,000) (65,000)
Issuance of Series C convertible preferred
stock..................................... 24,823,398 24,829,995
Issuance of warrants in connection with
interest on convertible notes............. 334,339 334,339
Issuance of common stock and options in
connection with business acquisitions..... 955 3,297,967 3,298,922
Issuance of stock options to consultants
and directors............................. 65,395 65,395
Net loss................................... (21,300,960) (21,300,960)
------ ----------- --------- -------- ------------ ------------
Balance at December 31, 1997............... 2,730 43,196,116 (65,000) (32,621,213) 10,522,119
Issuance of common stock for cash
(unaudited)............................... 426 1,666,240 1,666,666
Issuance of Series D convertible preferred
stock (unaudited)......................... 31,481,978 31,488,478
Issuance of stock options to consultants
and directors (unaudited)................. 119,306 $(79,012) 40,294
Issuance of common stock in connection with
exercise of stock options (unaudited)..... 13 42,487 42,500
Issuance of stock options in connection
with business transactions (unaudited).... 277,799 277,799
Officer's loan receivable (unaudited)...... (500,000) (500,000)
Net loss (unaudited)....................... (32,448,834) (32,448,834)
------ ----------- --------- -------- ------------ ------------
Balance at September 30, 1998
(unaudited)............................... $3,169 $76,783,926 $(565,000) $(79,012) $(65,070,047) $(11,089,022)
------ ----------- --------- -------- ------------ ------------
------ ----------- --------- -------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
JULY 1, 1995
(INCEPTION) YEAR ENDED NINE MONTHS ENDED
TO DECEMBER 31, SEPTEMBER 30,
DECEMBER 31, ---------------------------- ----------------------------
1995 1996 1997 1997 1998
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss............................. $(1,637,571) $ (9,682,682) $(21,300,960) $(14,509,412) $(32,448,834)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Expense recognized in connection
with issuance of warrants and
stock options.................. 6,745 92,108 1,434,572 1,409,209 218,093
Depreciation and amortization.... 17,252 108,956 2,886,256 2,230,798 4,044,309
Bad debt expense................. -- -- 746,589 550,000 455,000
Loss on sale..................... -- -- -- -- 164,558
Minority interest................ -- -- -- -- (366,255)
Changes in operating assets and
liabilities:
Accounts receivable............ -- (528,968) (2,410,489) (1,140,706) (1,097,896)
Other current assets........... (26,900) (71,787) (194,781) (91,971) (337,523)
Accounts payable and accrued
expenses..................... 255,616 1,034,070 2,609,437 175,480 3,459,616
Deferred revenue............... -- 294,998 709,201 146,395 1,475,578
Other liabilities.............. -- 64,236 268,295 105,302 (5,949)
------------ ------------ ------------ ------------ ------------
Net cash used in operating
activities................. (1,384,858) (8,689,069) (15,251,880) (11,124,905) (24,439,303)
------------ ------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchase of fixed assets............. (103,511) (665,148) (4,001,052) (3,822,055) (3,753,413)
Acquisitions of Web sites............ -- -- (2,865,000) (2,825,000) (520,000)
Proceeds from the sale of Web site... -- -- -- -- 600,000
------------ ------------ ------------ ------------ ------------
Net cash used in investing
activities................. (103,511) (665,148) (6,866,052) (6,647,055) (3,673,413)
------------ ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from convertible notes
payable............................ 1,150,000 1,800,000 3,775,000 3,775,000 --
Proceeds from issuance of common
stock.............................. -- -- 37,500 37,500 1,709,166
Proceeds from issuance of convertible
preferred stock, net............... 500,000 9,494,365 21,054,995 17,582,987 31,488,480
Principal payments on capital
leases............................. -- -- (516,621) (384,405) (152,081)
Stockholders' notes receivable....... -- -- -- -- (500,000)
------------ ------------ ------------ ------------ ------------
Net cash provided by
financing activities....... 1,650,000 11,294,365 24,350,874 21,011,082 32,545,565
------------ ------------ ------------ ------------ ------------
Net increase in cash for the period.... 161,631 1,940,148 2,232,942 3,239,122 4,432,849
Cash, beginning of period.............. -- 161,631 2,101,779 2,101,779 4,334,721
------------ ------------ ------------ ------------ ------------
Cash, end of period.................... $ 161,631 $ 2,101,779 $ 4,334,721 $ 5,340,901 $ 8,767,570
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Cash paid during the period for
interest............................. $ -- $ -- $ 66,223 $ 51,668 $ 30,374
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
Supplemental disclosure of non-cash
investing and financing activities:
During 1995, 1996 and 1997, certain convertible notes were converted into
preferred stock (see Note 8)
During December 1996, the Company acquired ParentsPlace.com in exchange
for the issuance of common stock (see Note 5)
During 1997, the Company entered in capital leases for computer equipment
totaling $1,015,460
During 1997, the Company acquired several Web site assets through the
issuance of stock (see Note 5)
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
iVillage Inc. was incorporated in the State of Delaware on June 8, 1995 and
commenced operations on July 1, 1995. iVillage and its subsidiaries ("iVillage"
or the "Company") is engaged in the development of programming material for
distribution through online service providers and the Internet and is involved
in the sale of products through its Web sites. The Company has sustained net
losses and negative cash flows from operations since its inception. The
Company's ability to meet its obligations in the ordinary course of business is
dependent upon its ability to establish profitable operations or raise
additional financing through public or private equity financings, collaborative
or other arrangements with corporate sources, or other sources of financing to
fund operations. During 1998, the Company has received additional financing of
approximately $65.2 million through the issuance of Common Stock, Series D and
Series E Convertible Preferred Stock (unaudited). Management believes that its
current funds will be sufficient to enable the Company to meet its planned
expenditures through at least December 31, 1998. If anticipated operating
results are not achieved, management has the intent and believes it has the
ability to delay or reduce expenditures so as not to require additional
financial resources, if such resources were not available on terms acceptable to
the Company.
The Company has a limited operating history and its prospects are subject
to the risks, expenses and uncertainties frequently encountered by companies in
the new and rapidly evolving markets for Internet products and services. These
risks include the failure to develop and extend the Company's online service
brands, the rejection of the Company's services by Web consumers, vendors and/or
advertisers, the inability of the Company to maintain and increase the levels of
traffic on its online services, as well as other risks and uncertainties. In the
event that the Company does not successfully implement its business plan,
certain assets may not be recoverable.
2. SIGNIFICANT ACCOUNTING POLICIES AND PROCEDURES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Intercompany balances and transactions have been
eliminated.
REVENUE RECOGNITION
To date, the Company's revenues have been derived primarily from the sale
of sponsorship and advertising contracts. Sponsorship revenues are derived
principally from contracts ranging from six to thirty-six months in which the
Company commits to provide sponsors enhanced promotional opportunities beyond
traditional banner advertising. Sponsorship agreements typically include the
delivery of impressions, exclusive relationships and the design and development
of customized bridge sites designed to enhance the promotional objective of the
sponsor. The portion of sponsorship revenues related to the delivery of
impressions are recognized ratably in the period in which the advertisement is
displayed provided that no significant Company obligations remain. To the extent
that minimum guaranteed page deliveries are not met, the Company defers
recognition of the corresponding revenues until the guaranteed page deliveries
are achieved. The portion of sponsorship revenues related to the up front
customized design work, as specified in the contract, is recognized in the
period in which the work is performed.
Advertising revenues are derived principally from short-term advertising
contracts in which the Company typically guarantees a minimum number of
impressions or pages to be delivered to users over a specified period of time
for a fixed fee. Advertising revenues are recognized ratably in the period in
which the advertisement is displayed, provided that no significant Company
obligations remain. To the extent that minimum guaranteed page deliveries are
not met, the Company defers recognition of the corresponding revenues until the
guaranteed page deliveries are achieved. Sponsorship and advertising revenues
were approximately 74% and 93% of total revenues for the years ended
December 31, 1996 and 1997, respectively.
F-7
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Sponsorship and advertising revenues include barter revenues, which is the
exchange by the Company of advertising space on the Company's Web sites for
reciprocal advertising space or traffic on other Web sites. Revenues from these
barter transactions are recorded as advertising revenues at the lower of the
estimated fair value of the advertisements received or delivered and are
recognized when the advertisements are run on the Company's Web sites. Barter
expenses are recorded when the Company's advertisements are run on the
reciprocal Web sites, which is typically in the same period as when
advertisements are run on the Company's Web sites. Barter revenues represented
1% and 12% of total revenues for the years ended December 31, 1996 and 1997,
respectively.
Usage revenues received from America Online, Inc. ("AOL"), which totaled
approximately $187,000 and $390,000 for the years ended December 31, 1996 and
1997, are derived from AOL customers visiting the Company's site on the AOL
online service and are recognized as they are earned (based upon visitations to
the site). As discussed in Note 4, the Company signed a new agreement with AOL
during 1997 which eliminated future usage revenues.
In 1996, no one advertiser accounted for greater than 10% of total
revenues. In 1997, revenues from the Company's five largest advertisers
accounted for approximately 26% of total revenues, however, no one advertiser
accounted for greater than 10% of total revenues. At December 31, 1996, four
customers each represented greater than 10% of the net accounts receivable
balance. At December 31, 1997, one customer accounted for approximately 31% of
the net accounts receivable balance.
ONLINE PRODUCT SALES (UNAUDITED)
As discussed in Note 11, in April 1998, the Company acquired a majority
interest in a subsidiary, iBaby, an online distributor of children's products.
The Company recognizes revenue from product sales, net of any discounts, when
products are shipped to customers and the collection of the receivable is
probable. Outbound shipping and handling charges are included in sales. The
Company provides an allowance for sales returns, which have not been
significant, based on historical experience. Total revenues of iBaby were
approximately $1,445,439 for the period April 1998 (date of acquisition) through
September 30, 1998.
FIXED ASSETS
Depreciation of equipment, furniture and fixtures, and purchased computer
software is provided for by the straight-line method over their estimated useful
lives ranging from three to five years. Amortization of leasehold improvements
is provided for over the lesser of the term of the related lease or the
estimated useful life of the improvement. The cost of additions and betterments
is capitalized, and repairs and maintenance costs are charged to operations in
the periods incurred. Depreciation and amortization expense has been included in
general and administrative expense.
GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets consist of trademarks and the remaining
excess purchase price paid over identified intangible and tangible net assets of
acquired companies. Goodwill and intangible assets are amortized using the
straight-line method over the period of expected benefit, generally between
three and five years. The Company assesses the recoverability of its goodwill
and intangible assets by determining whether the amortization of the unamortized
balance over its remaining life can be recovered through forecasted cash flows.
If undiscounted forecasted cash flows indicate that the unamortized amounts will
not be recovered, an adjustment will be made to reduce the net amounts to an
amount consistent with forecasted future cash flows discounted at the Company's
incremental borrowing rate. Cash flow forecasts are based on trends of
historical performance and management's estimate of future performance, giving
consideration to existing and anticipated competitive and economic conditions.
Amortization expense of goodwill and intangible assets for the year ended
December 31, 1997 was approximately $1,100,000.
F-8
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
INCOME TAXES
The Company recognizes deferred taxes by the asset and liability method of
accounting for income taxes. Under the asset and liability method, deferred
income taxes are recognized for differences between the financial statement and
tax basis of assets and liabilities at enacted statutory tax rates in effect for
the years in which the differences are expected to reverse. The effect on
deferred taxes of a change in tax rates is recognized in income in the period
that includes the enactment date. In addition, valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized.
CASH
Cash includes money market accounts and all highly liquid investments
purchased with original maturities of three months or less. The Company
maintains its cash balances in a highly rated financial institution.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments, including
cash, accounts receivable, accounts payable and accrued liabilities, approximate
fair value because of their short maturities. The carrying amount of the
Company's capital lease and other equipment financing obligations approximates
the fair value of such instruments based upon management's best estimate of
interest rates that would be available to the Company for similar debt
obligations at December 31, 1997.
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 amount of assets and liabilities,
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 these estimates. Significant
estimates made by the Company include the useful lives and recoverability of
fixed assets and capitalized software, goodwill and deferred tax assets.
NET LOSS PER SHARE
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" ("SFAS
No. 128"). SFAS No. 128 replaced primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Basic earnings per share is computed using the
weighted-average number of common shares outstanding during the period. Diluted
earnings per share is computed using the weighted-average number of common and
common stock equivalent shares outstanding during the period. Common equivalent
shares are excluded from the computation if their effect is antidilutive. The
pro forma net loss per share is computed by dividing the net loss by the sum of
the weighted average number of shares of common stock outstanding and the shares
resulting from the assumed conversion of all outstanding shares of Convertible
Preferred Stock.
COMPREHENSIVE INCOME
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"). This statement requires companies to classify items of
other comprehensive income by their nature in the financial statements and
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position. SFAS No. 130 is effective for financial
statements issued for fiscal years beginning after December 15, 1997. The
Company adopted SFAS No. 130 in the first quarter of 1998.
F-9
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
INTERIM FINANCIAL STATEMENTS (UNAUDITED)
The financial statements as of September 30, 1998 and for the nine months
ended September 30, 1997 and 1998 are unaudited but have been prepared in
accordance with generally accepted accounting principles for interim financial
statements and the rules of the Securities and Exchange Commission and do not
include all disclosures required by Generally Accepted Accounting Principles for
annual financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
have been included. The results of operations of any interim period are not
necessarily indicative of the results of operations for the full year.
PRO FORMA INFORMATION (UNAUDITED)
The pro forma balance sheet as of September 30, 1998 reflects the
issuance/conversion of the following equity securities into an aggregate of
44,355,615 shares of Common Stock:
(i) 1,000,000 shares of Series A Convertible Preferred Stock;
(ii) 4,777,746 shares of Series B and B-1 Convertible Preferred Stock;
(iii) 13,193,445 shares of Series C Convertible Preferred Stock;
(iv) 13,000,000 shares of Series D Convertible Preferred Stock;
(v) The issuance of 653,476 shares of Common Stock to holders of Series B
Convertible Preferred Stock resulting from anti-dilution protection;
and
(vi) The issuance for net proceeds of $32.0 million and subsequent
conversion of 11,730,948 shares of Series E Convertible Preferred
Stock.
Excludes (a) such number of shares to be negotiated between the Company and
iBaby prior to this offering that may be issuable in connection with the
acquisition of the minority interest in iBaby and (b) 3,684,210 shares issuable
to National Broadcasting Company, Inc. ("NBC") over the next three years
pursuant to the Company's agreement with NBC, plus an option granted to NBC to
purchase additional shares.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" ("SFAS No. 131"), which established
standards for reporting information about operating segments in annual financial
statements. It also establishes standards for related disclosures about products
and services, geographic areas and major customers. SFAS No. 131 will be adopted
by the Company at December 31, 1998. The Company does not expect the adoption of
SFAS No. 131 to have an impact on the Company's results of operations, financial
position or cash flows.
In February 1998, FASB issued SFAS No. 132, "Employees' Disclosures about
Pension and Other Postretirement Benefits" ("SFAS No. 132"), which revises
employers' disclosures about pension and other postretirement benefit plans.
SFAS No. 132 does not change the measurement or recognition of those plans. SFAS
No. 132 is effective for fiscal years beginning after December 15, 1997. The
Company does not expect the adoption of SFAS No. 132 to have an impact on the
Company's results of operations, financial position or cash flows.
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1").
SOP 98-1 is effective for financial statements for years beginning after
December 15, 1998. SOP 98-1 provides guidance over accounting for computer
software developed or obtained for internal use including the requirement to
capitalize specified costs and amortization of such costs. The Company does not
expect the adoption of this standard to have a material effect on the Company's
capitalization policy.
F-10
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In April 1998, AICPA issued SOP 98-5, "Reporting on the Costs of Start-up
Activities" ("SOP 98-5"). SOP 98-5, which is effective for fiscal years
beginning after December 15, 1998, provides guidance on the financial reporting
of start-up costs and organization costs. It requires costs of start up
activities and organization costs to be expensed as incurred. As the Company has
expensed these costs historically, the adoption of this standard is not expected
to have a significant impact on the Company's results of operations, financial
position or cash flows.
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities" ("SFAS 133"), which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as derivatives) and for
hedging activities. SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. The Company does not expect the adoption of
this statement to have a significant impact on the Company's results of
operations, financial position or cash flows.
3. FIXED ASSETS:
Fixed assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
---------------------------- -------------
1996 1997 1998
------------ -------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment....................................... $ 329,146 $ 2,579,083 $ 5,284,727
Capitalized software..................................... 150,000 2,295,138 2,493,707
Furniture and fixtures................................... 89,138 283,024 957,864
Leasehold improvements................................... 218,785 462,262 636,622
------------ -------------- -----------
787,069 5,619,507 9,372,920
Less, accumulated depreciation and amortization........ (126,238) (1,816,684) (3,697,231)
------------ -------------- -----------
$ 660,831 $ 3,802,823 $ 5,675,689
------------ -------------- -----------
------------ -------------- -----------
</TABLE>
Depreciation and amortization of fixed assets was approximately $17,000,
$109,000 and $1,780,000 for the periods ended December 31, 1995, 1996 and 1997,
respectively.
4. RELATED-PARTY TRANSACTIONS:
In September 1995, the Company entered into an information provider
agreement with AOL, a holder of different classes of iVillage stock, whereby AOL
had agreed to carry the Company's programming material on the AOL service for a
period of one year. As a result of this agreement, AOL received a percentage, as
defined, of the Company's revenue and paid the Company a usage fee based upon
hours of viewership of the iVillage site on the AOL network.
In May 1996, the Company entered into an information provider agreement
with AOL whereby AOL agreed to carry up to four additional Company channels for
a period of two years. In return, the Company issued to AOL 800,000 warrants
convertible into Series B Convertible Preferred Stock at an exercise price of
$2.50 per warrant. These warrants were valued at approximately $1.29 per share.
The cost of the warrants was to be expensed over the life of each channel,
however, the agreement was canceled in 1997; as a result the Company expensed
the unamortized cost of these warrants ($1,034,838) in 1997. These warrants were
recorded as prepaid distribution costs at December 31, 1996.
In July 1997, the Company entered into an interactive services agreement
with AOL (the "AOL Agreement"), whereby the Company has received anchor tenant
distribution within the AOL service. This agreement superseded any prior
agreements between the Company and AOL. The AOL Agreement expires February 28,
1999, however both parties have a right to extend the agreement. In
consideration for AOL carrying certain channels of the Company, the Company
receiving guaranteed
F-11
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
impressions of at least 84,721,000 per year and other services, the Company is
obligated to pay AOL monthly payments of approximately $229,000 until
September 1, 1998 and approximately $201,000 thereafter until February 28, 1999,
make certain additional payments based on revenues and provide $2,334,000 of
in-kind commitments to AOL. The Company estimates that a significant portion of
its traffic is derived from AOL and if the financial condition and operations of
AOL were to deteriorate below critical levels, or if the traffic to the
Company's site generated by AOL were to substantially decrease, the Company's
advertising revenues could be adversely affected. At December 31, 1997, the
Company owed AOL approximately $947,000 in connection with the AOL Agreement and
other expenses.
During 1997, the Company has also sold banner advertisements to one of its
investors generating revenues of approximately $19,000. As of December 31, 1997,
the Company was due approximately $16,000 from this investor.
5. ACQUISITIONS:
On December 9, 1996, the Company acquired all of the outstanding stock of
ParentsPlace.com, an Internet content provider, in exchange for 200,000 shares
of the Company's common stock valued at $500,000, or $2.50 per share. The cost
of the acquisition was allocated to the assets and liabilities assumed based
upon their estimated fair values as follows:
<TABLE>
<S> <C>
Working capital.................................................................. $ (77,323)
Equipment........................................................................ 19,726
Goodwill......................................................................... 557,597
-----------
$ 500,000
-----------
-----------
</TABLE>
In May 1997, the Company completed the acquisition of Health
ResponseAbility Systems, Inc. ("HRS"), an Internet content provider, in exchange
for $2,600,000 in cash, 1,300,200 shares of the Company's common stock valued
$2,210,340, or $1.70 per share, and cash amounts contingent on future
performance levels of HRS and the Company. In addition, the Company issued to
AOL 609,000 shares of common stock in exchange for the release of all equity
rights in HRS held by AOL valued at $1,035,300.
The cost of the acquisition was allocated to the assets acquired and
liabilities assumed based upon their estimated fair values as follows:
<TABLE>
<S> <C>
Working capital................................................................ $ (214,370)
Equipment...................................................................... 50,300
Goodwill....................................................................... 6,009,710
-------------
$ 5,845,640
-------------
-------------
</TABLE>
In January 1998, the Company agreed to pay $1,560,000 to the prior owners
of HRS in settlement of the cash amounts contingent on future performance
levels, as stipulated in the agreement for the acquisition of HRS, but not later
than January 15, 1999. This amount was recorded as additional goodwill to be
amortized over the remaining period of expected benefit.
The following unaudited pro forma summary presents consolidated results of
operations for the Company as if the acquisition of HRS had been consummated on
January 1, 1996 and 1997. The acquisition of ParentsPlace.com would not have had
a significant impact on the pro forma information. The pro forma information
does not necessarily reflect the actual results that would have been achieved,
nor is it necessarily indicative of future consolidated results of the Company.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1997
--------------- ---------------
<S> <C> <C>
Revenues............................................................. $ 1,640,839 $ 6,381,437
Net loss............................................................. $ (11,540,045) $ (22,369,099)
</TABLE>
F-12
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In September 1997, the Company acquired substantially all of the assets of
StudentCenter LLC ("StudentCenter"), an Internet content provider, for $125,000
and the issuance of options to purchase 125,000 shares of common stock of the
Company at $1.70 per share. In addition, the Company was required to make
additional bonus payments, based on a percentage of net revenues, as defined and
based on the amount of StudentCenter page views. As discussed in Note 11, the
Company sold the assets of StudentCenter in 1998 as part of the sale of About
Work and paid $520,000 in connection with the bonus payments and the issuance of
options to purchase 100,000 shares of common stock of the Company at $1.70 a
share.
6. STOCK OPTION PLANS:
1995 Amended and Restated Employee Stock Option Plan
In 1995, the Company's Board of Directors and stockholders adopted the
Company's 1995 Amended and Restated Employee Stock Option Plan (the "ESOP"),
which was amended in May 1997. The ESOP provides for the granting, at the
discretion of the Stock Option Committee of the Board of Directors (the "SOC"),
of: (i) options that are intended to qualify as incentive stock options, within
the meaning of Section 422 of the Internal Revenue Code, as amended (the
"Code"), to employees and (ii) options not intended to so qualify to employees,
officers, consultants and directors. The total number of shares of common stock
for which options may be granted under the ESOP is 4,540,500.
The exercise price of all stock options granted under the ESOP is
determined by the SOC at the time of grant. The maximum term of each option
granted under the ESOP is 10 years from the date of grant. Options shall become
exercisable at such times and in such installments as the SOC shall provide in
the terms of each individual option.
1997 Amended and Restated Acquisition Stock Option Plan
In May 1997, the Company's Board of Directors and stockholders adopted the
Company's 1997 Amended and Restated Acquisition Stock Option Plan (the "ASOP").
The ASOP provides for the granting, at the discretion of the SOC of: (i) the
options that are intended to qualify as incentive stock options, within the
meaning of the Code to directors who are employees of the Company or any of its
subsidiaries, or as part of one or more of such acquisitions and (ii) options
not intended to so qualify to employees, officers, consultants and directors of
the Company, or as part of one or more of such acquisitions. The total number of
shares of common stock for which options may be granted under the ASOP is
825,180. In December 1998, the Board of Directors and stockholders of the
Company resolved to increase the number of shares reserved for issuance under
the Company's ASOP to 1,082,180 shares.
F-13
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The exercise price of all stock options granted under the ASOP shall be
determined by the SOC at the time of grant. The maximum term of each option
granted under the ASOP is 10 years from the date of grant. Options shall become
exercisable at such times and in such installments as the SOC shall provide in
the terms of each individual option.
In September 1997, the SOC adjusted the exercise price of all outstanding
options of the ESOP and ASOP from the original exercise price of $2.50 a share
to $1.70 a share, based on the then determined current fair market value of the
Company's common stock.
As of December 31, 1997, an aggregate of 1,731,354 shares were available
for future grants under the ESOP and the ASOP.
Changes in options outstanding, the fair value per option and weighted
average exercise price of stock option activity for the period from July 1, 1995
(inception) to December 31, 1995, the years ended December 31, 1996 and 1997 and
the nine months ended September 30, 1998 are as follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
FAIR VALUE EXERCISE PRICE
OPTIONS PER OPTION PER SHARE
----------- ---------- --------------
<S> <C> <C> <C>
Outstanding, July 1, 1995................................... -- $ -- $ --
Granted..................................................... 326,000 0.26 1.05
Exercised................................................... -- -- --
Canceled.................................................... -- -- --
----------- ------ ------
Outstanding, December 31, 1995.............................. 326,000 0.26 1.05
Granted..................................................... 762,146 0.70 1.55
Exercised................................................... -- -- --
Canceled.................................................... -- -- --
----------- ------ ------
Outstanding, December 31, 1996.............................. 1,088,146 0.57 1.40
Granted..................................................... 3,163,680 0.49 1.70
Exercised................................................... (100,000) 0.35 1.00
Canceled.................................................... (517,500) 0.51 1.28
----------- ------ ------
Outstanding, December 31, 1997.............................. 3,634,326 0.51 1.69
Granted (unaudited)......................................... 3,423,630 0.53 1.96
Exercised (unaudited)....................................... (25,000) 0.87 1.70
Canceled (unaudited)........................................ (1,436,680) 0.46 1.71
----------- ------ ------
Outstanding, September 30, 1998 (unaudited)................. 5,596,276 $ 0.54 $ 1.88
----------- ------ ------
----------- ------ ------
Options exercisable at December 31, 1995.................... -- $ -- $ --
Options exercisable at December 31, 1996.................... 106,500 $ 0.36 $ 1.21
Options exercisable at December 31, 1997.................... 339,750 $ 0.57 $ 1.64
Options exercisable at September 30, 1998 (unaudited)....... 1,589,676 $ 0.54 $ 1.72
</TABLE>
At December 31, 1997, the weighted average remaining contractual life of
the options outstanding was approximately 7.17 years.
STOCK-BASED COMPENSATION
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock-Issued to Employees" and related interpretations in accounting for its
stock option issuances. The Company has adopted the disclosure-only provisions
of SFAS No. 123, "Accounting for Stock-Based Compensation". Had compensation
cost for the Company's stock options issued at the fair value of the Company's
stock been determined based on the fair value of the stock options at the grant
date for
F-14
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
awards in 1996 and 1997 consistent with the provisions of SFAS No. 123, the
Company's net loss would have been adjusted to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1996 1997
-------------- ---------------
<S> <C> <C>
Net loss as reported.................................................. $ (9,682,682) $ (21,300,960)
Net loss pro forma.................................................... $ (9,767,859) $ (21,624,031)
</TABLE>
The fair value of each option grant is estimated using the minimum value
method of the Black-Scholes option pricing model which assumes no volatility.
The values were obtained using assumptions which were arrived using information
supplied by the Company. Changes in the information would affect the assumptions
and the option prices derived from those assumptions. The weighted average
assumptions used for grants made in 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
OPTIONS GRANTED DURING
THE
YEAR ENDED DECEMBER 31,
-------------------------
1996 1997
-------- --------
<S> <C> <C>
Risk-free interest rate................................................... 6.10% 6.22%
Expected option life...................................................... 5 years 5 years
Dividend yield............................................................ 0.0% 0.0%
</TABLE>
In 1997, in connection with the exercise of options by former employees,
the Company accepted two promissory notes, with recourse, from the former
employees to cover the costs to exercise the options.
7. COMMITMENTS:
LEASES:
The Company leases office space in New York, under non-cancelable operating
leases expiring at various dates through August 2000. The following is a
schedule of future minimum lease payments under non-cancelable operating leases
as of December 31, 1997:
<TABLE>
<CAPTION>
Year ending December 31: 1997
- ------------------------ -----------
<S> <C>
1998............................................................................. $ 415,180
1999............................................................................. 263,138
2000............................................................................. 111,223
2001............................................................................. --
-----------
$ 789,541
-----------
-----------
</TABLE>
Rent expense was approximately $37,000, $149,000 and $486,000 for the
periods ended December 31, 1995, 1996 and 1997, respectively. In 1998, the
Company entered into a lease agreement for additional office space in New York.
F-15
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At December 31, 1997, minimum future lease payments due under capital
leases for computer equipment are as follows:
<TABLE>
<CAPTION>
Period ending December 31, 1997
- -------------------------- -----------
<S> <C>
1998............................................................................. $ 288,412
1999............................................................................. 144,204
-----------
Total minimum lease payments..................................................... 432,616
Less: amount representing interest............................................... 45,327
-----------
Net minimum lease payments....................................................... 387,289
Less: current portion............................................................ 247,943
-----------
Long-term portion................................................................ $ 139,346
-----------
-----------
</TABLE>
Accumulated amortization on assets accounted for as capital leases amounted
to approximately $301,000 as of December 31, 1997.
8. CONVERTIBLE NOTES
In August 1995, the Company entered into a promissory note agreement with
AOL whereby the Company received $500,000. This note was converted into shares
of Series A Convertible Preferred Stock ("Series A") in September 1995.
In September 1995, the Company entered into a promissory note agreement
with AOL whereby the Company received $650,000 in 1995 and an additional
$1,100,000 in 1996. In connection with this note, the Company issued warrants to
purchase 52,100 shares of Series B Convertible Preferred Stock ("Series B") at
$2.50 a share which resulted in an interest expense of $6,745 in 1995 and
$30,101 in 1996.
In 1996, the Company entered into promissory note agreements with AOL and
certain other investors whereby the Company received $1,800,000 inclusive of the
$1,100,000 received from AOL as described above. These notes, as well as the
$650,000 discussed above that was received in 1995, were converted into 980,000
shares of Series B.
In 1997, the Company entered into promissory note agreements with AOL and
certain other investors whereby the Company received $3,775,000. In connection
with these notes, the Company issued 335,313 warrants to purchase shares at
$1.954 per share, which resulted in an interest charge of $334,339 in 1997. In
1997, these notes were converted into approximately 1.93 million shares of
Series C Convertible Preferred Stock ("Series C").
9. CAPITAL STOCK
COMMON STOCK
At December 31, 1997, the authorized capital stock of the Company consists
of 35,000,000 shares of common stock, $0.0005 par value per share, and
25,000,000 shares of preferred stock, $0.0005 par value per share. The Board of
Directors (the "Board") of the Company has the authority to issue preferred
stock in series with rights and privileges determined by the Board. Upon
formation of the Company, 3,250,005 shares of $.0005 par value common stock were
issued to the founders.
PREFERRED STOCK
In September 1995, the Company issued 1,000,000 shares of Series A through
a private placement, in consideration for net proceeds of approximately
$1,000,000, inclusive of the conversion of a $500,000 convertible note payable.
F-16
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In May 1996, the Company issued 4,777,746 shares of Series B and
Series B-1 Convertible Preferred Stock ("Series B-1") through a private
placement in exchange for net proceeds of approximately $11,944,000 million,
inclusive of the conversion of convertible notes payable in the amount of
$2,450,000. The holder of Series B-1 has the same rights as the Series B
holders, however, the Series B-1 holder does not have voting rights.
In May 1997, the Company issued 11,003,067 shares of Series C through a
private placement in exchange for net proceeds of approximately $20,550,000,
inclusive of the conversion of convertible notes payable in the amount of
approximately $2,975,000. In connection with the issuance of Series C, the
Company will issue additional shares of common stock to Series B holders that
had anti-dilution provisions, upon the conversion to common stock. The Company
also issued 90,583 warrants to purchase shares of common stock at $.01 a share
to the Company's placement agent in consideration for services provided in
connection with the private placement.
In December 1997, the Company issued an additional 2,190,378 shares of
Series C through a private placement in exchange for net proceeds of
approximately $4,280,000, inclusive of the conversion of an $800,000 convertible
note payable.
The holders of convertible preferred stock are entitled to receive
noncumulative dividends when and if declared by the Board. These dividends are
in preference to any declaration or payment of any dividend on the common stock
of the Company.
In the event of liquidation, the holders of convertible preferred stock
have a liquidation preference over holders of common stock, with holders of
Series C and D having preference to Series A and B holders. Such preference is
equal to the original cost of the respective class of preferred stock, plus any
declared or unpaid dividends.
All classes of convertible preferred stock are convertible into common
stock at prices and at times subject to the provisions set forth in the
Company's restated Certificate of Incorporation. In the event of a public
offering of the Company's shares with gross proceeds and an offering price as
defined, the convertible preferred stock will be automatically converted into
common stock at the conversion rates as stated in the Company's restated
Certificate of Incorporation. Convertible preferred stockholders maintain voting
rights equivalent to the number of shares of common stock on an as if converted
basis.
As discussed in Note 4, Note 8 and above, as of December 31, 1997, the
Company has 1,277,996 warrants outstanding with a weighted average exercise
price of $2.18.
10. INCOME TAXES:
The components of the net deferred tax asset as of December 31, 1996 and
1997 consists of the following:
<TABLE>
<CAPTION>
1996 1997
-------------- ---------------
<S> <C> <C>
Operating loss carryforward........................................... $ 4,959,115 $ 13,940,842
Depreciation and amortization......................................... 8,276 (50,508)
-------------- ---------------
Net deferred tax asset.................................... 4,967,391 13,890,334
Less Valuation allowance.............................................. (4,967,391) (13,890,334)
-------------- ---------------
Deferred tax asset........................................ $ 0 $ 0
-------------- ---------------
-------------- ---------------
</TABLE>
The difference between the Company's U.S. federal statutory rate of 35%, as
well as its state and local rate, net of a federal benefit, of 10%, when
compared to the effective rate is principally comprised of the valuation
allowance.
F-17
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As of December 31, 1997, the Company has a net operating loss carryforward
for federal income tax purposes of approximately $26,480,000 which expires in
2012. The net deferred tax asset has been fully reserved due to the uncertainty
of the Company's ability to realize this asset in the future.
11. INTERIM FINANCIAL INFORMATION (UNAUDITED):
Stock Issuances
In February 1998, the Company issued 13,000,000 shares of newly issued
Series D Convertible Preferred Stock in exchange for net proceeds of
approximately $31,500,000.
In February 1998, the Company issued 852,951 shares of common stock, in
exchange for net proceeds of approximately $1,700,000.
Acquisition of iBaby
In April 1998, the Company entered into a joint venture agreement with
Ourbaby, LLC, a California limited liability company, to form iBaby, Inc., a
Delaware corporation ("iBaby"). The Company has purchased 1,000,000 shares of
iBaby (of the total 1,666,666 shares outstanding) for $1,350,000 and for the
delivery of certain promotional rights, including impressions on the iVillage
web site. The Company's equity ownership in iBaby may be altered due to various
provisions included in the joint venture agreement including: (i) conversion of
any convertible notes issued in connection with any bridge loan financing
provided to iBaby by the Company, (ii) the issuance of iBaby shares upon
exercise of stock options and grants of restricted stock, (iii) the Company's
failure to meet certain promotional obligations or (iv) the occurrence of an
initial public offering of the Company's stock or a merger, consolidation or
sale transaction ("call event" or "put event").
Since the formation of iBaby in April 1998, the accounts of iBaby have been
consolidated into the Company's financial statements, as the Company holds a
majority interest and control of iBaby.
In connection with the formation of iBaby, iBaby entered into an inventory
and services agreement with Kids Warehouse, the minority interest holder of
iBaby. The agreement, dated April 8, 1998, has a one-year term and provides for
Kids Warehouse to make available to iBaby at least $2,000,000 of inventory at
wholesale value, as defined, for iBaby to sell to customers. In addition, Kids
Warehouse is to stock and provide storage of iBaby inventory. In consideration
for such services, iBaby is to pay Kids Warehouse an inventory fee, as defined,
based on the cost of items sold by iBaby. This agreement is terminable at the
sole option of iBaby.
In connection with the joint venture agreement, the Company also entered
into a rights agreement with the minority stockholders which provides for
various rights including:
o The right and option by the Company, exercisable upon the occurrence of a
call or put event, to purchase all of the shares held by the minority
stockholders ("call option"); and
o The right and option by the minority stockholders, exercisable upon the
occurrence of a put event, to require the Company to purchase the shares
held by the minority stockholders ("put option").
The purchase price of the shares held by the minority stockholders is
defined in the agreement as the fair market value per share mutually agreed to
by all parties.
In 1998, the Board of Directors and stockholders of iBaby adopted the
iBaby, Inc. 1998 Stock Option Plan ("iBaby SOP"). The iBaby SOP provides for the
granting, at the discretion of the iBaby Stock Option Committee ("iBaby SOC")
of: (i) options that are intended to qualify as incentive stock options, within
the meaning of the Code to employees and (ii) options not intended to so qualify
to
F-18
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
employees, officers, consultants and directors. The total number of shares of
common stock for which options may be granted under the iBaby SOP is 294,118.
The exercise price of all stock options granted under the iBaby SOP is
determined by the iBaby SOC at the time of grant. The maximum term of each
option granted under the iBaby SOP is seven years from the date of grant.
Options shall become exercisable at such times and in such installments as the
iBaby SOC shall provide in the terms of each individual option.
Under the iBaby SOP, options to purchase 105,059 shares of Common Stock
were granted during the nine months ended September 30, 1998, with weighted
average exercise prices of $2.49. As of September 30, 1998, 189,059 shares
remain available for future grants.
Sale of About Work
In May 1998, the Company entered into a production and asset sale agreement
for one of its content channels, About Work, in exchange for net proceeds of
approximately $1,775,000, as adjusted. In connection with this sale, the Company
recorded a loss of approximately $165,000.
Officer's Loan Receivable
In June 1998, the Company accepted a non-recourse promissory note in the
principal amount of $500,000 (the "Note") from its chief executive officer
("CEO"). The Note is collateralized by 500,000 shares of the Company's common
stock which is held by the Company. Interest is payable annually on December 31
of each year, commencing December 31, 1998, at the rate of 5.58%. The
outstanding principal balance on the Note is payable on June 5, 2001. As of
September 30, 1998, the CEO has borrowed $500,000 under the note, which is
recorded as a stockholder note receivable and classified as a reduction of
equity.
12. SUBSEQUENT EVENTS (UNAUDITED):
(a) On November 11, 1998, the Company entered into an agreement with NBC
pursuant to which NBC will promote the Company's Web site,
iVillage.com, on television primarily during prime time programs, as
well as through its web sites. The terms of the NBC agreement provide
for the following:
i. NBC to provide the Company with the use of advertising spots
having an aggregate value of $3.5 million per annum over a
three-year period. For each $3.5 million of advertising spots
the Company will issue 1,228,070 shares of Series E Convertible
Preferred Stock ("Series E") (or shares of Common Stock after
this offering).
ii. NBC will have the option, exercisable at its sole discretion, to
provide the Company with additional spots having an aggregate
value of $5 million for each of the three years. Upon exercise of
NBC's option, the Company will issue shares of Series E (or shares
of Common Stock after this offering), subject to anti-dilution
protection, equal to the aggregate value of additional spots
divided by $4.15 in the first year, $5.15 in the second year and
$6.15 in the third year.
iii. NBC may terminate the agreement in the event that a change in
control of iVillage, as defined in the agreement, occurs involving
a television broadcast network entity or its affiliate that
directly competes with NBC.
In accordance with Emerging Issues Task Force Abstract No. 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or
Services", the Company will record the value of spots to be received
based on fair value of the stock provided to NBC or the fair value of
the spots received whichever is more reliably measured, at the earlier
of when the stock is provided to NBC or either a performance commitment
by NBC is reached or the performance is complete. The amounts recorded
prior to the receipt of the advertising spots will be classified on the
balance sheet as
F-19
<PAGE>
iVILLAGE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
deferred advertising costs with the offset to Series E (or common stock
after the offering) and additional paid in capital. As the advertising
spots are run, the Company will amortize the deferred advertising
costs.
(b) In December 1998, the Board of Directors and Stockholders of the
Company increased the number of authorized shares of Common Stock to
65,000,000 shares and authorized 12,280,702 shares of Series E.
(c) In December 1998, the Company issued 11,730,948 shares of Series E
through a private placement in exchange for net proceeds of
approximately $32,000,000. Holders of Series E have participating
preferred rights, the same conversion and dividend rights as well as
anti-dilution protection as those granted to all of the pre-existing
holders of the Company's Convertible Preferred Stock. Holders of
Series E have the same liquidation preference as the holders of
Series C and D.
(d) In December 1998, the Board of Directors and stockholders of the
Company, authorized the Company's management to file a registration
statement for an initial public offering of the Company's common stock.
(e) In December 1998, the Board of Directors and stockholders of the
Company opted to exercise the call option to acquire the minority
interest in iBaby, subject to the Company's plan to file a registration
statement for an initial public offering of the Company's common stock.
The Company is in the process of engaging an investment banker to
determine the fair market value of iBaby.
F-20
<PAGE>
UNDERWRITING
iVillage and the underwriters named below (the "Underwriters") have entered
into an underwriting agreement with respect to the shares being offered. Subject
to certain conditions, each Underwriter has severally
agreed to purchase the number of shares indicated in the following table.
Goldman, Sachs & Co., Credit Suisse First Boston Corporation and Hambrecht &
Quist LLC are the representatives of the Underwriters.
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
------------ ----------------
<S> <C>
Goldman, Sachs & Co.......................................................
Credit Suisse First Boston Corporation....................................
Hambrecht & Quist LLC.....................................................
------------
Total......................................................
------------
------------
</TABLE>
------------------------
If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional
shares from iVillage to cover such sales. They may exercise that
option for 30 days. If any shares are purchased pursuant to this option, the
Underwriters will severally purchase shares in approximately the same proportion
as set forth in the table above.
The following tables show the per share and total underwriting discounts
and commissions to be paid to the Underwriters by iVillage. Such amounts are
shown assuming both no exercise and full exercise of the Underwriters' option to
purchase additional shares.
PAID BY IVILLAGE
NO EXERCISE FULL EXERCISE
----------- -------------
Per Share............... $ $
Total................... $ $
Shares sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus. Any
shares sold by the Underwriters to securities dealers may be sold at a discount
of up to $ per share from the initial public offering price. Any such
securities dealers may resell any shares purchased from the Underwriters to
certain other brokers or dealers at a discount of up to $ per share from the
initial public offering price. If all the shares are not sold at the initial
offering price, the representatives may change the offering price and the other
selling terms.
iVillage, its directors, officers and stockholders have agreed with the
Underwriters not to dispose of or hedge any of their Common Stock or securities
convertible into or exchangeable for shares of Common Stock during the period
from the date of this prospectus continuing through the date 180 days after the
date of this prospectus, except with the prior written consent of the
representatives. This agreement does not apply to any existing employee benefit
plans. Please see "Shares Available for Future Sale" for a discussion of certain
transfer restrictions.
Prior to this offering, there has been no public market for the shares. The
initial public offering price will be negotiated among iVillage and the
representatives. Among the factors to be considered in determining the initial
public offering price of the shares, in addition to prevailing market
conditions, will be iVillage's historical performance, estimates of the business
potential and earnings prospects of iVillage, an assessment of iVillage's
management and the consideration of the above factors in relation to market
valuation of companies in related businesses.
iVillage intends to apply to list the Common Stock on the Nasdaq National
Market under the symbol "IVIL".
In connection with this offering, the Underwriters may purchase and sell
shares of
U-1
<PAGE>
Common Stock in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the Common Stock while
this offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Common Stock. As a result, the price of the
Common Stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
Underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
The Underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.
iVillage estimates that its share of the total expenses of this offering,
excluding underwriting discounts and commissions, will be approximately
$ .
iVillage has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
Credit Suisse First Boston Corporation acted as iVillage's exclusive
placement agent in connection with the private placement of iVillage's Series E
Convertible Preferred Stock in December 1998. iVillage paid customary placement
fees to Credit Suisse First Boston Corporation for such services.
U-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO SELL ONLY THE SHARES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES
AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
------------------------------
TABLE OF CONTENTS
Page
----
Prospectus Summary............................ 3
Risk Factors.................................. 7
Use of Proceeds............................... 17
Dividend Policy............................... 17
Capitalization................................ 18
Dilution...................................... 20
Selected Consolidated Financial
Data........................................ 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................. 22
Business...................................... 32
Management.................................... 45
Certain Transactions.......................... 54
Principal Stockholders........................ 57
Description of Capital Stock.................. 59
Shares Eligible for Future Sale............... 62
Legal Matters................................. 63
Experts....................................... 63
Available Information......................... 64
Index to Consolidated Financial Statements.... F-1
Underwriting.................................. U-1
------------------------------
THROUGH AND INCLUDING , 1999 (25 DAYS AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THESE SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO A DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITER AND WITH RESPECT TO AN UNSOLD ALLOTMENT OR SUBSCRIPTION.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
iVILLAGE INC.
Common Stock
------------------------------
[LOGO]
------------------------------
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
HAMBRECHT & QUIST
REPRESENTATIVES OF THE UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than the
underwriting discounts, payable by the Registrant in connection with the sale of
the securities being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fee and the Nasdaq/NMS listing fee.
<TABLE>
<S> <C>
SEC Registration Fee.................................................................. $ 12,788
NASD Filing Fee....................................................................... 5,100
Nasdaq National Market Listing Fee.................................................... *
Printing Costs........................................................................ *
Legal Fees and Expenses............................................................... *
Accounting Fees and Expenses.......................................................... *
Blue Sky Fees and Expenses............................................................ *
Transfer Agent and Registrar Fees..................................................... *
Miscellaneous......................................................................... *
--------
Total............................................................................ $
--------
--------
</TABLE>
- ------------------------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent to the Registrant. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Article VII of the Registrant's Bylaws provides for indemnification by the
Registrant of its directors, officers and employees to the fullest extent
permitted by the Delaware General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchases, redemptions or
other distributions, or (iv) for any transaction from which the director derived
an improper personal benefit. The Registrant's Amended and Restated Certificate
of Incorporation provides for such limitation of liability.
The Registrant intends to obtain directors, and officers, insurance
providing indemnification for certain of the Registrant's directors, officers
and employees for certain liabilities.
Reference is also made to the Underwriting Agreement to be filed as
Exhibit 1.1 to the Registration Statement for information concerning the
Underwriters' obligation to indemnify the Registrant and its officers and
directors in certain circumstances.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1995, the Registrant has issued and sold (without payment
of any selling commission to any person) the following unregistered securities:
(1) In September 1995, the Registrant issued and sold an aggregate of
2,000,005, 1,000,000, and 250,000 shares of Common Stock to Candice
Carpenter, Nancy Evans and Robert Levitan, respectively, at a price per
share of $.0005.
(2) In September 1995, the Registrant issued a stock subscription
warrant to purchase shares of Series B Convertible Preferred Stock at a
price per share of $2.50 (the "September 1995 Warrant") and 1,000,000
shares of Series A Convertible Preferred Stock to America Online, Inc.
("AOL") at a price per share of $1.00 in exchange for the cancellation of a
note and $496,494 in cash.
(3) In May 1996, the Registrant issued 797,130 shares of Series B
Convertible Preferred Stock to AOL at a price per share of $2.50 in
exchange for the cancellation of a note payable.
(4) In May 1996, the Registrant issued and sold an aggregate of
300,000 shares of Series B-1 Convertible Preferred Stock to AOL at a price
per share of $2.50 in exchange for the conversion of the principal amount
and accrued interest on two notes and $450,000 in cash.
(5) In May 1996, in connection with the issuance of Series B
Convertible Preferred Stock, the Registrant issued a stock subscription
warrant to purchase 800,000 shares and issued 52,100 shares of Series B
Convertible Preferred Stock pursuant to the exercise of the September 1995
Warrant, respectively, to AOL at a price per share of $2.50.
(6) In May 1996, the Registrant issued and sold an aggregate of
4,477,746 shares of Series B Convertible Preferred Stock at a price per
share of $2.50 to the following entities: Kleiner Perkins Caufield & Byers
VII ("Kleiner"), KPCB VII Founders Fund ("KPCB VII"), KPCB Information
Sciences Zaibatsu Fund II ("KPCB Information"), Ann R. Mathias, Edward J.
Mathias, TCI Online Village Holdings, Inc. ("TCI") and the Tribune Company
("Tribune").
(7) In December 1996, in connection with an Agreement and Plan of
Reorganization, the Registrant issued 100,000 shares of Common Stock each
to Jacqueline B. Needelman and David L. Cohen in consideration for 1,500
shares of jointly owned common stock of ParentsPlace.com, Inc.
(8) In January 1997, Beth Polish exercised an option and received
25,000 shares of Common Stock at a price per share of $1.00.
(9) In January 1997, Elaine Rubin exercised an option and received
37,500 shares of Common Stock at a price per share of $1.00.
(10) In January 1997, Tina Neederlander exercised an option and
received 37,500 shares of Common Stock at a price per share of $1.00.
(11) In February 1997, the Registrant issued and sold stock
subscription warrants to purchase an aggregate of 335,313 shares of Series
C Convertible Preferred Stock at a price per share of $1.954 to AOL,
Tribune, Kleiner and KPCB Information in consideration for the cancellation
of a note and cash.
(12) In May 1997, the Registrant issued and sold an aggregate of
11,003,068 shares of Series C Preferred Stock at a price per share of
$1.954 to the following entities: AOL, Philip E Berney, CIBC Wood Gundy
Ventures, Inc. ("CIBC") Cox Interactive Media, Inc. ("Cox"), Convergence
Ventures I, L.P. ("Convergence"), Stephen Friedman, Charles A. Davis,
Growth Shares Ltd., Juergen Habermeier, Kleiner, KPCB Information, Ralph
Mack, Stephen M. Parish, Rho Management Trust I ("Rho"), Sonem Partners,
Tenet, Transatlantic Venture Partners C.V., Tribune, The Trustees of the
General Electric Pension Trust, Norman Tulchin, Stanley Tulchin and one
other corporate investor.
II-2
<PAGE>
(13) In May 1997, the Registrant issued warrants to Bear, Stearns &
Co. Inc. to purchase 90,583 shares of the Registrant's Common Stock at an
exercise price of $0.01 per share in consideration for services rendered.
(14) In May 1997, in connection with a Plan of Reorganization and
Merger, among the Registrant, Health ResponseAbility Systems, Inc. and
other signatories thereto, the Registrant issued 1,300,200 shares of Common
Stock to Elin Silveous and 609,000 shares of Common Stock to AOL.
(15) In December 1997, the Registrant issued and sold an aggregate of
2,190,377 shares of Series C Convertible Preferred Stock at a price per
share of $1.954 per share to the following entities: AOL, Convergence,
Convergence Entrepreneurs Fund I ("Convergence Entrepreneurs"), Rho, Sonem
Partners and O'Sullivan Graev & Karabell, L.L.P., Profit Sharing Plan F/B/O
Martin H. Levenglick.
(16) In February 1998, the Registrant issued and sold an aggregate of
852,951 shares of Common Stock to Tenet Healthcare Corporation ("Tenet") at
a price per share of $1.954.
(17) In February 1998, the Registrant issued a certificate for an
aggregate of 76,800 shares of Series B Convertible Preferred Stock to
Kleiner in exchange for a certificate representing 76,800 shares of Series
B Convertible Preferred Stock issued to KPCB VII.
(18) In February 1998, the Registrant issued and sold an aggregate of
1,333,334 shares of Series D Convertible Preferred Stock to Tenet at a
price per share of $2.50.
(19) In March 1998, the Registrant issued and sold an aggregate of
4,480,000 shares of Series D Convertible Preferred Stock at a price per
share of $2.50 to the following entities: Convergence, Nexus Capital
Partners I, L.P., NIG-Village Ltd., Porcelain Partners L.P., Rho, TCV II
V.O.F., Technology Crossover Ventures II, L.P., TCV Strategic Partners,
L.P., Technology Crossover Partners II, C.V. and TCV II (Q), L.P.
(20) In April 1998, the Registrant issued and sold an aggregate of
6,434,000 shares of Series D Convertible Preferred Stock at a price per
share of $2.50 to the following entities: AOL, CIBC, Transatlantic Venture
Partners, C.V., Leavitt Family Trust, Boston Millennia Partners Limited,
Boston Millennia Associates I Partnership, FIMA Finance Management, Inc.,
Josef H. von Rickenbach, David Mahoney, Chestnut Investment Associates
1998, Chestnut Partners, Inc., Allyn C. Woodward, Moore Global Investments,
Ltd., Remington Investment Strategies, L.P., Ralph Mack, Cox and one other
corporate investor.
(21) In May 1998, the Registrant issued and sold an aggregate of
352,666 shares of Series D Convertible Preferred Stock at a price per share
of $2.50 to the following entities: Merrill Roth, Gannett International
Communications, Inc. and Pasquale Lavecchia.
(22) In June 1998, the Registrant issued and sold an aggregate of
400,000 shares of Series D Convertible Preferred Stock to a corporate
investor at a price per share of $2.50.
(23) In June 1998, Stephen Chao, Inc. exercised an option and received
25,000 shares of Common Stock at a price per share of $1.70.
(24) In December 1998, the Registrant issued and sold an aggregate of
11,730,948 shares of Series E Convertible Preferred Stock at a price of
$2.85 to the following entities: AOL, Boston Millennia Associates, Boston
Millennia Partners Limited, Lawrence Berk, CIBC, Convergence, Convergence
Entrepreneurs, Cox, Gannett, Leavitt, Steven Parish, Merrill Roth, Moore,
Nexus, NIG, O'Sullivan Graev & Karabell, L.L.P., Profit Sharing Plan F/B/O
Martin H. Levenglick, Ralph Mack, Remington, Rho, Sonem, TCI, TCI Ventures
Group, LLC, TCV II (Q), L.P., TCV II V.O.F., TCV Strategic Partners, L.P.,
Technology Crossover Ventures II, C.V., Technology Crossover Ventures II,
L.P., Tenet, Transatlantic, Tribune, William James Bell 1993 Trust,
Seligman Communications & Information Fund, Vantage Point Communications
Partners, LP, Vantage Point
II-3
<PAGE>
Venture Partners 1996, LP, Applewood Associates, Fred F. Nazem, Admirals,
L.P., Fred Tanzer, Van Wagoner Capital Management.
Exemption from registration for the transactions described above was
claimed pursuant to Section 4(2) of the Securities Act of 1933, as amended,
regarding transactions by the issuer not involving a public offering, in that
these transactions were made, without general solicitation or advertising, to
sophisticated investors with access to all relevant information necessary to
evaluate these investments and who represented to the Registrant that the shares
were being acquired for investment.
ITEM 16. EXHIBITS.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
<S> <C>
1.1 Form of Underwriting Agreement.
2.1 Agreement and Plan of Reorganization and Merger dated as of January 31, 1997, as amended on
March 31, 1997, as further amended as of May 15, 1997, as further amended as of May 16, 1997 and as
further amended as of May 23, 1997 among the Registrant, Health ResponseAbility Systems, Inc., and
other signatories thereto.
2.2 Agreement and Plan of Reorganization dated as of December 10, 1996 among the Registrant, PP
Acquisition Corporation, ParentsPlace.com, Inc. and the stockholders of ParentsPlace.com, Inc.
3.1 Certificate of Incorporation of the Registrant, as currently in effect.
3.3 Form of Amended and Restated Certificate of Incorporation of the Registrant, to be filed prior to
completion of this offering.*
3.4 Form of Amended and Restated Certificate of Incorporation of the Registrant, to be filed and
effective upon completion of this offering.*
3.5 Bylaws of the Registrant, as currently in effect.
3.6 Form of Amended and Restated Bylaws of the Registrant, to be effective upon completion of this
offering.*
4.1 Form of Registrant's Common Stock Certificate.*
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP.*
9.1 Voting Trust Agreement dated as of September 19, 1995 between Candice Carpenter, Nancy Evans and
certain owners of Common Stock of the Registrant.
10.1 Form of Indemnification Agreement between the Registrant and each of its directors and officers.*
10.2 1995 Amended and Restated Employee Stock Option Plan of the Registrant.
10.3 1997 Amended and Restated Acquisition Stock Option Plan of the Registrant.
10.4 1999 Employee Stock Option Plan of the Registrant.*
10.5 1999 Director Stock Option Plan of the Registrant.*
10.6 1999 Employee Stock Purchase Plan of the Registrant.*
10.7 Interactive Services Agreement dated July 1, 1997, between the Registrant and America Online, Inc.
("AOL").+
10.8 Confidential Bankcard Marketing Agreement dated June 4, 1998, between the Registrant and First Credit
Card Services USA L.L.C.+
10.9 Promotion Distribution and License Agreement dated October 21, 1998 between AT&T Corp. and the
Registrant.*
10.10 Exclusive Sponsorship Agreement dated February 28, 1998 between Amazon.com, Inc. and the
Registrant.+
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- -----------
<S> <C>
10.11 Promotion Agreement dated November 6, 1998 between Snap! LLC and the Registrant.+
10.12 Online Services Agreement dated December 19, 1997 between Charles Schwab & Co., Inc. and the
Registrant.+
10.13 Letter Agreement dated November 11, 1998 between the National Broadcasting Company, Inc. and the
Registrant.
10.14 Joint Activities Agreement dated September 1997 between Intuit Inc. and the Registrant.+
10.15 Form of Non-Competition, Non-Disclosure and Assignment of Inventions Agreement dated September 9,
1995, and Amendment dated May 6, 1996, between the Registrant and each of Candice Carpenter, Nancy
Evans and Robert Levitan.
10.16 Employment Letter dated June 4, 1998 to Craig Monaghan.*
10.17 Employment Letter dated December , 1998 to Allison Abraham.*
10.18 Lease dated August 21, 1995, commencing on September 1, 1995, as amended on September 20, 1995, as
amended and supplemented April 5, 1996, as further amended and supplemented on April 15, 1996, as
further amended and supplemented January 20, 1997, and as amended and supplemented on May 8, 1997,
between 170 Fifth Associates (the "Landlord") and the Registrant.
10.19 Lease dated March 19, 1998, commencing March 15, 1998 between 149 Fifth Avenue Corporation and the
Registrant, as supplemented on June 30, 1998.
10.20 Commercial Lease dated August 13, 1997 between Grove Corporate Plaza and the Registrant.
10.21 Rental Agreement dated September 8, 1997 between Jack May and the Registrant.
10.22 Note and Warrant Purchase Agreement dated as of February 27, 1997, as amended April 29, 1997, among
the Registrant, AOL, Tribune, KPCB VII and KPCB Zaibatsu II, including Form of Warrant.
10.23 Promissory Note dated June 5, 1998 in the amount of $500,000 between Candice Carpenter and the
Registrant.
10.24 Fourth Amended and Restated Stockholders' Agreement dated as of December 4, 1998, among the
Registrant, the Founders and each of the Investors identified therein.
10.25 Fourth Amended and Restated Registration Rights Agreement dated as of December 4, 1998, among the
Registrant, the Founders and each of the Investors identified therein.
21 List of subsidiaries.
23.1 Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 5.1).*
23.2 Consent of PricewaterhouseCoopers LLP.
24 Power of Attorney (included on page II-6).
27 Financial Data Schedule.
</TABLE>
- ------------------------------
* To be filed by amendment.
+ Confidental treatment has been requested for certain portions of this
agreement.
(b) Financial Statement Schedules
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
II-5
<PAGE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 10th day of December, 1998.
iVILLAGE INC.
By: /s/ Candice Carpenter
-------------------------------------
Candice Carpenter
Co-Chairperson of the Board and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that the persons whose signatures appear
below each severally constitutes and appoints Candice Carpenter and Caterina A.
Conti, and each of them, as true and lawful attorneys-in-fact and agents, with
full powers of substitution and resubstitution, for them in their name, place
and stead, in any and all capacities, to sign any and all amendments (including
pre-effective and post-effective amendments) to this Registration Statement and
to sign any registration statement (and any post-effective amendments thereto)
relating to the same offering as this Registration Statement that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as they might or
could do in person, hereby ratifying and confirming all which said
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do, or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
--------- -------- ----
<S> <C> <C>
/s/ Candice Carpenter Co-Chairperson of the Board and Chief December 10, 1998
- ----------------------------------------- Executive Officer (Principal Executive
Candice Carpenter Officer)
/s/ Nancy Evans Editor-in-Chief and Co-Chairperson of the December 10, 1998
- ----------------------------------------- Board
Nancy Evans
/s/ Craig T. Monaghan Chief Financial Officer (Principal December 10, 1998
- ----------------------------------------- Financial Officer)
Craig T. Monaghan
/s/ Sanjay Muralidhar Vice President, Finance (Principal December 10, 1998
- ----------------------------------------- Accounting Officer)
Sanjay Muralidhar
/s/ Lennert J. Leader Director December 10, 1998
- -----------------------------------------
Lennert J. Leader
/s/ Habib Kairouz Director December 10, 1998
- -----------------------------------------
Habib Kairouz
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
--------- -------- ----
<S> <C> <C>
Director
- -----------------------------------------
William L. Killen, Jr.
/s/ Lori Koffman Director December 10, 1998
- -----------------------------------------
Lori Koffman
/s/ Philip Schlein Director December 10, 1998
- -----------------------------------------
Philip Schlein
/s/ Michael Levy Director December 10, 1998
- -----------------------------------------
Michael Levy
</TABLE>
II-8
<PAGE>
SCHEDULE II
iVILLAGE INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COLUMN C
COLUMN B ------------------------ COLUMN E
---------- ADDITIONS ----------
BALANCE AT CHARGED TO CHARGED COLUMN D BALANCE AT
BEGINNING COSTS AND TO OTHER ---------- END
COLUMN A OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- -------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
For the period from July 1, 1995
(inception) to December 31, 1995:
Provision for doubtful accounts............... $ -- $ -- $ -- $ -- $ --
-------- -------- ---------- ---------- --------
-------- -------- ---------- ---------- --------
For the year ended December 31, 1996:
Provision for doubtful accounts................. $ -- $ -- $ -- $ -- $ --
-------- -------- ---------- ---------- --------
-------- -------- ---------- ---------- --------
For the year ended December 31, 1997:
Provision for doubtful accounts................. $ -- $748,589 $ 100,000(1) $ 568,760(2) $279,839
-------- -------- ---------- ---------- --------
-------- -------- ---------- ---------- --------
For the nine months ended September 30, 1998:
Provision for doubtful accounts (unaudited)..... $279,839 $455,000 $ -- $ 11,765 $723,074
-------- -------- ---------- ---------- --------
-------- -------- ---------- ---------- --------
</TABLE>
- ------------------
(1) Doubtful accounts written off against revenue
(2) Doubtful accounts written off, net of cash recovered
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ---------- ----------- -----------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement.
2.1 -- Agreement and Plan of Reorganization and Merger dated as of January 31, 1997, as
amended on March 31, 1997, as further amended as of May 15, 1997, as further amended
as of May 16, 1997 and as further amended as of May 23, 1997 among the Registrant,
Health ResponseAbility Systems, Inc., and other signatories thereto.
2.2 -- Agreement and Plan of Reorganization dated as of December 10, 1996 among the
Registrant, PP Acquisition Corporation, ParentsPlace.com, Inc. and the stockholders
of ParentsPlace.com, Inc.
3.1 -- Certificate of Incorporation of the Registrant, as currently in effect.
3.3 -- Form of Amended and Restated Certificate of Incorporation of the Registrant, to be
filed prior to completion of this offering.*
3.4 -- Form of Amended and Restated Certificate of Incorporation of the Registrant, to be
filed and effective upon completion of this offering.*
3.5 -- Bylaws of the Registrant, as currently in effect.
3.6 -- Form of Amended and Restated Bylaws of the Registrant, to be effective upon
completion of this offering.*
4.1 -- Form of Registrant's Common Stock Certificate.*
5.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP.*
9.1 -- Voting Trust Agreement dated as of September 19, 1995 between Candice Carpenter,
Nancy Evans and certain owners of Common Stock of the Registrant.
10.1 -- Form of Indemnification Agreement between the Registrant and each of its directors
and officers.*
10.2 -- 1995 Amended and Restated Employee Stock Option Plan of the Registrant.
10.3 -- 1997 Amended and Restated Acquisition Stock Option Plan of the Registrant.
10.4 -- 1999 Employee Stock Option Plan of the Registrant.*
10.5 -- 1999 Director Stock Option Plan of the Registrant.*
10.6 -- 1999 Employee Stock Purchase Plan of the Registrant.*
10.7 -- Interactive Services Agreement dated July 1, 1997, between the Registrant and America
Online, Inc. ("AOL").+
10.8 -- Confidential Bankcard Marketing Agreement dated June 4, 1998, between the Registrant
and First Credit Card Services USA L.L.C.+
10.9 -- Promotion Distribution and License Agreement dated October 21, 1998 between AT&T
Corp. and the Registrant.*
10.10 -- Exclusive Sponsorship Agreement dated February 28, 1998 between Amazon.com, Inc. and
the Registrant.+
10.11 -- Promotion Agreement dated November 6, 1998 between Snap! LLC and the Registrant.+
10.12 -- Online Services Agreement dated December 19, 1997 between Charles Schwab & Co., Inc.
and the Registrant.+
10.13 -- Letter Agreement dated November 11, 1998 between the National Broadcasting Company,
Inc. and the Registrant.
10.14 -- Joint Activities Agreement dated September 1997 between Intuit Inc. and the
Registrant.+
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ---------- ----------- -----------
<S> <C> <C>
10.15 -- Form of Non-Competition, Non-Disclosure and Assignment of Inventions Agreement dated
September 9, 1995, and Amendment dated May 6, 1996, between the Registrant and each
of Candice Carpenter, Nancy Evans and Robert Levitan.
10.16 -- Employment Letter dated June 4, 1998 to Craig Monaghan.*
10.17 -- Employment Letter dated December , 1998 to Allison Abraham.*
10.18 -- Lease dated August 21, 1995, commencing on September 1, 1995, as amended on
September 20, 1995, as amended and supplemented April 5, 1996, as further amended and
supplemented on April 15, 1996, as further amended and supplemented January 20, 1997,
and as amended and supplemented on May 8, 1997, between 170 Fifth Associates (the
"Landlord") and the Registrant.
10.19 -- Lease dated March 19, 1998, commencing March 15, 1998 between 149 Fifth Avenue
Corporation and the Registrant, as supplemented on June 30, 1998.
10.20 -- Commercial Lease dated August 13, 1997 between Grove Corporate Plaza and the
Registrant.
10.21 -- Rental Agreement dated September 8, 1997 between Jack May and the Registrant.
10.22 -- Note and Warrant Purchase Agreement dated as of February 27, 1997, as amended
April 29, 1997, among the Registrant, AOL, Tribune, KPCB VII and KPCB Zaibatsu II,
including Form of Warrant.
10.23 -- Promissory Note dated June 5, 1998 in the amount of $500,000 between Candice
Carpenter and the Registrant.
10.24 -- Fourth Amended and Restated Stockholders' Agreement dated as of December 4, 1998,
among the Registrant, the Founders and each of the Investors identified therein.
10.25 -- Fourth Amended and Restated Registration Rights Agreement dated as of December 4,
1998, among the Registrant, the Founders and each of the Investors identified
therein.
21 -- List of subsidiaries.
23.1 -- Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 5.1).*
23.2 -- Consent of PricewaterhouseCoopers LLP.
24 -- Power of Attorney (included on page II-6).
27 -- Financial Data Schedule.
</TABLE>
- ------------------
* To be filed by amendment.
+ Confidental treatment has been requested for certain portions of this
agreement.
<PAGE>
iVILLAGE INC.
Common Stock
(par value $0.0005 per share)
Underwriting Agreement
----------------------
...................., 1999
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Hambrecht & Quist LLC
As representatives of the several Underwriters
named in Schedule I hereto
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
iVillage Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of .
. . . . . .shares (the "Firm Shares") and, at the election of the Underwriters,
up to . . . . . . additional shares (the "Optional Shares") of Common Stock,
$[0.0005] par value per share ("Stock"), of the Company. The Firm Shares and
the Optional Shares that the Underwriters elect to purchase pursuant to Section
2 hereof are herein collectively called the "Shares".
1. The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-....) and all
pre-effective amendments thereto (the "Initial Registration Statement") in
respect of the Shares has been filed with the Securities and Exchange
Commission (the "Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered to you,
and, excluding exhibits thereto, to you for each of the other Underwriters,
have been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a "Rule
462(b) Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective upon
filing, no other document with respect to the Initial Registration Statement
has heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or threatened by
the Commission (any preliminary prospectus included in the Initial Registration
Statement or filed with the Commission
<PAGE>
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Act is hereinafter called a "Preliminary Prospectus"; the various
parts of the Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and including the information
contained in the form of final prospectus filed with the Commission pursuant to
Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by
virtue of Rule 430A under the Act to be part of the Initial Registration
Statement at the time it was declared effective, each as amended at the time
such part of the Initial Registration Statement became effective or such part
of the Rule 462(b) Registration Statement, if any, became or hereafter becomes
effective, are hereinafter collectively called the "Registration Statement";
and such final prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, is hereinafter called the "Prospectus";
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Goldman, Sachs & Co. expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder and do not and
will not, as of the applicable effective date as to the Registration Statement
and any amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein;
(d) Neither the Company nor any of its subsidiaries (as defined in
Rule 405 of the rules and regulations under the Act), taken as a whole, has
sustained since the date of the latest audited financial statements included in
the Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development which could reasonably be expected to result
in a prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations
of the Company and its subsidiaries, taken as a whole, otherwise than as set
forth or contemplated in the Prospectus;
(e) Neither the Company nor any of its subsidiaries owns real
property, and the Company and its subsidiaries have good and marketable title
to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
-2-
<PAGE>
Prospectus or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not materially interfere with the use
made and proposed to be made of such property and buildings by the Company and
its subsidiaries;
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualifications, except where the
failure to so qualify would not, individually or in the aggregate, have or
could reasonably be expected to result in a material adverse effect on the
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect"); and each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation;
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description of the Stock contained in the Prospectus; and
all of the issued shares of capital stock of each subsidiary of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and (except as set forth in the Prospectus) are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equitable interests or claims;
(h) The Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;
(i) The issue and sale of the Shares to be sold by the Company and the
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the Company or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or any of
their properties; and no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the
Company of the transactions contemplated by this Agreement, except the
registration under the Act of the Shares, the approval by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale
of the Shares, and such consents, approvals, authorizations, registrations or
qualifications as may be
-3-
<PAGE>
required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Shares by the Underwriters;
(j) Neither the Company nor any of its subsidiaries is in violation of
its Certificate of Incorporation or By-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its properties may
be bound, except where such default would not, individually or in the
aggregate, have a Material Adverse Effect;
(k) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a summary
of the terms of the Stock, and under the caption "Underwriting", insofar as
they purport to describe the provisions of the documents referred to therein,
are accurate summaries and descriptions of such terms and provisions in all
material respects;
(l) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or
any of its subsidiaries, would, individually or in the aggregate, have a
Material Adverse Effect and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(m) Other than as set forth in the Prospectus, the Company and its
subsidiaries have sufficient interests in all patents, trademarks, service
marks, trade names, domain names, copyrights, trade secrets, information,
proprietary rights and processes ("Intellectual Property") necessary for their
business as described in the Prospectus and, to the Company=s knowledge,
necessary in connection with the products and services under development,
without, to the Company=s knowledge, any conflict with or infringement of the
interests of others, except for such conflicts which, individually or in the
aggregate, have not had and are not reasonably likely to result in a Material
Adverse Effect, and have taken all reasonable steps necessary to secure
interests in such Intellectual Property from their contractors; except as set
forth in the Prospectus, the Company is not aware of outstanding options,
licenses or agreements of any kind relating to the Intellectual Property of the
Company which are required to be set forth in the Prospectus, and, except as
set forth in the Prospectus, neither the Company nor any of its subsidiaries is
a party to or bound by any options, licenses or agreements with respect to the
Intellectual Property of any other person or entity which are required to be
set forth in the Prospectus; none of the technology employed by the Company has
been obtained or is being used by the Company or its subsidiaries in violation
of any contractual fiduciary obligation binding on the Company or any of its
subsidiaries or to the knowledge of the Company any of its directors, officers
or employees or otherwise in violation of the rights of any persons; except as
disclosed in the Prospectus, neither the Company nor any of its subsidiaries
has received any written or, to the Company's knowledge, oral communications
alleging that the Company or any of its subsidiaries has violated, infringed or
conflicted with, or, by conducting its business as set forth in the Prospectus,
would violate, infringe or conflict with any of the Intellectual Property of
any other person or entity other than any such violations, infringements or
conflicts which, individually or in the aggregate, have not had and are not
reasonably likely to result in a Material Adverse Effect; and the Company and
its subsidiaries have taken and will maintain reasonable measures to prevent
the unauthorized dissemination or
-4-
<PAGE>
publication of their confidential information and, to the extent
contractually required to do so, the confidential information of third parties
in their possession;
(n) The Company maintains insurance of the types and in the amounts
generally deemed adequate for its business, including, but not limited to,
general liability insurance, business interruption insurance and insurance
covering personal property owned or leased by the Company against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect;
(o) There are no contracts, other documents or other agreements
required to be described in the Registration Statement or to be filed as
exhibits to the Registration Statement by the Act or by the rules and
regulations thereunder which have not been described or filed as required; the
contracts so described in the Prospectus are in full force and effect on the
date hereof; and neither the Company nor, to the Company's knowledge, any other
party is in breach of or default under any of such contracts other than such
breaches or defaults which, individually or in the aggregate, have not had, and
are not reasonably likely to result in, a Material Adverse Effect;
(p) Except as described in or contemplated by the Prospectus, the
Company and its subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and neither the
Company nor any such subsidiary has received any notice of proceedings relating
to the revocation or modification of, or failure to obtain, any such
certificate, authorization or permit which, individually or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect;
(q) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company or to require the Company
to include such securities with the Shares registered pursuant to the
Registration Statement, and the right of each person who is a party to any
contract, agreement or understanding so described to include such securities
pursuant to the Registration Statement has been effectively satisfied or
waived;
(r) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to which the
business or operations of the Company or any of its subsidiaries will be
affected by Year 2000 issues. As a result of such review, the Company represents
and warrants that the disclosure in the Registration Statement relating to Year
2000 issues is accurate and complies in all material respects with the rules and
regulations of the Act. "Year 2000 issues" as used herein means Year 2000 issues
described in or contemplated by the Commission's Interpretation: Disclosure of
Year 2000 Issues and Consequences by Public Companies, Investment Advisers,
Investment Companies, and Municipal Securities Issuers (Release No. 33-7558);
(s) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company", or an entity
"controlled" by an "investment company", as such
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terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(t) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075, Florida Statutes; and
(u) PricewaterhouseCoopers LLP, who have certified certain
consolidated financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at a purchase price per share of $.............., the number of Firm Shares (to
be adjusted by you so as to eliminate fractional shares) set forth opposite the
name of such Underwriter in Schedule I hereto, and (b) in the event and to the
extent that the Underwriters shall exercise the election to purchase Optional
Shares as provided below, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly,
to purchase from the Company, at the purchase price per share set forth in
clause (a) of this Section 2, that portion of the number of Optional Shares as
to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to ................... Optional Shares, at the purchase price
per share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise agree in
writing, earlier than two or later than ten business days after the date of
such notice.
3. Upon the authorization by you of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours'
prior notice to the Company shall be delivered by or on behalf of the Company
to Goldman, Sachs & Co., through the facilities of the Depository Trust Company
("DTC"), for the account of such Underwriter, against payment by or on behalf
of such Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to Goldman, Sachs &
Co. at least forty-eight hours in advance. The Company will cause the
certificates representing the Shares to be made available for checking and
packaging at
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least twenty-four hours prior to the Time of Delivery (as defined
below) with respect thereto at the office of DTC or its designated custodian
(the "Designated Office"). The time and date of such delivery and payment shall
be, with respect to the Firm Shares, 9:30 a.m., New York time, on
............., 1999 or such other time and date as Goldman, Sachs & Co. and the
Company may agree upon in writing, and, with respect to the Optional Shares,
9:30 a.m., New York time, on the date specified by Goldman, Sachs & Co. in the
written notice given by Goldman, Sachs & Co. of the Underwriters' election to
purchase such Optional Shares, or such other time and date as Goldman, Sachs &
Co. and the Company may agree upon in writing. Such time and date for delivery
of the Firm Shares is herein called the "First Time of Delivery", such time and
date for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(j) hereof, will be delivered at the offices
of Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York
10103 (the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at such Time of Delivery. A meeting will be held at the
Closing Location at 3:00 p.m., New York City time, on the New York Business Day
next preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be disapproved by you promptly after reasonable notice thereof; to
advise you, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and
to furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and
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dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in New York City in
such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering or
sale of the Shares and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary during such
period to amend or supplement the Prospectus in order to comply with the Act,
to notify you and upon your request to prepare and furnish without charge to
each Underwriter and to any dealer in securities as many copies as you may
from time to time reasonably request of an amended Prospectus or a supplement
to the Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Shares at any time nine months or more
after the time of issue of the Prospectus, upon your request but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as
many copies as you may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158);
(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not to
sell, offer to sell, contract to sell, grant any option or warrant for the
sale or purchase of, engage in any hedging transaction with respect to, or
otherwise dispose of, except as provided hereunder, any shares of Stock or any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to stock option plans
existing on, or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of, the date of this Agreement), without the prior
written consent of Goldman, Sachs & Co.;
(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and
its consolidated subsidiaries certified by independent public accountants)
and, as soon as practicable after the end of each of the
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first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;
(g) During a period of two years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver
to you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is listed;
and (ii) such additional information concerning the business and financial
condition of the Company as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the accounts
of the Company and its subsidiaries are consolidated in reports furnished to
its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on the
Nasdaq National Market ("NASDAQ");
(j) To file with the Commission such information on Form 10-Q or Form
10-K as may be required by Rule 463 under the Act; and
(k) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
6. The Company covenants and agrees with the several Underwriters
that the Company will pay or cause to be paid the following: (a) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (b) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares; (c)
all reasonable expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(d) all fees and expenses in connection with listing the Shares on NASDAQ; (e)
the filing fees incident to securing any required review by the NASD of the
terms of the sale of the Shares; (f) the cost of preparing stock certificates;
(g) the cost and charges of any transfer agent or registrar and (h) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section. It is
understood that the Company shall
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bear the cost of any other matters not directly relating to the sale
and purchase of the Shares pursuant to this Agreement, and that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
stock transfer taxes on resale of any of the Shares by them, and any
advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion,
to the condition that all representations and warranties and other statements
of the Company herein are, at and as of such Time of Delivery, true and
correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to
rely upon Rule 462(b), the Rule 462(b) Registration Statement shall
have become effective by 10:00 P.M., Washington, D.C. time, on the
date of this Agreement; no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued
and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied
with to your reasonable satisfaction;
(b) Hale and Dorr LLP, counsel for the Underwriters, shall have
furnished to you their written opinion (a draft of such opinion is
attached as Annex II(a) hereto), dated such Time of Delivery, with
respect to the matters covered in paragraphs (i), (ii), (vii), (xi)
and (xiii) of subsection (c) below as well as such other related
matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request
to enable them to pass upon such matters;
(c) Orrick, Herrington & Sutcliffe LLP, counsel for the Company,
shall have furnished to you their written opinion (a draft of such
opinion is attached as Annex II(b) hereto), dated such Time of
Delivery, in form and substance reasonably satisfactory to you, to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its
properties and conduct its business, as such properties and
business are described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock
of the Company (including the Shares being delivered at such Time
of Delivery) have been duly and validly authorized and issued and
upon payment for the Shares in accordance with the terms of this
Agreement, all issued shares of the capital stock of the Company
will be fully paid and non-assessable; and the Shares conform, in
all material respects, to the description of the Stock contained
in the Prospectus;
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(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to
require such qualification, except where the failure to so
register or qualify would not have a Material Adverse Effect
(such counsel being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company,
provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions and
certificates);
(iv) Each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation; and all of the
issued shares of capital stock of each such subsidiary have been
duly and validly authorized and issued, are fully paid and
non-assessable, and, to such counsel's knowledge (except as
otherwise set forth in the Prospectus), are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of
local counsel and in respect of matters of fact upon certificates
of officers of the Company or its subsidiaries, provided that
such counsel shall state that they believe that both you and they
are justified in relying upon such opinions and certificates);
(v) Any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases;
(vi) To such counsel's knowledge and other than as set forth
in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect; and, to such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vii) This Agreement has been duly authorized, executed and
delivered by the Company;
(viii) The issue and sale of the Shares being delivered at
such Time of Delivery to be sold by the Company and the
compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein
contemplated will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject
and which is filed as an exhibit to the Registration Statement,
(ii) result in any violation of the provisions of the Certificate
of Incorporation or By-laws of the Company or (iii) result in a
violation of any statute or any order, rule or regulation
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known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries
or any of their properties;
(ix) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Shares or the
consummation by the Company of the transactions contemplated by
this Agreement, except the registration under the Act of the
Shares, the approval by the NASD of the terms of the sale of the
Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(x) To the knowledge of such counsel, neither the Company nor
any of its subsidiaries is in violation of its Certificate of
Incorporation or By-laws;
(xi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport
to constitute a summary of the terms of the Stock, and under the
caption "Underwriting", insofar as they purport to describe the
provisions of the documents referred to therein, are accurate
summaries and descriptions of such terms and provisions in all
material respects;
(xii) The Company is not an "investment company", or an entity
"controlled" by an "investment company", as such terms are
defined in the Investment Company Act; and
(xiii) The Registration Statement or any further amendments
thereto, as of its effective date, and the Prospectus or any
further amendments or supplements thereto, as of its issue date
(except for the financial statements, schedules and other
financial information included therein or omitted therefrom, as
to which counsel need not express an opinion), complied as to
form in all material respects with the requirements of the Act
and rules and regulations thereunder.
Such opinion letter shall also state that such counsel has
participated in conferences with representatives of the Underwriters and their
counsel and with representatives of the Company and its accountants concerning
the Registration Statement and the Prospectus and has considered the matters
required to be stated therein and the statements contained therein. Although
such counsel do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or
Prospectus, except for those referred to in Subsection (xi) of this Section
7(c), nothing has come to such counsel's attention to cause them to believe
that, as of its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to such Time of Delivery, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that, as of its date and as of such Time of Delivery, the
Prospectus, or any further amendment or supplement thereto made by the Company
prior to such Time of Delivery, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel has not been requested to and does not make any comment in
this paragraph with respect to the
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financial statements, schedules and other financial information
contained in or omitted from the Registration Statement or the Prospectus), and
they do not know of any amendment to the Registration Statement required to be
filed or of any contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to be described
in the Registration Statement or the Prospectus which are not filed or
described as required. As to matters of fact in the foregoing opinions, counsel
may rely upon certificates of officers of the Company and public officials;
(d) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 a.m., New York City time, on the effective
date of any post-effective amendment to the Registration Statement
filed subsequent to the date of this Agreement and also at each Time
of Delivery, PricewaterhouseCoopers LLP shall have furnished to you a
letter or letters, dated the respective dates of delivery thereof, in
form and substance satisfactory to you, to the effect set forth in
Annex I hereto (the executed copy of the letter delivered prior to
the execution of this Agreement is attached as Annex I(a) hereto and
a draft of the form of letter to be delivered on the effective date
of any post-effective amendment to the Registration Statement and as
of each Time of Delivery is attached as Annex I(b) hereto);
(e)(i)Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated
in the Prospectus, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any
of its subsidiaries or any change, or any development which could
reasonably be expected to result in a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of
the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(f) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading
in securities generally on the New York Stock Exchange or on NASDAQ;
(ii) a suspension or material limitation in trading in the Company's
securities on NASDAQ; (iii) a general moratorium on commercial
banking activities declared by either Federal or New York State
authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States
of a national emergency or war, if the effect of any such event
specified in this Clause (iv) in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated in the
Prospectus;
(g) The Shares at such Time of Delivery shall have been duly
listed for quotation on NASDAQ;
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(h) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each director, officer,
stockholder and optionholder of the Company, in form and substance
satisfactory to you, to the effect that, during the period beginning
from the date hereof and continuing to and including the date 180
days after the date of the Prospectus, such person will not sell,
offer to sell, contract to sell, grant any option or warrant for the
sale or purchase of, or otherwise dispose of, any shares of Stock or
any securities of the Company that are substantially similar to the
Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to
receive, Stock or any such substantially similar securities (other
than transfers as bona fide gifts or to any trust for the direct or
indirect benefit of the holder or his immediate family, or upon the
conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement), without the prior
written consent of Goldman, Sachs & Co.; provided, however, that such
stockholder may make transfers to affiliates as described in such
lock-up agreements;
(i) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of
prospectuses on the New York Business Day next succeeding the
date of this Agreement; and
(j) The Company shall have furnished or caused to be furnished
to you at such Time of Delivery certificates of officers of the
Company satisfactory to you as to the accuracy of the
representations and warranties of the Company herein at and as of
such Time of Delivery, as to the performance by the Company of
all of its obligations hereunder to be performed at or prior to
such Time of Delivery, and as to such other matters as you may
reasonably request, and the Company shall have furnished or
caused to be furnished certificates as to the matters set forth
in subsections (a) and (e) of this Section.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Goldman, Sachs & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
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contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through Goldman, Sachs & Co. expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the
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<PAGE>
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 8 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company) and to
each person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Shares, or the Company notifies you that
it has so arranged for the purchase of such Shares, you or the Company shall
have the right to postpone such Time of Delivery for a period of not more than
seven days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with
-16-
<PAGE>
like effect as if such person had originally been a party to this Agreement
with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the
number of Shares which such Underwriter agreed to purchase hereunder at such
Time of Delivery and, in addition, to require each non-defaulting Underwriter
to purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all of the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of
any non-defaulting Underwriter or the Company, except for the expenses to be
borne by the Company and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless
of any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company shall then be under no liability to any Underwriter except
as provided in Sections 6 and 8 hereof; but, if for any other reason any Shares
are not delivered by or on behalf of the Company as provided herein, the
Company will reimburse the Underwriters through you for all reasonable
out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company shall then be under no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
Representatives.
-17-
<PAGE>
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you as the representatives in care of
Goldman, Sachs & Co., 32 Old Slip, 9th Floor, New York, New York 10004,
Attention: Registration Department; and if to the Company shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company set
forth in the Registration Statement, Attention: Secretary; provided, however,
that any notice to an Underwriter pursuant to Section 8(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire or telex
constituting such Questionnaire, which address will be supplied to the Company
by you on request. Any such statements, requests, notices or agreements shall
take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters and the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please
sign and return to us one for the Company and each of the Representatives plus
one for each counsel counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination, upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
iVillage Inc.
By:
------------------------------------
Name:
Title:
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<PAGE>
Accepted as of the date hereof
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Hambrecht & Quist LLC
By:
-------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
-19-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of Optional
Shares to be Purchased
Total Number of Firm if Maximum Option
Shares to be Purchased Exercised
---------------------- ----------------------
Underwriter
-----------
<S> <C> <C>
Goldman, Sachs & Co......................................
Credit Suisse First Boston Corporation...................
Hambrecht & Quist LLC....................................
---------------------- ----------------------
Total....................................................
====================== ======================
</TABLE>
-20-
<PAGE>
ANNEX I
Pursuant to Section 7(d) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined
by them and included in the Prospectus or the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports
thereon, copies of which have been separately furnished to the
representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus as indicated in their reports thereon
copies of which have been separately furnished to the Representatives
and on the basis of specified procedures including inquiries of
officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Company for the three most recent fiscal years
included in the Prospectus agrees with the corresponding amounts
(after restatements where applicable) in the audited consolidated
financial statements for such three fiscal years which were included
in the Prospectus;
(v) They have compared the information in the Prospectus
under selected captions with the disclosure requirements of Regulation
S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not
conform in
-1-
<PAGE>
all material respects with the disclosure requirements of
Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in
the Prospectus for them to be in conformity with generally
accepted accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were
not included in the Prospectus but from which were derived
any unaudited condensed financial statements referred to in
Clause (A) and any unaudited income statement data and
balance sheet items included in the Prospectus and referred
to in Clause (B) were not determined on a basis substantially
consistent with the basis for the audited consolidated
financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply
as to form in all material respects with the applicable
accounting requirements of the Act and the published rules
and regulations thereunder or the pro forma adjustments have
not been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which
were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
consolidated
-2-
<PAGE>
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or
any increases in any items specified by the Representatives,
in each case as compared with amounts shown in the latest
balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described
in such letter; and
(F) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any
increases in any items specified by the Representatives, in
each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Representatives, except in each case
for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(vii) In addition to the examination referred to in their
report included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus,
or in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.
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<PAGE>
EXECUTION COPY
===============================================================================
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
DATED AS OF
JANUARY 31, 1997,
AMONG
iVILLAGE, INC.
HRS ACQUISITION CORPORATION
HEALTH RESPONSEABILITY SYSTEMS, INC.
THE SECURITYHOLDERS OF HEALTH RESPONSEABILITY SYSTEMS, INC.
AND
ALLEN DOUMA
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I GENERAL ................................................... 1
1.1 The Merger ................................................ 1
1.2 The Effective Time of the Merger .......................... 2
1.3 Effect of Merger .......................................... 2
1.4 Charter and By-Laws of Surviving Corporation .............. 2
1.5 Taking of Necessary Action ................................ 2
1.6 Tax-Free Reorganization ................................... 2
1.7 Closing ................................................... 3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS .............................. 3
2.1 Total Consideration ....................................... 3
2.2 Approval of Transaction; Exchange of Securities ........... 5
2.3 Escrow Deposits ........................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES ............................ 6
3.1 Representations and Warranties of the Company, the
Shareholder and Douma ..................................... 6
3.2 Several Representations and Warranties of the
Shareholder, Douma and AOL ................................ 23
3.3 Representations and Warranties of Purchaser ............... 27
ARTICLE IV CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME;
ADDITIONAL AGREEMENTS ..................................... 31
4.1 Access to Records and Properties of Each Party;
Confidentiality ........................................... 31
4.2 Operation of Business of the Company ...................... 32
4.3 Negotiations With Others .................................. 32
4.4 Advice of Changes ......................................... 33
4.5 Company Financial Information Update ...................... 34
4.6 Purchaser Financial Information Update .................... 34
4.7 Legal Conditions to Merger ................................ 34
4.8 Consents .................................................. 35
4.9 Efforts to Consummate ..................................... 35
4.10 Notice of Prospective Breach .............................. 35
4.11 Public Announcements ...................................... 35
4.12 No Transfers .............................................. 36
4.13 Confidentiality ........................................... 36
ARTICLE V CONDITIONS PRECEDENT ...................................... 36
5.1 Conditions to Each Party's Obligations .................... 36
5.2 Conditions to Obligations of Purchaser and
Acquisition Sub ........................................... 37
5.3 Conditions to Obligations of the Company .................. 39
ARTICLE VI ADDITIONAL AGREEMENTS ..................................... 41
6.1 Compliance With the Code .................................. 41
6.2 Restriction on Transfer ................................... 41
6.3 Piggyback Registration .................................... 43
<PAGE>
Page
----
6.4 Disclosure of Information; Non-Competition ................ 47
6.5 Employee Options .......................................... 49
ARTICLE VII INDEMNIFICATION ........................................... 49
7.1 Definitions ............................................... 49
7.2 Indemnification Generally ................................. 50
7.3 Assertion of Claims ....................................... 50
7.4 Notice and Defense of Third Party Claims .................. 50
7.5 Survival of Representations and Warranties ................ 51
7.6 Limitation on Indemnification ............................. 52
ARTICLE VIII TERMINATION; AMENDMENT, MODIFICATION AND WAIVER ........... 53
8.1 Termination ............................................... 53
8.2 Effect of Termination ..................................... 53
ARTICLE IX MISCELLANEOUS ............................................. 54
9.1 Expenses .................................................. 54
9.2 Entire Agreement .......................................... 54
9.3 Descriptive Headings ...................................... 54
9.4 Notices ................................................... 54
9.5 Counterparts .............................................. 55
9.6 Governing Law ............................................. 56
9.7 Benefits of Agreement ..................................... 56
9.8 Pronouns .................................................. 56
9.9 Amendment, Modification and Waiver ........................ 56
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<PAGE>
SCHEDULES
Purchaser Disclosure Schedule
Company Disclosure Schedule
Schedule 3.1(a) - Organization, Good Standing, Qualification and Power
Schedule 3.1(c) - Capital Stock, Securities
Schedule 3.1(e) - Financial Statements
Schedule 3.1(g) - Absence of Changes
Schedule 3.1(i) - Title to Assets, Properties and Rights and Related
Matters
Schedule 3.1(j) - Real Property - Owned or Leased
Schedule 3.1(k) - Intellectual Property
Schedule 3.1(l) - Company Software
Schedule 3.1(m) - Agreements
Schedule 3.1(p) - Accounts and Notes Receivable
Schedule 3.1(r) - Compliance, Governmental Authorities
Schedule 3.1(s) - Employees
Schedule 3.1(t) - Employee Benefit Plans and Contracts
Schedule 3.1(v) - Insurance
Schedule 3.1(w) - Bank Accounts; Powers of Attorney
Schedule 3.1(y) - Related Transactions
Schedule 3.1(af) - Officers and Directors
Schedule 3.1(ah) - Marketing Materials
Schedule 6.6 - Options
EXHIBITS
Exhibit A - Form of Articles of Merger
Exhibit B - [Intentionally Omitted]
Exhibit C - [Intentionally Omitted]
Exhibit D-1 - Form of Silveous Employment Agreement
Exhibit D-2 - Form of Douma Employment Agreement
Exhibit E - Form of Non-Disclosure Agreement
Exhibit F - [Intentionally Omitted]
Exhibit G-1 - Form of Silveous Option Agreement
Exhibit G-2 - Form of Douma Option Agreement
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<PAGE>
GLOSSARY
The following terms used in this Agreement are defined in the
following Sections:
Section or
Term Other Location
- ---- --------------
Acquisition Sub ................................................... Caption
Acquisition Transaction ........................................... 4.3(a)
Actions ........................................................... 3.1(o)
Affiliate ......................................................... 7.1(a)
Agreement ......................................................... Preamble
Articles of Merger ................................................ Preamble
AOL ............................................................... Caption
AOL Note .......................................................... 2.2(a)
AOL Warrant ....................................................... 2.2(a)
Basket Amount ..................................................... 7.6(a)
Benefit Arrangements .............................................. 3.1(t)
Business Day ...................................................... 1.7
Charter ........................................................... 3.1(a)
Closing ........................................................... 1.7
Closing Date ...................................................... 1.7
Code .............................................................. 1.6
Commission ........................................................ 1.2
Company ........................................................... Caption
Company Balance Sheet ............................................. 3.1(e)
Company Balance Sheet Date ........................................ 3.1(e)
Company Common Stock .............................................. Preamble
Company Disclosure Schedule ....................................... 3.1
Company Expenses .................................................. 9.1
Company Financial Statements ...................................... 3.1(e)
Company Preferred Stock ........................................... 2.2(a)
Company Principals ................................................ Caption
Company Returns ................................................... 3.1(h)
Company Rights .................................................... 3.1(k)
Competitive Business .............................................. 6.4(b)
Confidential Information .......................................... 6.4(a)
Constituent Corporations .......................................... 1.1
Designated Persons ................................................ 3.1(o)
Douma ............................................................. Caption
Douma Employment Agreement ........................................ 5.2(o)
Effective Time .................................................... 1.2
Employee .......................................................... 3.1(t)
Employee Plans .................................................... 3.1(t)
Encumbrances ...................................................... 3.1
Equity Rights ..................................................... 2.1(a)
ERISA ............................................................. 3.1(t)
ERISA Affiliate ................................................... 3.1(t)
Escrow Agent ...................................................... 2.3(a)
Escrow Agreement .................................................. 2.3(a)
Escrow Shares ..................................................... 2.3(b)
Event of Indemnification .......................................... 7.1(b)
Executory Period .................................................. 4.1(a)
FAS No. 5 ......................................................... 3.1(f)
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<PAGE>
Section or
Term Other Location
- ---- --------------
Financing ......................................................... 5.1(e)
Fully Diluted Company Shares ...................................... 2.1(a)
GAAP .............................................................. 3.1(e)
Governmental Authority ............................................ 3.1(o)
Indemnified Persons ............................................... 7.1(c)
Indemnifying Persons .............................................. 7.1(d)
Intellectual Property Rights ...................................... 3.1(k)
Interested Securityholder ......................................... 3.1(ad)
Leased Real Property .............................................. 3.1(j)
Leases ............................................................ 3.1(j)
Liability ......................................................... 3.1(f)
Licensed Software ................................................. 3.1(l)
LOI Deposit ....................................................... 4.3(b)
LOI Escrow Agent .................................................. 2.3(c)
LOI Escrow Agreement .............................................. 2.3(c)
Losses ............................................................ 7.1(e)
Material Adverse Change ........................................... 3.1(g)
Material Adverse Effect ........................................... 3.1(a)
Merger ............................................................ 1.1
Merger Shares ..................................................... 2.1(b)
Non-Disclosure Agreements ......................................... 5.2(p)
Offering Memorandum ............................................... 3.3(f)
OGK ............................................................... 5.3(d)
Option Agreement .................................................. 5.3(f)
Option Agreements ................................................. 5.3(f)
Other Shares ...................................................... 6.3(a)
Owned Software .................................................... 3.1(l)
Party ............................................................. 4.7
Preferred Stock ................................................... 3.3(c)
Primary Shares .................................................... 6.3(a)
Purchaser ......................................................... Caption
Purchaser Common Stock ............................................ Preamble
Purchaser Disclosure Schedule ..................................... 3.3
Registrable Founder's Shares ...................................... 6.3(a)
Registrable Shares ................................................ 6.3(a)
Restricted Securities ............................................. 6.2(a)
Rule 144 .......................................................... 6.3(a)
Schedule of Expenses .............................................. 5.2(g)
Series A Preferred Stock .......................................... 3.3(c)
Series B Preferred Stock .......................................... 3.3(c)
Series B-1 Preferred Stock ........................................ 3.3(c)
Shareholder ....................................................... Caption
Silveous Employment Agreement ..................................... 5.2(o)
Site .............................................................. 3.1(z)
Software .......................................................... 3.1(l)
SPPT .............................................................. 5.2(d)
Stockholders' Agreement ........................................... 5.2(n)
Subject Business .................................................. 6.4(a)
Subsidiary ........................................................ 3.1(b)
Survival Date ..................................................... 7.5
Surviving Corporation ............................................. 1.1
-v-
<PAGE>
Section or
Term Other Location
- ---- --------------
Tax ............................................................... 3.1(h)
Taxes ............................................................. 3.1(h)
Third Party Claim ................................................. 7.4
to the best knowledge of the Company .............................. 3.1(ah)
Transaction Costs ................................................. 9.1
Transfer .......................................................... 6.2(a)
transferee ........................................................ 3.1(h)
Virginia Statute .................................................. Preamble
Warrant Shares .................................................... 3.3(c)
-vi-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION AND
MERGER dated as of January 31, 1997, among
iVILLAGE, INC., a Delaware corporation
("Purchaser"), HEALTH RESPONSEABILITY
SYSTEMS, INC., a Virginia corporation (the
"Company"), ELIN SILVEOUS, the sole
shareholder of the Company (the
"Shareholder"), HRS ACQUISITION
CORPORATION, a Virginia corporation and a
direct, wholly-owned subsidiary of
Purchaser ("Acquisition Sub"), AMERICA
ONLINE, INC. ("AOL"), a Delaware
corporation and the holder of the AOL
Warrant (as defined below), and ALLEN
DOUMA, the Chief Executive Officer of the
Company ("Douma" and together with the
Shareholder, the "Company Principals").
The Boards of Directors of Purchaser, Acquisition Sub and the
Company have each duly approved and adopted this Agreement and Plan of
Reorganization and Merger (the "Agreement"), the Articles of Merger in
substantially the form of Exhibit A attached hereto (the "Articles of Merger")
and the proposed merger of the Company with and into Acquisition Sub in
accordance with this Agreement, the Articles of Merger and the Virginia Stock
Corporation Act (the "Virginia Statute"), whereby, among other things, the
issued and outstanding shares of common stock, $.01 par value, of the Company
(the "Company Common Stock"), will be exchanged and converted into shares of
common stock, $.0005 par value, of Purchaser (the "Purchaser Common Stock") in
the manner set forth in Article II hereof and in the Articles of Merger, upon
the terms and subject to the conditions set forth in this Agreement and the
Articles of Merger.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived from this Agreement and the Articles of Merger and the representations,
warranties, covenants, agreements, conditions and promises contained herein and
therein, the parties hereby agree as follows:
ARTICLE I
GENERAL
1.1. The Merger. In accordance with the provisions of this
Agreement, the Articles of Merger, and the Virginia Statute, the Company shall
be merged with and into Acquisition Sub (the
<PAGE>
"Merger"), which at and after the Effective Time shall be, and is sometimes
hereinafter referred to as the "Surviving Corporation." For convenience of
reference, Acquisition Sub and the Company are sometimes collectively
hereinafter referred to as the "Constituent Corporations."
1.2. The Effective Time of the Merger. Subject to the
provisions of this Agreement, the Articles of Merger shall be executed and
delivered to and filed with the State Corporation Commission of the
Commonwealth of Virginia (the "Commission") by each of the Constituent
Corporations on the Closing Date in the manner provided under Section 13.1-720
of the Virginia Statute. The Merger shall become effective (the "Effective
Time") upon the issuance by the Commission of a Certificate of Merger (as
defined in the Virginia Statute) in accordance with Virginia Statute.
1.3. Effect of Merger. At the Effective Time, the separate
existence of the Company shall cease and the Company shall be merged with and
into the Surviving Corporation, and the Surviving Corporation shall possess all
of the rights, privileges, powers and franchises as well of a public as of a
private nature, and be subject to all the restrictions, disabilities and duties
of each of the Constituent Corporations as provided in Section 13.1-721 of the
Virginia Statute.
1.4. Charter and By-Laws of Surviving Corporation. From and
after the Effective Time and pursuant to the Articles of Merger: (i) the Charter
of Acquisition Sub shall be the Charter of the Surviving Corporation, unless
and until altered, amended or repealed as provided in the Virginia Statute,
(ii) the By-Laws of Acquisition Sub shall be the By-Laws of the Surviving
Corporation, unless and until altered, amended or repealed as provided in the
Virginia Statute, the Charter or such By-Laws, (iii) the directors of
Acquisition Sub shall be the directors of the Surviving Corporation, unless and
until removed, or until their respective terms of office shall have expired, in
accordance with the Virginia Statute, the Charter and the By-Laws of the
Surviving Corporation, as applicable and (iv) the officers of Acquisition Sub
shall be the officers of the Surviving Corporation, unless and until removed,
or until their terms of office shall have expired, in accordance with the
Virginia Statute, the Charter and the By-Laws of the Surviving Corporation, as
applicable.
1.5. Taking of Necessary Action. Prior to the Effective Time,
the parties hereto shall do or cause to be done all such acts and things as may
be necessary or appropriate in order to effectuate the Merger as expeditiously
as reasonably practicable, in accordance with this Agreement, the Articles of
Merger and the Virginia Statute.
1.6. Tax-Free Reorganization. For Federal income tax
purposes, the parties intend that the Merger be treated as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code"), by
<PAGE>
reason of Section 368(a)(2)(D) of the Code. Each party shall not take a
position on any tax return or reports inconsistent with this Section 1.6, and
shall use their reasonable efforts to maintain such reporting in the context of
an audit. Each party shall give the other prompt notice of any challenges or
investigations undertaken by any taxing agency in connection with such
reporting, and shall keep such other party fully informed of all aspects of
such ongoing challenge or investigation.
1.7. Closing. Unless this Agreement shall have been
terminated and the transactions contemplated by this Agreement abandoned
pursuant to the provisions of Article VIII, and subject to the provisions of
Article V, the closing of the Merger (the "Closing") will take place at 10:00
a.m. (New York time) on a date (the "Closing Date") to be mutually agreed upon
by the parties, which date shall be not later than the third Business Day after
all the conditions set forth in Article V shall have been satisfied (or waived
in accordance with Section 9.9, to the extent the same may be waived), unless
another date is agreed to in writing by the parties. The Closing shall take
place at the offices of O'Sullivan Graev & Karabell, LLP, 30 Rockefeller Plaza,
New York, New York 10112, unless another place is agreed to in writing by the
parties. As used herein, the term "Business Day" shall mean any day other than
a Saturday, Sunday or day on which banks are permitted to close in the City and
State of New York.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS
2.1. Total Consideration.
(a) Payment of Consideration. The entire consideration
payable by Purchaser with respect to all outstanding shares of capital stock of
the Company and for all options, warrants, rights, calls, commitments or
agreements of any character to which the Company is a party or by which it is
bound calling for the issuance of shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for, or representing
the right to purchase or otherwise receive, directly or indirectly, any such
capital stock, or other arrangement to acquire, at any time or under any
circumstance, capital stock of the Company or any such other securities (such
options, warrants, rights, calls, commitments, agreements or arrangements being
sometimes hereinafter collectively referred to as "Equity Rights"; and the
Equity Rights, together with all such outstanding shares of capital stock of
the Company, being sometimes collectively hereinafter referred to as the "Fully
Diluted Company Shares") shall be an aggregate consideration payable as
follows:
<PAGE>
(i) an aggregate amount of $4,600,000 in cash;
and
(ii) 1,038,000 shares of Purchaser Common Stock,
payable or issuable (as the case may be) as provided in Section 2.1(b).
(b) Effect on Capital Stock. At the Effective Time, subject
and pursuant to the terms and conditions of this Agreement and the Articles of
Merger, by virtue of the Merger and without any action on the part of the
Constituent Corporations or the holders of the capital stock of the Constituent
Corporations:
(i) The shares of Company Common Stock issued and outstanding
as of the Effective Time shall be exchanged for and converted into
the right to receive shares of Purchaser Common Stock and/or cash as
follows:
(A) all shares of Company Common Stock held by the
Shareholder shall be exchanged and converted into the right to
receive in the aggregate: (1) $2,600,000 in cash, and (2) 1,038,000
shares of Purchaser Common Stock; and
(B) all Equity Rights held by AOL shall be surrendered and
cancelled in exchange for the right to receive in the aggregate
$2,000,000 in cash.
(ii) In the event that any time during the Executory Period,
the Company shall issue any capital stock or Equity Rights, the foregoing
allocations of consideration shall be proportionately and equitably
adjusted and reallocated among all holders of Company Common Stock.
(iii) All Equity Rights not theretofore converted, exercised or
exchanged for such shares shall cease to be outstanding and shall be
canceled, terminated and extinguished effective immediately upon the
Effective Time.
(iv) Each share of Company Common Stock that is authorized but
unissued shall cease to exist and no Purchaser Common Stock or other
consideration shall be delivered in exchange therefor.
(v) For convenience of reference, the shares of Purchaser
Common Stock to be issued upon the exchange and conversion of Company
Common Stock in accordance with this Section 2.1 are sometimes
hereinafter collectively referred to as the "Merger Shares."
(c) No Liability. Neither Purchaser, Acquisition Sub nor
the Company shall be liable to any holder of shares of and/or
<PAGE>
rights to Company Common Stock or Purchaser Common Stock, as the case may be,
for shares (or dividends or distributions with respect thereto) and/or rights
to such shares of Purchaser Common Stock to be issued in exchange for Company
Common Stock and/or rights thereto pursuant to this Section 2.1, if, on or
after the expiration of six months following the Effective Date, such shares
and/or rights thereto are delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
2.2. Approval of Transaction; Exchange of Securities.
(a) AOL Warrant and Note. Reference is made to that certain
warrant dated March 31, 1995 (the "AOL Warrant") for Series A Preferred Stock
of the Company (the "Company Preferred Stock") and the note of the Company,
dated April 2, 1995 (the "AOL Note") made in connection therewith in the
original principal amount of $270,000. Immediately prior to the Effective Time
and subject to and contingent upon the effectiveness of the Merger, AOL shall
surrender, terminate and cancel the AOL Note and relinquish its security
interest in the assets of the Company pursuant to the security agreement
entered into in connection with the AOL Note (which will concurrently be
terminated) and the AOL Warrant in exchange for the right to receive $2,000,000
in cash at Closing as full consideration.
(b) Agreement to Vote Shares. Prior to the Effective Time
and subject to and contingent upon the effectiveness of the Merger, the
Shareholder shall vote all of her shares of Company Common Stock, or execute
and deliver a written consent in favor of the approval of this Agreement, the
Articles of Merger and the Merger and any matter that could reasonably be
expected to facilitate the Merger.
2.3. Escrow Deposits.
(a) Escrow Agreement. Reference is made to the Escrow
Agreement which shall be dated as of the Effective Time among the Shareholder,
the Purchaser and the escrow agent named therein (the "Escrow Agent") in a form
mutually acceptable to the parties hereto (the "Escrow Agreement"). The Escrow
Agreement is being entered into for the purpose of securing the indemnification
obligations of the Company Principals under Article VII.
(b) Escrow Deposit. At the Effective Time, Purchaser shall
cause to be deposited with the Escrow Agent to be held by the Escrow Agent and
distributed subject to the terms of the Escrow Agreement (i) $130,000 from the
Shareholder in cash and (ii) certificates representing 103,800 Merger Shares
(of which all of the cash and all of the Purchaser Common Stock shall be
deposited on behalf of the Shareholder), together with stock powers duly
endorsed in blank for transfer on behalf of the Shareholder, who by her
execution and delivery of this Agreement, hereby authorizes and directs
Purchaser to make such deposit on her behalf (collectively, the "Escrow
Shares").
<PAGE>
(c) Letter of Intent Escrow. Reference is also made to that
certain escrow agreement dated January 31, 1997 (the "LOI Escrow Agreement")
among the Company, the Purchaser and the escrow agent named therein (the "LOI
Escrow Agent"). The monies deposited with the LOI Escrow Agent pursuant to the
terms of the LOI Escrow Agreement (minus any and all fees and expenses payable
to the LOI Escrow Agent pursuant to the LOI Escrow Agreement) will, at the
Effective Time, be released and distributed by the LOI Escrow Agent pursuant to
the terms of the LOI Escrow Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Company, the
Shareholder and Douma. The Company and the Company Principals hereby jointly
and severally represent and warrant to Purchaser and Acquisition Sub that,
except as disclosed in the disclosure schedule dated the date hereof, certified
as being such disclosure schedule by the President and Chief Executive officer
of the Company and delivered by the Company to Purchaser and Acquisition Sub
simultaneously herewith (which disclosure schedule shall reference with
specificity the representations and warranties to which the disclosures
contained therein relate) (the "Company Disclosure Schedule"):
(a) Organization; Good Standing; Qualification and Power.
The Company (i) is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Virginia, (ii) has all requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as now being conducted and as proposed to
be conducted to enter into this Agreement and the Articles of Merger, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby and (iii) is duly qualified and in
good standing to do business in those jurisdictions listed in the Company
Disclosure Schedule and in all other jurisdictions in which the failure to be
so qualified and in good standing could reasonably be expected to have a
material adverse effect on the business, properties, Liabilities, assets,
operations, results of operations, condition (financial or otherwise) or
affairs (a "Material Adverse Effect") of the Company. The Company has delivered
to Purchaser true and complete copies of the Charter and By-Laws of the
Company, in each case as amended to the date hereof. As used herein, "Charter"
shall mean, with respect to any corporation, those instruments that at the time
constitute its corporate charter as filed or recorded under the general
corporation law of the jurisdiction of its incorporation, including the
articles or certificate of incorporation or organization, and any amendments
thereto, as the same may have been restated, and any amendments thereto
(including any articles or certificates of merger or consolidation or
certificates of designation or similar
<PAGE>
instruments which effect any such amendment) which became effective after the
most recent such restatement.
(b) Equity Investments. The Company has never had, nor does
it currently have, any Subsidiaries, nor has it ever owned, nor does it
currently own, any capital stock or other proprietary interest, directly or
indirectly, in any corporation, association, trust, partnership, joint venture
or other entity. As used herein, a "Subsidiary" of any corporation means
another corporation an amount of whose voting securities sufficient to elect at
least a majority of its Board of Directors is owned directly or indirectly by
such corporation.
(c) Capital Stock; Securities. The authorized capital stock
of the Company consists of 10,000 shares of Company Common Stock, of which
1,000 shares are outstanding. The Company has not authorized nor reserved any
shares of Company Preferred Stock for issuance upon exercise of the AOL
Warrant. All outstanding shares of Company Common Stock are validly issued and
outstanding, fully paid and non-assessable and not subject to preemptive
rights. The Company Disclosure Schedule sets forth a true and complete list of
the holders of shares of Company Common Stock and the number and class or
series of such shares owned of record and beneficially by each such holder.
There are no Equity Rights (other than the AOL Warrant). Except as set forth in
the Company Disclosure Schedule, there are no voting trusts, voting agreements,
proxies, first refusal rights, first offer rights, co-sale rights, transfer
restrictions or other agreements, instruments or understandings (whether
written or oral, formal or informal) with respect to the voting, transfer or
disposition of Company Common Stock to which the Company or any Company
Principal is a party or by which it is bound, or, to the best knowledge of the
Company, among or between any persons other than the Company. All shares of
Company capital stock and all other securities previously issued by the Company
have been issued in compliance with and pursuant to an exemption from all
applicable Federal and State securities or "blue sky" laws.
(d) Authority; No Consents. The execution, delivery and
performance by the Company of this Agreement, the Articles of Merger and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of the
Company; and this Agreement and the Articles of Merger have been, and the
Articles of Merger when executed and delivered by the Company will be duly and
validly executed and delivered by the Company, and this Agreement and the
Articles of Merger are the valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting creditors, rights and remedies generally from time to time
in effect and to general equitable principles. Neither the execution, delivery
and performance of this Agreement or the Articles of Merger nor the
consummation by the Company of the transactions contemplated hereby or thereby
nor compliance by the
<PAGE>
Company with any provision hereof or thereof will (A) conflict with, (B) result
in any violations of, (C) cause a default under (with or without due notice,
lapse of time or both), (D) give rise to any right of termination, amendment,
cancellation or acceleration of any obligation contained in or the loss of any
material benefit under or (E) result in the creation of any Encumbrance on or
against any assets, rights or property of the Company under any term, condition
or provision of (x) any instrument or agreement to which the Company is a party,
or by which the Company or any of its properties, assets or rights may be
bound, (y) any law, statute, rule, regulation, order, writ, injunction, decree,
permit, concession, license or franchise of any Governmental Authority
applicable to the Company or any of its properties, assets or rights or (z) the
Company's Charter or By-Laws. Except as contemplated by this Agreement, no
permit, authorization, consent or approval of or by, or any notification of or
filing with, any Governmental Authority or other person is required in
connection with the execution, delivery and performance by the Company of this
Agreement or the Articles of Merger or the consummation of the transactions
contemplated hereby or thereby, except for (i) the filing of the Articles of
Merger with the Secretary of State of the State of Virginia and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business and (ii) such other consents, waivers, authorizations,
filings, approvals and registrations which if not obtained or made would not
have a Material Adverse Effect on the Company or impair the ability of the
Company and the Company Principals to consummate the transactions contemplated
by this Agreement or the Articles of Merger, including, without limitation, the
Merger.
(e) Financial Information.
(i) The Company has previously delivered to Purchaser the
following financial statements (collectively, the "Company Financial
Statements"), the unaudited balance sheets of the Company as at December
31, 1995 and December 31, 1996 (the "Company Balance Sheets"; and the date
of the Company 1996 balance sheet being the "Company Balance Sheet Date"),
and the related statements of income, respective years then ended
(including footnotes thereto).
(ii) The Company Financial Statements (A) are in accordance
with the books and records of the Company, (B) fairly present the
financial condition of the Company as at the respective dates indicated
and the results of operations of the Company for the respective periods
indicated and (C) except as set forth in the Company Disclosure Schedule,
have been prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP").
(f) Absence of Undisclosed Liabilities. At the Company
Balance Sheet Date, (i) the Company had no liability or obligation of any
nature (whether known or otherwise
<PAGE>
discoverable, matured or unmatured, fixed or contingent, secured or unsecured,
accrued, absolute or otherwise ("Liability")) required to be set forth on the
Company Balance Sheet in order for the Company Balance Sheet to fairly present
the financial condition of the Company at the respective dates thereof in
accordance with GAAP, which was not provided for or disclosed thereon, and (ii)
all liability reserves established by the Company and set forth thereon were
adequate for all such Liabilities at the respective dates thereof. There were
no material loss contingencies (as such term is used in Statement of Financial
Accounting Standards No. 5 issued by the Financial Accounting Standards Board
in March, 1975 ("FAS No. 5")) which were not adequately provided for on the
Company Balance Sheet as required by FAS No. 5.
(g) Absence of Changes. Since the Company Balance Sheet
Date, the Company has been operated in the ordinary course, consistent with
past practice, and there has not been:
(i) any material adverse change in the business, assets, properties,
Liabilities, operations, results of operations, condition (financial or
otherwise) or affairs (a "Material Adverse Change") of the Company;
(ii) any damage, destruction or loss, whether or not covered by
insurance, having or which could reasonably be expected to have a Material
Adverse Effect;
(iii) (A) any Liability created, assumed, guaranteed or incurred,
or (B) any transaction, contract or commitment entered into, by the
Company, in the case of either clause (A) or (B) other than in the
ordinary course of business;
(iv) any payment, discharge or satisfaction of any material
Encumbrance by the Company or any cancellation by the Company of any
material debts or claims or any amendment, termination or waiver of any
rights of material value to the Company;
(v) any declaration, setting aside or payment of any dividend or
other distribution of any assets of any kind whatsoever with respect to
any shares of the capital stock of the Company, or any direct or indirect
redemption, purchase or other acquisition of any such shares of the
capital stock of the Company;
(vi) any stock split, reverse stock split, combination,
reclassification or recapitalization of any Company Common Stock, or any
issuance of any other security in respect of or in exchange for, any
shares of Company Common Stock;
(vii) any issuance by the Company of any shares of its capital stock
or any debt security or any Equity Rights;
<PAGE>
(viii) any license, sale, transfer, pledge, mortgage or other
disposition of any material tangible or intangible asset (including any
Intellectual Property Rights) of the Company;
(ix) any termination of, or written indication of an intention to
terminate or not renew, any material contract, license, commitment or
other agreement between the Company and any other person;
(x) any material write-down or write-up of the value of any asset
of the Company, or any material write-off of any accounts receivable or
notes receivable of the Company or any portion thereof;
(xi) any increase in or modification of compensation payable or to
become payable to any director, officer, employee, consultant or agent of
the Company, or the entering into of any employment contract with any
officer or employee;
(xii) any increase in or modification or acceleration of any benefits
payable or to become payable under any bonus, pension, severance,
insurance or other benefit plan, payment or arrangement (including, but
not limited to, the granting of stock options, restricted stock awards or
stock appreciation rights) made to, for or with any director, officer,
employee, consultant or agent of the Company;
(xiii) the making of any loan, advance or capital contribution to or
investment in any person or the engagement in any transaction with any
employee, officer, director or securityholder of the Company, other than
advances to employees in the ordinary course of business for travel and
similar business expenses;
(xiv) any change in the accounting methods or practices followed by
the Company or any change in depreciation or amortization policies or
rates theretofore adopted;
(xv) any forward sales commitments at a price less than the Company's
cost of sales for such commitments;
(xvi) any termination of employment of any officer or key employee of
the Company or any expression of intention by any officer or key employee
of the Company to resign from such office or employment with the Company;
(xvii) any amendments or changes in the Company's Charter or By-Laws;
(xviii) any labor dispute or any union organizing campaign;
<PAGE>
(xix) the commencement of any litigation or other action by the
Company or the commencement or threat of commencement of any litigation or
other action against the Company; or
(xx) any agreement, understanding, authorization or proposal, whether
in writing or otherwise, for the Company to take any of the actions
specified in items (i) through (xx) above.
(h) Tax Matters. The Company: (i) has filed in a timely and
proper manner, consistent with then applicable laws, all Federal, state, local
and foreign Tax returns and Tax reports required to be filed by them through
the Closing Date, taking into account all appropriate extensions (the "Company
Returns"), with the appropriate governmental agencies in all jurisdictions in
which Company Returns are required to be filed and has paid all amounts shown
thereon to be due; and (ii) has paid all Taxes required to have been paid on or
before the Closing Date. All Taxes attributable to all taxable periods of the
Company ending on or before the Closing Date, to the extent not required to
have been previously paid have been adequately provided for on the Company
Balance Sheet. The Company will not accrue a Tax liability from the date of the
Company Balance Sheet up to and including the Closing Date, other than a Tax
liability accrued in the ordinary course of business. No Federal, state, local
or foreign tax audits or other administrative or court proceedings are
presently pending with respect to any of the Company Returns. The Company has
not been notified by any taxing authority that any such audit or proceeding is
going to be commenced. No waivers of statutes of limitations have been given or
requested with respect to the Company. Except as contested in good faith and
disclosed in the Company Disclosure Schedule, any deficiencies asserted or
assessments (including interest and penalties) made through the date of the
Company Balance Sheet as a result of any examination by the Internal Revenue
Service or by any other taxing authorities of any Company Return have been
fully paid or are adequately provided for on the Company Balance Sheet. No
additional Taxes have been proposed or asserted since the Company Balance Sheet
Date. The Company has not made an election to be treated as a "consenting
corporation" under Section 341(f) of the Code. The Company has not and will
not, on or before the Closing Date, incur any Tax liability pursuant to Section
541 of the Code. The Company has not agreed to, nor is required to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise. The Company is not now, nor has it ever been, a member of
a consolidated or combined group for Federal, state, local or foreign tax
purposes nor has it ever been included in a consolidated or combined tax return
for Federal, state, local or foreign tax purposes. The Company is not a party
to any agreement or contract with any "disqualified individual" (as defined in
Section 280G (c) of the Code) that, individually or taking into account any
other agreements or contracts currently in effect between the Company and such
disqualified individual,
<PAGE>
will result in the disallowance of any deduction for any payment under such
agreement or contract as an "excess parachute payment" (as defined in Section
280G(b)(1) of the Code). The Company and each of its predecessors have complied
with all applicable Laws relating to the payment and withholding of Taxes, and
has withheld and paid over all amounts required by Laws to be withheld and paid
from the wages and salaries of employees, and the Company is not liable for any
Taxes for failure to comply with such Laws. As used in this Agreement, "Tax"
means any of the Taxes and "Taxes" means, with respect to any entity, (A) all
income taxes (including any tax on or based upon net income, gross income,
income as specially defined, earnings, profits or selected items of income,
earnings or profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, alternative or add-on
minimum taxes, customs duties and other taxes, fees, assessments or charges of
any kind whatsoever, together with all interest and penalties, additions to
tax and other additional amounts imposed by any taxing authority (domestic or
foreign) on such entity and (B) any liability for the payment of any amount of
the type described in the immediately preceding clause (A) as a result of (i)
being a "transferee" (within the meaning of Section 6901 of the Code or any
other applicable law) of another entity, (ii) a member of an affiliated or
combined group or (iii) any contractual obligation.
(i) Title to Assets, Properties and Rights and Related
Matters. The Company has good and marketable title to all assets, properties
and interests in properties, real, personal or mixed, reflected, respectively,
on the Company Balance Sheet acquired after the Company Balance Sheet Date
(except property sold or otherwise disposed of since the Company Balance Sheet
Date, in the ordinary course of business and accounts receivable and notes
receivable paid in full subsequent to the Company Balance Sheet Date), or not
so reflected therein but used or useful in the conduct or operation of the
Company's business free and clear of all Encumbrances, of any kind or character,
except for (i) those Encumbrances set forth in the Company Disclosure Schedule
and (ii) liens for current taxes not yet due and payable and (iii) statutory
mechanics and materialmen's liens. The assets, properties and interests in
properties of the Company are in good operating condition and repair in all
material respects (ordinary wear and tear excepted). The assets, properties and
interests in properties of the Company to be owned, leased or licensed by the
Surviving Corporation at the Effective Time shall include all assets, properties
and interests in properties (real, personal and mixed, tangible and intangible)
and all rights, leases, licenses and other agreements necessary to enable the
Surviving Corporation to carry on the business of the Company as presently
conducted by the Company. As used herein, the term "Encumbrances" shall mean and
include security interests, mortgages, liens, pledges, guarantees, charges,
easements, reservations, restrictions, clouds, equities, rights of way, options,
rights of first refusal and all other
<PAGE>
encumbrances, whether or not relating to the extension of credit or the
borrowing of money. Acquisition Sub will acquire at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets held by the Company immediately prior to the Effective Date.
(j) Real Property-Owned or Leased. The Company does not
currently own, nor has it or any of its predecessors ever owned, any real
property. The Company Disclosure Schedule contains a list and brief description
of (i) all real property leased by the Company, together with all buildings and
other structures and material improvements located on such real property (the
"Leased Real Property"), and (ii) with respect to each lease covering the
Leased Real Property (collectively, the "Leases"), (A) the name of the lessor,
(B) any requirement of consent of the lessor to assignment (including
assignment by way of merger or change of control) and (C) the termination date
of the Lease. The Company is the owner and holder of all the leasehold estates
purported to be granted by each Lease and all Leases are in full force an d
effect and constitute valid and binding obligations of the Company. The Company
has made available to Purchaser true and complete copies of all Leases. Except
as set forth in the Company Disclosure Schedule, all improvements included in
the Leased Real Property are in good operating condition and repair in all
material respects (ordinary wear and tear excepted) and there does not exist any
condition which interferes with the economic value or use of such property and
improvements.
(k) Intellectual Property.
(i) The Company owns free and clear of all Encumbrances, has the
exclusive right to use, sell, license (or sublicense) transmit, broadcast,
deliver (electronically or otherwise) and dispose-of, and has the right to
bring actions for the infringement of, all Intellectual Property Rights
(other than the Licensed Software) necessary or required for the conduct
of its business as currently conducted and as proposed to be conducted
(collectively, the "Company Rights") (which rights are described in the
Company Disclosure Schedule);
(ii) the execution, delivery and performance of this Agreement and
the Articles of Merger and the consummation of the Merger and the
consummation of the other transactions contemplated hereby and thereby,
will not breach, violate or conflict with any instrument or agreement
governing any Company Rights, will not cause the forfeiture or termination
or give rise to a right of forfeiture or termination of any Company Right
or in any way impair the right of the Company or the Surviving Corporation
to use, sell, license (or sublicense), transmit, broadcast, deliver
(electronically or otherwise) or dispose of or to bring any action for the
infringement of, any Company Right or portion thereof;
<PAGE>
(iii) there are no royalties, honoraria, fees or other payments
payable by the Company to any person by reason of the ownership, use,
license (or sublicense), sale, transmission, broadcast, delivery
(electronically or otherwise) or disposition of the Company Rights;
(iv) neither the manufacture, marketing, license, sale, transmission,
broadcast, distribution, delivery (electronically or otherwise) or use of
any product or service currently or currently proposed to be licensed,
sold, marketed, transmitted, broadcast, distributed, delivered
(electronically or otherwise) or used by the Company or currently under
development by the Company, violates any license or agreement of the
Company with any third party or infringes any common law or statutory
rights of any other party, including, without limitation, rights relating
to defamation, contractual rights, Intellectual Property Rights and rights
of privacy or publicity; nor, to the best knowledge of the Company, is any
third party infringing upon, or violating any license or agreement with
the Company relating to, any Company Right; and, to the best knowledge of
the Company, there is no pending or threatened claim or litigation
contesting the validity, ownership or right to use, sell, license,
transmit, broadcast, distribute, deliver (electronically or otherwise) or
dispose of any Company Right, nor to the best knowledge of the Company, is
there a basis for any such claim, nor has the Company received any notice
asserting that any Company Right or the proposed use, manufacture, sale,
license, transmission, broadcast, distribution, delivery (electronically
or otherwise) or disposition thereof conflicts or will conflict with the
rights of any other party, nor, to the best knowledge of the Company, is
there any basis for any such assertion; and
(v) The Company has made and will continue through the Effective Time
to take all reasonable steps necessary, appropriate or desirable to
safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all Company Rights.
The Company Disclosure Schedule contains a true and complete list of all (A) of
the Company's patents, patent applications, trademarks, trademark applications,
trade names, service marks, service mark applications, copyrights and copyright
applications and (B) other filings and formal actions made or taken pursuant to
Federal, state, local and foreign laws by the Company to perfect or protect its
interest in the Company Rights. As used herein, the term "Intellectual Property
Rights" shall mean all industrial and intellectual property rights, including,
without limitation, patents, patent applications, patent rights, trademarks,
trademark applications, trade names, service marks, service mark applications,
copyrights, copyright applications, franchises, licenses, databases, computer
programs and other computer software (including, but not limited to, the
Software),
<PAGE>
user interfaces, know-how, trade secrets, customer lists, proprietary
technology, processes and formulae, source code, object code, algorithms,
architecture, structure, display screens, layouts, development tools,
instructions, templates, marketing materials, inventions, trade dress, logos
and designs and all documentation and media constituting, describing or
relating to the foregoing.
(l) Company Software.
(i) The Company Disclosure Schedule sets forth a true and complete
list and description of all software systems and applications (A) designed
or developed by employees of the Company or by consultants or independent
contractors on the Company's behalf (the "Owned Software") or (B) licensed
by the Company from any third party or constituting "off-the-shelf"
software (the "Licensed Software"), in each case that is manufactured or
used by the Company in the operation of its business or marketed, licensed
or sold or proposed to be marketed, licensed or sold by the Company to
third parties (collectively, the "Software") and, in the case of Licensed
Software, the Company Disclosure Schedule identifies each license
agreement with respect thereto.
(ii) All of the Owned Software is original and is protected by the
copyright laws of the United States. The Company owns the Owned Software
free and clear of Encumbrances (other than valid third party patent rights
of which the Company is unaware) and has not sold, assigned, licensed,
distributed or in any other way disposed of or Encumbered the Owned
Software other than licenses granted in the ordinary course of business as
disclosed on the Company Disclosure Schedule.
(iii) The Licensed Software is validly held and used by the Company
and is currently, and after giving effect to the Merger, will be, fully
utilizable by the Company pursuant to the applicable license agreement
with respect thereto without the consent of or notice to any third party.
To the best knowledge of the Company, all of the Company's computer
hardware has validly licensed software installed therein and the Company's
use thereof does not conflict with or violate any such license.
(iv) The Company has not knowingly altered its data, or any Software
or supporting software that may in turn damage the integrity of the data,
whether stored in electronic, optical or magnetic or other form. To the
best knowledge of the Company, the Software does not contain any viruses
(the Company having employed standard virus checkers to identify the
same). The Company has furnished Purchaser with all existing documentation
relating to the use, maintenance and operation of the Software.
<PAGE>
(m) Agreements, Etc. The Company Disclosure Schedule sets
forth a true and complete list of all contracts, agreements and other
instruments to which the Company is a party which either have (i) an
ascertainable aggregate value, or involve, payments or assets, of at least
$10,000 or (ii) in the case of contracts, agreements and other instruments
which do not have reasonably ascertainable values, such contracts, agreements
and other instruments which are otherwise material to the business and/or
operations of the Company. The Company has furnished to Purchaser true and
complete copies of all such agreements listed in the Company Disclosure
Schedule and (i) each such agreement (A) is the legal, valid and binding
obligation of the Company and, to the best knowledge of the Company, the legal,
valid and binding obligation of each other party thereto, in each case
enforceable in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights and remedies generally from time to time in effect and to general
equitable principles, (B) is in full force and effect and (ii) neither the
Company nor the other party or parties thereto is or are in material default
thereunder.
(n) No Defaults. The Company has in all material respects
performed all the obligations required to be performed by it to date and is not
in default or alleged to be in default under (i) its Charter or By-Laws or (ii)
any material agreement, lease, contract, commitment, instrument or obligation
to which the Company is a party or by which any of its properties, assets or
rights are or may be bound or affected, and there exists no event, condition or
occurrence which, with or without due notice or lapse of time, or both, would
constitute such a default by it of any of the foregoing.
(o) Litigation, Etc. There are no (i) actions, suits, claims,
investigations or legal or administrative or arbitration proceedings
(collectively, "Actions") pending, or to the best knowledge of the Company,
threatened against the Company, whether at law or in equity, or before or by
any Federal, state, local, municipal, foreign or other governmental court,
department, commission, board, bureau, agency or instrumentality ("Governmental
Authority") or (ii) judgments, decrees, injunctions or orders of any
Governmental Authority or arbitrator against the Company. There are no Actions
pending or, to the best knowledge of the Company, threatened, nor, to the best
knowledge of the Company, any basis therefor, with respect to (A) the current
employment by, or association with, the Company, or future employment by, or
association with, Purchaser or the Surviving Corporation, of any of the present
officers or employees of or consultants to the Company (collectively, the
"Designated Persons"), (B) the use, in connection with any business presently
conducted or proposed to be conducted by the Company or the Surviving
Corporation, of any information, techniques or processes presently utilized or
proposed to be utilized by the Company, Purchaser, the Surviving Corporation or
any of the Designated Persons, that the Company, Purchaser, the
<PAGE>
Surviving Corporation or any of the Designated Persons are or would be
prohibited from using as the result of a violation or breach of, or conflict
with any agreements or arrangements between any Designated Person and any other
person, or any legal considerations applicable to unfair competition, trade
secrets or confidential or proprietary information or (C) the validity,
ownership or right to use, sell, license or dispose of, under any Company
Rights. The Company has delivered to Purchaser all material documents and
correspondence relating to such matters referred to in the Company Disclosure
Schedule.
(p) Accounts and Notes Receivable. All the accounts
receivable and notes receivable owing to the Company as of the date hereof
constitute, and as of the Effective Time will constitute, valid and enforceable
claims arising from bona fide transactions in the ordinary course of business,
and there are no known or asserted claims, refusals to pay or other rights of
set-off against any thereof. There is (a) no account debtor or note debtor
delinquent in its payment by more than 90 days, (b) no account debtor or note
debtor that has refused (or, to the best knowledge of the Company, threatened
to refuse) to pay its obligations for any reason, (c) to the best knowledge of
the Company, no account debtor or note debtor that is insolvent or bankrupt and
(d) no account receivable or note receivable which is pledged to any third
party by the Company. Except to the extent of a reserve which the Company has
established specifically for doubtful accounts receivable and notes receivable
(which reserve is set forth on the Company Balance Sheet is reasonable under
the circumstances and is consistent with past practice), all of the accounts
receivable of the Company existing at the Closing shall be paid in full by not
later than the ninetieth (90th) day after the Closing and all of the notes
receivable shall be paid in accordance with the terms thereof.
(q) Accounts and Notes Payable. All accounts payable and
notes payable by the Company to third parties as of the date hereof arose in
the ordinary course of business, and, except as set forth in the Company
Disclosure Schedule, there is no such account payable or note payable
delinquent in its payment, except those contested in good faith and already
disclosed in the Company Disclosure Schedule.
(r) Compliance; Governmental Authorizations. The Company has
complied and is presently in compliance in all material respects with all
material Federal, state, local or foreign laws, statutes, ordinances,
judgments, regulations and orders applicable to it or its business, properties,
facilities or operations (including, by way of example and not in limitation
thereof, any of the foregoing that concern the protection of the environment or
human health). The Company has all material Federal, state, local and foreign
governmental authorizations, consents, approvals, licenses and permits necessary
in the conduct of its business as presently conducted or as proposed to be
conducted, such authorizations, consents, approvals, licenses
<PAGE>
and permits are in full force and effect, no violations are or have been
recorded in respect of any thereof and no proceeding is pending or, to the best
knowledge of the Company, threatened to revoke or limit any thereof. The
Company Disclosure Schedule contains a true and complete list of all such
governmental licenses, authorizations, consents, approvals, permits, orders,
decrees and other compliance agreements under which the Company is operating or
bound, the Company is not in default or alleged to be in default under any
thereof and the Company has furnished to Purchaser true and complete copies
thereof. None of such authorizations, consents, approvals, licenses and permits
shall be affected in any material respect by the Merger or the transactions
contemplated hereby.
(s) Employees. etc. Except as set forth in the Company
Disclosure Schedule, (i) the Company is not delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to date or amounts required to
be reimbursed to such employees, (ii) upon termination of the employment of any
such employees, neither the Company, Purchaser, Acquisition Sub nor the
Surviving Corporation will by reason of anything done prior to the Closing be
liable to any of such employees for so-called "severance pay" or any other
payments, (iii) the Company is in compliance in all material respects with all
material Federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices, terms and conditions of employment
and wages and hours, and (iv) no employee has notified the Company that such
employee will terminate his or her employment or engagement with the Company or
the Surviving Corporation. To the best knowledge of the Company, no employee of
the Company is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
relationship of such employee with the Company or any other party because of
the nature of the business conducted or proposed to be conducted by the Company
or the execution and delivery of the Non-Disclosure Agreement by such employee.
(t) Employee Benefit Plans and Contracts.
(i) Except as set forth on the Company Disclosure Schedule, the
Company has no "employee benefit plan," as defined in Section 3 (3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
no other material written or formal plans or agreements involving direct
or indirect compensation (including any employment agreements entered into
between the Company and any Employee of the Company) currently or
previously maintained, contributed to or entered into by the Company or
any ERISA Affiliate thereof for the benefit of any Employee or former
Employee under which the Company or any ERISA Affiliate thereof has any
present or future obligation or liability (the "Employee Plans"). For
purposes of the preceding sentence, "ERISA Affiliate" shall mean any
entity which is a
<PAGE>
member of (A) a "controlled group of corporations," as defined in Section
414(b) of the Code, (B) a group of entities under "common control," as
defined in Section 414(c) of the Code or (C) an "affiliated service
group," as defined in Section 414(m) of the Code or treasury regulations
promulgated under Section 414(o) of the Code, any of which includes the
Company. For purposes of this Section 3.1(t), "Employee" means any common
law employee, consultant or director of the Company.
(ii) The Company Disclosure Schedule lists each employment, severance
or other similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including
any self-insured arrangements), workers, benefits, vacation benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (A) is not an
Employee Plan, (B) is entered into, maintained or contributed to, as the
case may be, by the Company, (C) covers any Employee or former Employee,
and (D) under which the Company has any present or future obligation or
liability. Such contracts, plans and arrangements as are described above,
are hereinafter referred to collectively as the "Benefit Arrangements."
Each Benefit Arrangement has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and all
material laws, statutes, rules, regulations, orders and judgments which
are applicable to such Benefit Arrangements.
(iii) Except as set forth on the Company Disclosure Schedule, (A)
each Employee Plan and Benefit Arrangement has been operated and
administered in compliance with ERISA, the Code and in accordance with the
provisions of all other applicable federal and state laws; (B) all
reporting and disclosure obligations imposed under ERISA and the Code have
been satisfied with respect to each Employee Plan and Benefit Arrangement;
(C) each Employee Plan which is a "group health plan" within the meaning
of Section 5000 of the Code has been maintained in compliance with Section
4980(B) of the Code and Title I, Subtitle B, Part 6 of ERISA and no tax
payable on account of Section 4908B of the Code has been or is expected to
be incurred; (D) all contributions due and payable on or before the
Closing Date in respect of any Employee Plan or Benefit Arrangement have
been made in full and proper form, or adequate accruals have been provided
for in the financial statements for all other contributions or amounts in
respect of the Employee Plans or Benefit Arrangements for periods ending
on the Closing Date; (E) neither the Company nor any of its ERISA
Affiliates, nor to the knowledge of the Company and its ERISA Affiliates,
any other "disqualified person" or "party in interest" (as defined in
Section 4975 of the Code and Section 3(14) of ERISA, respectively) with
respect to an Employee Plan has
<PAGE>
breached the fiduciary rules of the ERISA or engaged in a prohibited
transaction which could subject the Company or its ERISA Affiliates to any
tax or penalty imposed under Sections 4975 of the Code or Section 502(i),
(j) or (1) of ERISA; (F) neither the Company nor any of its ERISA
Affiliates currently is or has ever maintained or been obligated to
contribute to (1) a "multiple employer plan" (within the meaning of
Section 413 of the Code); (2) a "multiemployer plan" (as defined in
Section 3(37) of ERISA); (3) a "defined benefit plan" (as defined in
Section 3(35) of ERISA) or (4) any Employee Plan that provides
post-retirement health of life insurance benefits; or (G) no benefit or
amount payable or which may become payable by the Company or its ERISA
Affiliates pursuant to any Employee Plan or Benefit Arrangement, shall
constitute an "excess parachute payment," within the meaning of Section
280G of the Code, which is or may be subject to the imposition of an
excise tax under Section 4999 of the Code or which would not be deductible
by reason of Section 280G of the Code.
(u) Certain Agreements. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute, bonus or otherwise) becoming due
to any director or employee of the Company from the Company, under any Employee
Plan, Benefit Arrangement or otherwise, (ii) materially increase any benefits
otherwise payable under any Employee Plan or the Benefit Arrangement or (iii)
result in the acceleration of the time of payment or vesting of any such
benefits.
(v) Insurance. The Company Disclosure Schedule contains a
list of all policies of liability, theft, fidelity, fire, product liability,
errors and omissions, workmen's compensation, indemnification of directors and
officers and other similar forms of insurance held by the Company (specifying
the insurer, the amount of coverage, the type of insurance, the policy number
and any pending claims thereunder) and a history of all claims made by the
Company thereunder and the status thereof. All such policies of insurance are
in full force and effect and all premiums with respect thereto are currently
paid and, to the best knowledge of the Company, no basis exists for termination
of any thereof on the part of the insurer. The amounts of coverage under such
policies of insurance are adequate for the assets and properties of the
Company. The Company has not, during the last three fiscal years, been denied
or had revoked or rescinded any policy of insurance.
(w) Bank Accounts; Powers of Attorney. The Company
Disclosure Schedule sets forth a true and complete list of (i) all bank accounts
and safe deposit boxes of the Company and all persons who are signatories
thereunder or who have access thereto and (ii) the names of all persons, firms,
associations, corporations or business organizations holding general or special
<PAGE>
powers of attorney from the Company and a summary of the terms thereof.
(x) Brokers. The Company has not, nor have any of its
officers, directors, securityholders or employees, employed any broker or
finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby.
(y) Related Transactions. Except as set forth in the Company
Disclosure Schedule, no current or former director, officer or securityholder
that is an affiliate of the Company or any associate (as defined in the rules
promulgated under the Exchange Act) thereof, is now, or since the inception of
the Company has been, (i) a party to any transaction with the Company
(including, but not limited to, any contract, agreement or other arrangement
providing for the furnishing of services by, or rental of real or personal
property from, or borrowing money from, or otherwise requiring payments to, any
such director, officer or affiliated securityholder of the Company or associate
thereof), or (ii) the direct or indirect owner of an interest in any
corporation, firm, association or business organization which is a present or
potential competitor, supplier or customer of the Company (other than
non-affiliated holdings in publicly-held companies), nor does any such person
receive income from any source other than the Company which relates to the
business of, or should properly accrue to, the Company.
(z) Traffic/Usage. BetterHealth.com, the Company's site on
AOL (the "Site"), on average receives approximately 98,000 hours of usage per
month and experiences 2,000,000 entries per month, which numbers represent the
Company's good faith estimate of the monthly average of hours of usage and
entries since October 1, 1996.
(aa) Minute Books. The minute books of the Company provided
to Purchaser for review contain a complete summary of all meetings of and
actions by directors and securityholders of the Company from the time of its
incorporation to the date of such review and reflect all actions referred to in
such minutes accurately in all material respects.
(ab) Board Approval. The Board of Directors of the Company
has unanimously (i) approved this Agreement, the Articles of Merger and each of
the other documents executed and delivered in connection with the Merger
Agreements to which the Company is a party and the transactions contemplated
hereby and thereby, (ii) determined that the Merger is in the best interests of
the Shareholder and is on terms that are fair to the Shareholder and (iii)
recommended that the Shareholder approves the Merger in accordance with the
Virginia Statute.
(ac) Vote Recquired. The affirmative vote of at least 51% of
the outstanding shares of the Company Common Stock approving the Merger and
this Agreement are the only votes and/or
<PAGE>
consents of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement and the transactions contemplated hereby.
(ad) Company Not an Interested Securityholder or an
Acquiring Person. As of the date of this Agreement, neither the Company nor, to
the best knowledge of the Company, any of its Affiliates (other than AOL) is an
"Interested Securityholder" of Purchaser as such term is defined in Section 203
of the Delaware Statute or Purchaser's Charter.
(ae) Company Expenses. The Schedule of Expenses being
delivered at the Closing sets forth a true, correct and complete schedule of
all Company Expenses that have been incurred or paid by or on behalf of the
Company (whether or not theretofore billed) through the Effective Time, and
there are no Company Expenses other than as set forth therein.
(af) Officers and Directors. Set forth on Schedule 3.1(af)
is a list of current officers and directors of the Company.
(ag) Disclosure. Neither Section 3.1 of this Agreement
(including the Company Disclosure Schedule) nor any written information,
written statement, certificate or exhibit furnished to Purchaser or Acquisition
Sub by or on behalf of the Company pursuant hereto, contains or will contain
any untrue statement of a material fact or, when taken together, omits or will
omit to state a material fact internal to the business of the Company necessary
in order to make the statements or facts contained herein and therein not
misleading in light of the circumstances under which they were made.
(ah) Knowledge Definition. As used herein, "to the best
knowledge of the Company" and like phrases shall mean and include (i) actual
knowledge and (ii) that knowledge which each of the Company Principals should
have obtained in the management of his or her business affairs after reasonable
inquiry. In connection therewith, the knowledge (both actual and constructive)
of any of the Company Principals and/or any other officer or director of the
Company shall be imputed to be the knowledge of the Company.
3.2. Several Representations and Warranties of the
Shareholder, Douma and AOL.
(a) Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to Purchaser and Acquisition Sub with
respect to herself as follows:
(i) Title; Absence of Certain Agreements. The Shareholder is the
lawful and record owner of, and has good and marketable title to all of
the shares of Company Common Stock with the full power and authority to
vote such Company Common Stock and transfer and otherwise dispose of such
<PAGE>
Company Common Stock, free and clear of all Encumbrances. There are no
agreements or understandings between the Shareholder or any other person
with respect to the voting, sale or other disposition of Company Common
Stock or any other matter relating to Company Common Stock.
(ii) Authority - General. The Shareholder has full and absolute power
and authority to enter into this Agreement and the Escrow Agreement and
this Agreement and the Escrow Agreement are valid and binding obligations
of the Shareholder enforceable against the Shareholder in accordance with
their respective terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights and
remedies generally from time to time in effect and to general equitable
principles. Neither the execution, delivery and performance of this
Agreement and the Escrow Agreement, nor the consummation of the
transactions contemplated hereby or thereby nor compliance by the
Shareholder with any of the provisions hereof or thereof will (i) (A)
conflict with, (B) result in any violations of, (C) cause a default under
(with or without due notice, lapse of time or both), (D) give rise to any
right of termination, amendment, cancellation or acceleration of any
obligation contained in or the loss of any material benefit under or (E)
result in the creation of any Encumbrance upon or against any assets,
rights or property of the Company (or against any Company Common Stock,
Purchaser capital stock or common stock of the Surviving Corporation),
under any term, condition or provision of (x) any agreement or instrument
to which the Shareholder is a party, or by which the Shareholder or her
properties, assets or rights may be bound, or (y) any law, statute, rule,
regulation, order, writ, injunction, decree, permit, concession, license
or franchise of any Governmental Authority applicable to the Shareholder
or any of her properties, assets or rights, which conflict, breach,
default or violation or other event would prevent the consummation of the
transactions contemplated by this Agreement, the Articles of Merger or the
Escrow Agreement, as the case may be. Except as specified in Section
3.1(d) hereof or otherwise contemplated by this Agreement, no permit,
authorization, consent or approval of or by, or any notification of or
filing with, any Governmental Authority or other person is required in
connection with the execution, delivery and performance by the Shareholder
of this Agreement or the Escrow Agreement, or the consummation by the
Shareholder of the transactions contemplated hereby or thereby.
(iii) Investment Representations.
(A) The Shareholder (i) is acquiring the shares of the
Purchaser Common Stock, being issued to her pursuant to the Merger
for investment and for her own account and not as a
<PAGE>
nominee or agent for any other person and with no present
intention of distributing or reselling such shares or any part
thereof in any transactions that would be in violation of the
Securities Act or any state securities or "blue-sky" laws, (ii) has
had an opportunity to ask questions of and has received
satisfactory answers from the officers of Purchaser or persons
acting on Purchaser's behalf concerning Purchaser and the terms and
conditions of an investment in Purchaser Common Stock, (iii) has
sufficient knowledge and experience in financial affairs and is
capable of evaluating the risks of acquiring and holding shares of
Purchaser Common Stock, (iv) is aware of Purchaser's business
affairs and financial condition and has acquired sufficient
information about Purchaser to reach an informed and knowledgeable
decision to acquire the shares of Purchaser Common Stock to be
issued to her in the Merger, (v) can afford to suffer a complete
loss of her investment in shares of Purchaser Common Stock and (vi)
understands (1) that the shares of Purchaser Common Stock to be
issued to her in the Merger have not been registered for sale under
the Securities Act or any state securities or "blue-sky" laws in
reliance upon an exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of the investment intent
of the Shareholder as expressed hereunder, (2) that such shares of
Purchaser Common Stock must be held indefinitely and not sold until
such shares are registered under the Securities Act and any
applicable state securities or "blue-sky" laws, unless an exemption
from such registration is available, (3) that, except as provided
in Section 6.3, Purchaser is under no obligation to so register
such shares and (4) that the certificates evidencing such shares
will be imprinted with a legend in the form set forth in Section
6.2(b) that prohibits the transfer of such shares, except as
provided in Section 6.2. The Shareholder is an "accredited
investor" within the meaning of Rule 501(a) under the Securities
Act. The Shareholder has no plan or intention to sell, exchange or
dispose of any of the shares of Company Common Stock received in
connection with the transactions contemplated herein.
(b) Representation and warranties of Douma. Douma represents
and warrants to Purchaser and Acquisition Sub with respect to himself that he
has full and absolute power and authority to enter into this Agreement and the
Escrow Agreement and this Agreement and the Escrow Agreement are valid and
binding obligations of Douma enforceable against him in accordance with their
respective terms, subject to applicable bankruptcy,
<PAGE>
reorganization, insolvency, moratorium and other laws affecting creditors'
rights and remedies generally from time to time in effect and to general
equitable principles. Neither the execution, delivery and performance of this
Agreement and the Escrow Agreement, nor the consummation of the transactions
contemplated hereby or thereby nor compliance by Douma with any of the
provisions hereof or thereof will (i) conflict with, (ii) result in any
violations of, (iii) cause a default under (with or without due notice, lapse
of time or both), (iv) give rise to any right of termination, amendment,
cancellation or acceleration of any obligation contained in or the loss of any
material benefit under or (v) result in the creation of any Encumbrance upon or
against any assets, rights or property of the Company (or against any Company
Common Stock, Purchaser capital stock or common stock of the Surviving
Corporation), under any term, condition or provision of (x) any agreement or
instrument to which Douma is a party, or by which he or any of his properties,
assets or rights may be bound, or (y) any law, statute, rule, regulation,
order, writ, injunction, decree, permit, concession, license or franchise of
any Governmental Authority applicable to him or any of his properties, assets
or rights, which conflict, breach, default or violation or other event would
prevent the consummation of the transactions contemplated by this Agreement or
the Escrow Agreement, as the case may be. Except as specified in Section 3.1(d)
hereof or otherwise contemplated by this Agreement, no permit, authorization,
consent or approval of or by, or any notification of or filing with, any
Governmental Authority or other person is required in connection with the
execution, delivery and performance by Douma of this Agreement or the Escrow
Agreement or the consummation by him of the transactions contemplated hereby or
thereby.
(c) Representations and Warranties of AOL. AOL represents
and warrants to Purchaser and Acquisition Sub with respect to itself as
follows:
(i) Title; Absence of Certain Agreements. AOL is the lawful and record
owner of, and has good and marketable title to the AOL Warrant and the AOL
Note with the full power and authority to exercise the rights under and
transfer and otherwise dispose of the AOL Warrant and/or the AOL Note,
free and clear of all Encumbrances. There are no agreements or
understandings between AOL or any other person with respect to the
exercise, sale or other disposition of the AOL Warrant and the AOL Note or
any other matter relating to the AOL Warrant and the AOL Note.
(ii) Authority - General. AOL has full and absolute power and
authority to enter into this Agreement and this Agreement is a valid and
binding obligation of AOL enforceable against AOL in accordance with its
terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights and remedies
generally from time to time in effect and to general equitable principles.
Neither the execution,
<PAGE>
delivery and performance of this Agreement, nor the consummation of
the transactions contemplated hereby nor compliance by AOL with any of the
provisions hereof will (i) conflict with, (ii) result in any violations
of, (iii) cause a default under (with or without due notice, lapse of
time or both), (iv) give rise to any right of termination, amendment,
cancellation or acceleration of any obligation contained in or the loss of
any material benefit under or (v) result in the creation of any
Encumbrance upon or against any assets, rights or property of the Company
(or against any Company Common Stock, Purchaser capital stock or common
stock of the Surviving Corporation), under any term, condition or
provision of (x) any agreement or instrument to which AOL is a party, or by
which AOL or any of its properties, assets or rights may be bound, or (y)
any law, statute, rule, regulation, order, writ, injunction, decree,
permit, concession, license or franchise of any Governmental Authority
applicable to AOL or any of its properties, assets or rights, which
conflict, breach, default or violation or other event would prevent the
consummation of the transactions contemplated by this Agreement, or the
Articles of Merger, as the case may be. Except as specified in Section
3.1(d) hereof or otherwise contemplated by this Agreement, no permit,
authorization, consent or approval of or by, or any notification of or
filing with, any Governmental Authority or other person is required in
connection with the execution, delivery and performance by AOL of this
Agreement or the consummation by AOL of the transactions contemplated
hereby.
3.3. Representations and Warranties of Purchaser. Purchaser
represents and warrants to each of the Shareholder and AOL, except as disclosed
in the disclosure schedule dated the date hereof, certified as being such
disclosure schedule by the Chief Executive Officer of the Purchaser and
delivered by the Purchaser to the Company and each of the Shareholder and AOL
simultaneously herewith (which disclosure schedule shall reference with
specificity the representations and warranties to which the disclosures
contained therein relate) (the "Purchaser Disclosure Schedule"):
(a) Organization; Good Standing; Qualification and Power.
Each of Purchaser and Acquisition Sub (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of its
incorporation and (ii) has all requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its business as now
being conducted, to enter into this Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. Purchaser has delivered to the Company true and complete copies of
the Charter and By-Laws of each of Purchaser and Acquisition Sub, in each case
as amended to the date hereof.
<PAGE>
(b) Authority. The execution, delivery and performance by
Purchaser of this Agreement and the Escrow Agreement and the execution,
delivery and performance of this Agreement and the Articles of Merger by
Acquisition Sub, and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Purchaser and Acquisition Sub, respectively. This Agreement and the
Escrow Agreement are valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms; and this Agreement
and the Articles of Merger are the valid and binding obligations of Acquisition
Sub, subject to applicable bankruptcy, reorganization, insolvency, moratorium
and other laws affecting creditors' rights and remedies generally from time to
time in effect and to general equitable principles. Neither the execution,
delivery and performance by Purchaser of this Agreement and the Escrow
Agreement, the execution, delivery and performance of this Agreement and the
Articles of Merger by Acquisition Sub, nor the consummation of the transactions
contemplated hereby or thereby, will (A) conflict with, (B) result in any
violations of, (C) cause a default under (with or without due notice, lapse of
time or both), (D) give rise to any right of termination, amendment,
cancellation or acceleration of any obligation contained in or the loss of any
material benefit under, (E) result in the creation of any Encumbrance on or
against any assets, rights or property of Purchaser or Acquisition Sub, as the
case may be, under any term, condition or provision of (x) any instrument or
agreement to which Purchaser or Acquisition Sub is a party, or by which
Purchaser or Acquisition Sub any of its respective properties, assets or rights
may be bound, (y) any law, statute, rule, regulation, order, writ, injunction,
decree, permit, concession, license or franchise of any Governmental Authority
applicable to Purchaser or Acquisition Sub any of its respective properties,
assets or rights or (z) Purchaser's Charter or By-Laws, as amended through the
date hereof, respectively, which conflict, breach, default, violation or other
event would prevent the consummation of the transactions contemplated by this
Agreement, the Escrow Agreement. Except as contemplated by this Agreement, no
permit, authorization, consent or approval of or by, or any notification of or
filing with, any Governmental Authority or other person is required in
connection with the execution, delivery and performance by Purchaser of this
Agreement or the Escrow Agreement or the execution, delivery and performance by
Acquisition Sub of this Agreement and the Articles of Merger or the
consummation of the transactions contemplated hereby or thereby, except for (i)
the filing with the SEC of such reports and information under the Securities
Act, and the rules and regulations promulgated by the SEC thereunder, as may be
required in connection with this Agreement and the transactions contemplated
hereby, (ii) the filing of such documents with, and the obtaining of such
orders from, various state securities and blue-sky authorities as are required
in connection with the transactions contemplated hereby, (iii) the filing of
the Articles of Merger with the Commissioner and (iv) such other
<PAGE>
consents, waivers, authorizations, filings, approvals and registrations which
if not obtained or made would not have a Material Adverse Effect on Purchaser
or materially impair the ability of Purchaser to consummate the transactions
contemplated by this Agreement, including, without limitation, the Merger.
(C) Capital Stock.
(i) The authorized capital stock of Purchaser consists of 25,000,000
shares of Purchaser Common Stock and 15,000,000 shares of Preferred Stock,
$.0005 par value (the "Preferred Stock"), of which 1,000,000 shares have
been designated as Series A Preferred Stock, $.0005 par value (the "Series
A Preferred Stock"), 5,669,846 shares have been designated as Series B
Preferred Stock, $.0005 par value (the "Series B Preferred Stock") and
300,000 shares have been designated as Series B-1 Preferred Stock, $.0005
par value (the "Series B-1 Preferred Stock"). On the date hereof, (i)
3,475,005 shares of Common Stock are issued and outstanding, (ii)
1,000,000 shares of Series A Preferred Stock are issued and outstanding,
(iii) 4,477,746 shares of Series B Preferred Stock are issued and
outstanding, (iv) 300,000 shares of Series B-1 Preferred Stock are issued
and outstanding, (v) 300,000 shares of Series B Preferred Stock are
reserved for issuance upon conversion of shares of Series B-1 Preferred
Stock, (vi) 120,000 shares of Series B Preferred Stock are reserved for
issuance in accordance with a Series B Preferred Stock Purchase Agreement
dated as of May 6, 1996, among Purchaser and the other parties thereto,
(vii) 852,100 shares (the "Warrant Shares") of Series B Preferred Stock
are reserved for issuance upon exercise or exchange of (A) the stock
subscription warrants dated September 19, 1995 issued to and held by AOL
and (B) the stock subscription warrants dated May 6, 1996 issued to and
held by AOL, (viii) 1,000,000 shares of Common Stock are reserved for
conversion of shares of Series A Preferred Stock, (ix) 4,897,746 shares of
Common Stock are reserved for conversion of Series B Preferred Stock and
Series B-1 Preferred Stock, (ix) 852,100 shares of Common Stock are
reserved for conversion of the Warrant Shares and (x) 1,550,000 shares of
Common Stock are reserved for future issuance upon exercise of options or
as restricted stock granted to employees of Purchaser. All outstanding
shares of Purchaser Common Stock are validly issued, fully paid and
non-assessable and not subject to preemptive rights. Purchaser has duly
authorized and reserved for issuance the Merger Shares, and, when issued
in accordance with the terms of Article II, the Merger Shares will be
validly issued, fully paid and nonassessable and free of preemptive
rights. Purchaser directly owns all the outstanding shares of capital
stock of Acquisition Sub, and all of such shares are validly issued, fully
paid and nonassessable and not subject to preemptive rights.
<PAGE>
(ii) Except as set forth in paragraph (i) above and on the Purchaser
Disclosure Schedule, immediately after the Closing, there are no
outstanding (A) securities convertible into or exchangeable for shares of
capital stock or other securities of the Company, (B) options, warrants,
or other rights to purchase or otherwise acquire from the Company shares
of such capital stock, or securities convertible into or exchangeable for
shares of such capital stock, or (iii) contracts, agreements or
commitments relating to the issuance by the Company of any shares of such
capital stock, any such convertible or exchangeable securities, or any
such options, warrants or other rights. on the date hereof and in
accordance with the Certificate of Incorporation of Purchaser, as amended
and in effect on the date hereof, each one share of Preferred Stock is
convertible into one share of Common Stock.
(d) Litigation, Except as set forth in the Purchaser
Disclosure Schedule, there are no (i) Actions pending, or to the best knowledge
of the Purchaser, threatened against the Purchaser, whether at law or in
equity, or before or by any Governmental Authority or (ii) judgments, decrees,
injunctions or orders of any Governmental Authority or arbitrator against the
Purchaser. There are no Actions pending or, to the best knowledge of the
Purchaser, threatened, nor, to the best knowledge of the Purchaser, any basis
therefor, with respect to (A) the current employment by, or association with,
the Purchaser, of any of the present officers or employees of or consultants to
the Purchaser (collectively, the "Purchaser Designated Persons"), or (B) the
use, in connection with any business presently conducted or proposed to be
conducted by the Purchaser, of any information, techniques or processes
presently utilized or proposed to be utilized by the Purchaser or any of the
Purchaser Designated Persons, that the Purchaser, the Purchaser Designated
Persons are or would be prohibited from using as the result of a violation or
breach of, or conflict with any agreements or arrangements between any
Purchaser Designated Person and any other person, or any legal considerations
applicable to unfair competition, trade secrets or confidential or proprietary
information or (C) the validity, ownership or right to use, sell, license or
dispose of, under any material Purchaser intellectual property. The Purchaser
has delivered to the Company all material documents and correspondence relating
to such matters referred to in the Purchaser Disclosure Schedule.
(e) Brokers. Neither Purchaser nor any of its officers,
directors or employees have employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection
with the transactions contemplated hereby.
(f) Offering Memorandum. To the knowledge of the Purchaser,
the factual statements (exclusive of any opinions, projections or expectations
expressed therein) in the business description set forth in the Purchaser's
offering Memorandum (a
<PAGE>
copy which was provided to the Company), dated as of January 10, 1997
("Offering Memorandum"), and which was prepared in connection with the
Financing, did not contain any misrepresentation of a material fact at the date
thereof and did not omit to make any statement, the omission of which would
otherwise make the factual statements made therein misleading at the date
thereof in light of the circumstances in which they were made. Notwithstanding
anything herein to the contrary, the Purchaser makes no representation or
warranty whatsoever as to any information in the offering Memorandum with
respect to the Company, the Company Principals and/or AOL.
ARTICLE IV
CONDUCT AND TRANSACTIONS PRIOR
TO EFFECTIVE TIME; ADDITIONAL AGREEMENTS
4.1. Access to Records and Properties of Each Party;
Confidentiality.
(a) Access to the Company. From and after the date hereof
until the Effective Time or the earlier termination of this Agreement pursuant
to Section 8.1 hereof (the "Executory Period"), the Company shall afford: (i) to
the officers, independent certified public accountants, counsel and other
representatives of the Purchaser, free and full access at all reasonable times
to all properties, books and records (including tax returns filed and those in
preparation) of the Company, in order that the Purchaser and such other persons
may have full opportunity to make such investigations as they shall reasonably
desire to make of the business and affairs of the Company; and (ii) to the
independent certified public accountants of the Company, free and full access
at all reasonable times to the work papers of the independent certified public
accountants for the Company. Additionally, the Company will permit the
Purchaser to make such reasonable inspections of the Company and its operations
during normal business hours as the Purchaser may reasonably require and the
Company will cause its officers to furnish to the Purchaser and such other
persons, such additional financial and operating data and other information as
to the business and properties of the Company as the Purchaser or such other
persons shall from time to time reasonably request. No investigation pursuant
to this Section 4.1(a), or made prior to the date hereof, shall affect or
otherwise diminish or obviate in any respect any of the representations and
warranties of the Company.
(b) Access to the Purchaser. The Purchaser will make
available to the Company on a confidential basis (i) the Offering Memorandum and
(ii) access to its senior personnel and pertinent books and records so long as
such access is reasonable in light of the due diligence the Purchaser will be
preparing in connection with the Financing. No investigation pursuant to this
Section 4.1(b),or made prior to the date hereof, shall affect or
<PAGE>
otherwise diminish or obviate in any respect any of the representations and
warranties of the Purchaser.
4.2. Operation of Business of the Company. During the
Executory Period, the Company will operate its business as now operated and
only in the normal and ordinary course and, consistent with such operation,
will use its best efforts to preserve intact its present business organization,
to keep available the services of its officers and employees and to maintain
satisfactory relationships with licensors, franchisees, licensees, suppliers,
contractors, distributors, customers and other persons having business dealings
with it. Without limiting the generality of the foregoing, during the Executory
Period, the Company shall not, without the prior written consent of Purchaser,
(a) take any action that would result in any of the representations and
warranties of the Company herein becoming untrue or in any of the conditions to
the Merger not being satisfied, or (b) take or cause to occur any of the
actions or transactions described in Section 3.1(g) hereof. The parties hereto
will, during the Executory Period, jointly consider the extent to which the
Information Provider Agreement dated as of March 31, 1995 (the "Company IPA")
between the Company and AOL should be amended, modified or otherwise revised,
as appropriate in order to reflect the transactions contemplated herein and
the mutual intent of the parties.
4.3. Negotiations With Others.
(a) Company Negotiations. During the Executory Period
neither the Company, any Company Principal or AOL shall, nor shall the Company
authorize any of its employees, officers, directors, shareholders or agents to,
directly or indirectly, solicit, initiate or engage in discussions or
negotiations with, or provide any information to, or take any other action to
facilitate the efforts of, any third party with respect to a financing of or
investment in the Company (including by way of the purchase of any capital
stock or other securities from the Company or any securityholder of the
Company) or the acquisition of the Company (including by way of merger, purchase
of capital stock or purchase of assets), or that would otherwise be inconsistent
with the terms of this Agreement, or that would prohibit the performance of the
Company's obligations hereunder or that could be expected to diminish the
likelihood of or render impracticable the consummation of the transactions
contemplated hereby (each as described above) (other than the Merger and the
hereby (each as described above (other than the Merger and the transactions
contemplated herein), an "Acquisition Transaction")), or enter into any
agreement or arrangement with respect to, or authorize or consummate, an
Acquisition Transaction. If the Company or any of its Subsidiaries or any
Company Principal, or AOL or any employee, officer, director, shareholder or
agent of the Company receives an unsolicited offer or proposal to enter
negotiations relating to any of the above, such party shall immediately notify
the Purchaser of such offer or proposal and shall not entertain any such offer
and shall communicate its unwillingness to entertain such offer to such
<PAGE>
offering party. Upon the execution and delivery of this Agreement, the Company,
the Company Principals and AOL, shall terminate any and all discussions, if any,
it or they may be having with respect to an Acquisition Transaction. Neither the
Company, any of the Company Principals or AOL shall, nor shall the Company
authorize any of its employees, officers, directors, shareholders or agents to,
directly or indirectly, negotiate or discuss with any person or entity that
provides or proposes to provide online services, the provision of financing to
the Company by such person or entity or any merger, consolidation, business
combination or similar transaction with any such person or entity, directly or
indirectly.
(b) Purchaser Negotiations. During the Executory Period,
the Purchaser will not, without the prior consent of the Company (such consent
not to be unreasonably withheld), actively solicit or negotiate with any third
party whose business includes the provision of health specific content on the
Internet with a view to the acquisition thereof unless such business is a niche
component of the Purchaser's "Vices and Virtues" product. In the event the
Purchaser enters into serious and detailed negotiations with any unaffiliated
third party with respect to a proposed transaction involving the acquisition of
the Purchaser (by way of merger, sale of all outstanding capital stock or sale
of all or substantially all of the assets of the Purchase) the Purchaser will,
to the extent it is permitted to do so (provided that the Purchaser will use
best efforts to attain such permission), notify the Company Principals of the
fact of such negotiations (all information with respect to which shall be
maintained by the Company Principals and by the Company as strictly
confidential) and will give the Company a reasonable opportunity (but in no
event in excess of 10 days from the date of such notice) to terminate this
Agreement in its entirety, provided that in the event of any such termination
by the Company, the Company will not, pursuant to the terms of the LOI Escrow
Agreement, be entitled to retain any part of the monies deposited with the LOI
Escrow Agent (the "LOI Deposit"). Furthermore, in the event of any such
negotiations, the Purchaser will similarly have the right to terminate this
Agreement in its entirety, provided that in the event of any such termination
by the Purchaser, the Company will be entitled to retain the LOI Deposit.
4.4 Advice of Changes. The Company shall confer on a regular
and frequent basis with Purchaser, report on operational matters and promptly
advise Purchaser orally and in writing of any change, event or circumstance
having, or which could have, a Material Adverse Effect on the Company or which
could impair (negatively or positively) its financial projections, forecasts
or prospects.
<PAGE>
4.5. Company Financial Information Update. During the
Executory Period, the Company shall:
(a) prepare and deliver to the Purchaser, within ten (10)
business days after the end of each calendar month during the Executory Period,
(i) its unaudited balance sheet as at the end of such calendar month and the
related statements of income, cash flow and shareholders' equity for the period
then ended, which shall be (A) in accordance with the books and records of the
Company and (B) fairly present the financial condition of the Company as at the
respective dates indicated and the results of operations of the Company for the
respective periods indicated, and (ii) updated financial projections and
forecasts for the Company;
(b) prepare and deliver on a weekly basis, a summary of the
material developments (if any) in the business or prospects of the Company
occurring during such period; and
(c) furnish upon request of the Purchaser, such other
financial information as is available to management of the Company.
4.6. Purchaser Financial Information Update. During the
Executory Period, the Purchaser shall prepare and deliver to the Company,
within ten (10) business days after the end of each calendar month during the
Executory Period, its unaudited balance sheet as at the end of such calendar
month and the related statements of income, cash flow and shareholders' equity
for the period then ended, which shall be (A) in accordance with the books and
records of the Purchaser, (B) fairly present the financial condition of the
Purchaser as at the respective dates indicated and the results of operations of
the Purchaser for the respective periods indicated, and (C) have been prepared
in accordance with GAAP, except for the absence of complete footnote disclosure
as required by GAAP and subject to changes resulting from normal year-end audit
adjustments, which adjustments shall not in any event result in a material
adverse change to any item of revenue or expense.
4.7. Legal Conditions to Merger. Each Party hereto shall take
all reasonable actions necessary to comply promptly with all legal requirements
that may be imposed on such Party with respect to the Merger and will take all
reasonable action necessary to cooperate with and furnish information to the
other Party in connection with any such requirements imposed upon such other
Party in connection with the Merger. Each Party hereto shall take all
reasonable actions necessary (a) to obtain (and will take all reasonable
actions necessary to promptly cooperate with the other Party (in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Authority, or other third Party, required to be obtained or made
by such Party (or by the other Parties) in connection with the Merger or the
taking of any action contemplated by this Agreement, (b) to defend, lift,
rescind or mitigate the effect of
<PAGE>
any lawsuit, order, injunction or other action adversely affecting the ability
of such Party to consummate the transactions contemplated hereby and (b) to
fulfill all conditions precedent applicable to such Party pursuant to this
Agreement. As used herein, the term "Party" shall mean and refer to the
Company, on the one hand, and Purchaser and Acquisition Sub, on the other hand.
4.8. Consents. Each Party hereto shall use its best efforts,
and the other Parties shall cooperate with such efforts, to obtain any consents
and approvals of, or effect the notification of or filing with, each person or
authority, whether private or governmental, whose consent or approval is
required in order to permit the consummation of the Merger and the transactions
contemplated hereby and to enable the Surviving Corporation to conduct and
operate the business of the Company substantially as presently conducted and as
proposed to be conducted.
4.9. Efforts to Consummate. Subject to the terms and
conditions herein provided, the parties hereto shall use their best efforts to
do or cause to be done all such acts and things as may be necessary, proper or
advisable, consistent with all applicable laws and regulations, to consummate
and make effective the transactions contemplated hereby and to satisfy or cause
to be satisfied all conditions precedent that are set forth in Article V as
soon as reasonably practicable.
4.10. Notice of Prospective Breach. Each Party hereto shall
immediately notify the other parties in writing upon the occurrence of any act,
event, circumstance or thing that is reasonably likely to cause or result in a
representation or warranty hereunder to be untrue at the Closing, the failure
of a closing condition to be achieved at the Closing, or any other breach or
violation hereof or default hereunder.
4.11. Public Announcements. The parties hereto agree that,
except with respect to any Purchaser disclosure in connection with the
Financing, they shall obtain each others' consent prior to the issuance (and
provide copies to the other party prior to issuance) of any public
announcements, reports, statements or releases pertaining to the Merger, this
Agreement or any of the transactions contemplated herein, provided that the
parties shall not disclose (other than any Purchaser disclosure in connection
with the Financing) the consideration payable in connection with the Merger in
any such public announcements.
4.12. No Transfers. During the Executory Period, the Company,
any of the Company Principals and AOL shall not sell, transfer (except in the
case of AOL, any transfer necessary to effect the transactions contemplated by
Section 2.2(a) hereof), assign, pledge, encumber or otherwise dispose of any of
the Company Common Stock or any other Equity Security (including in the case of
AOL, the AOL Warrant, the AOL Note and the Company
<PAGE>
Preferred Stock) other than in connection with and pursuant to the transactions
contemplated by this Agreement and the Merger.
4.13. Confidentiality. The parties understand and agree that
to the extent not otherwise provided herein, Section 5(e) of that certain
Letter of Intent dated December 5, 1996, among the Purchaser, the Company and
Silveous shall survive the execution of this Agreement and shall govern during
the Executory Period.
ARTICLE V
CONDITIONS PRECEDENT
5.1. Conditions to Each Party's Obligations. The obligations
of each Party to perform this Agreement and to effect the Merger are subject to
the satisfaction of the following conditions unless waived (to the extent such
conditions can be waived) by all parties hereto:
(a) Shareholder Approval; Articles of Merger. This Agreement
and the Merger shall have been duly and validly approved and adopted by
Shareholder and AOL in accordance with the Virginia Statute and the Company's
Charter and By-Laws, and the Articles of Merger shall have been executed and
delivered by Acquisition Sub and the Company and filed with and accepted by the
Secretary of State of the State of Virginia.
(b) Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with or expiration of waiting periods
imposed by any Governmental Authority necessary for the consummation of the
transactions contemplated hereby shall have been obtained or made or shall have
occurred.
(c) Legal Action. No temporary restraining order,
preliminary injunction or permanent injunction or other order preventing the
consummation of the Merger shall have been issued by any Federal or state court
or other Governmental Authority and remain in effect.
(d) Legislation. No Federal, state, local or foreign statute,
rule or regulation shall have been enacted which prohibits, restricts or delays
the consummation of the transactions contemplated by this Agreement or any of
the conditions to the consummation of such transactions.
(e) Consummation of the Financing. On or before the Closing,
the Purchaser will have successfully completed a private placement of at least
$12,000,000 aggregate amount of its equity securities (the "Financing").
5.2. Conditions to Obligations of Purchaser and Acquisition
Sub. The obligations of Purchaser to perform this Agreement and of Acquisition
Sub to perform this Agreement and the Articles of Merger are subject to the
satisfaction of the
<PAGE>
following conditions unless waived (to the extent such conditions can be
waived) by Purchaser and Acquisition Sub:
(a) Representations and Warranties of the Company, the
Shareholder, Douma and AOL. The representations and warranties of the Company,
the Shareholder, Douma and AOL shall be true and correct in all material
respects (except for any representation or warranty that by its terms is
qualified by materiality, in which case it shall be true and correct in all
respects) as of the date of this Agreement and as of the Closing Date, as
though made at and as of such dates, respectively, and Purchaser and
Acquisition Sub shall have received a certificate signed by the Chairman, Chief
Executive Officer and the President of the Company to that effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects the obligations required to be
performed by it under this Agreement prior to or as of the Closing Date, and
Purchaser and Acquisition Sub shall have received a certificate signed by the
Chief Executive Officer of the Company to that effect.
(c) Authorization of Merger. All action necessary to
authorize the execution, delivery and performance of this Agreement, the
Articles of Merger and the other documents to be executed and delivered by the
Company in connection with the Merger and the consummation of the Merger and the
other transactions contemplated hereby and thereby shall have been duly and
validly taken by the Board of Directors of the Company, and the Company and the
Shareholder shall have full power and right to effect the Merger on the terms
provided herein.
(d) Opinion of the Company's Counsel. Purchaser and
Acquisition Sub shall have received an opinion dated as of the Closing Date of
Shaw Pittman Potts & Trowbridge ("SPPT") in a form reasonably acceptable to
the Purchaser and its counsel.
(e) Consents and Approvals. Purchaser and Acquisition Sub
shall have received duly executed copies of all consents and approvals
contemplated by this Agreement or the Company Disclosure Schedule, in form and
substance satisfactory to Purchaser and Acquisition Sub, which such consents
shall include, but not be limited to, the consent of (i) the National Library
of Medicine pursuant to its agreement with the Company dated March 10, 1995 and
(ii) the Company's current commercial landlord pursuant to the Company's office
lease dated June 30, 1995. Furthermore, the Company shall have provided the
Purchaser written evidence satisfactory to the Purchaser of the termination of
the Company's services contract with Hill and Knowlton.
(f) Government Consents, Authorizations, Etc. All consents,
authorizations, orders or approvals of, and filings or registrations with, any
Governmental Authority which are required for or in connection with the
execution and delivery by the Company of this Agreement and the consummation by
the Company of
<PAGE>
the transactions contemplated hereby shall have been obtained or made.
(g) Payment of Company Expenses. The Company shall have
delivered to Purchaser and Acquisition Sub a true, correct and complete
schedule (the "Schedule of Expenses") of all Company Expenses paid or
incurred by or on behalf of the Company, the Shareholder or AOL through the
Closing Date, and Purchaser and Acquisition Sub shall have received a
certificate signed by the Chief Executive Officer of the Company certifying
the accuracy and completeness thereof.
(h) Company Expenses Release. Purchaser, Acquisition Sub
and the Surviving Corporation shall have received from each third Party
identified on the Schedule of Expenses a written instrument in form and
substance reasonably satisfactory to Purchaser, Acquisition Sub and the
Surviving Corporation, (i) acknowledging receipt by each such Party of full
payment of all fees and expenses of such Party constituting Company Expenses
and (ii) releasing Purchaser, Acquisition Sub, the Surviving Corporation and
their Affiliates from any liabilities or obligations in respect of the
payment of any fees and expenses.
(i) Absence of Material Adverse Change. There shall not
have been any Material Adverse Change as to the Company since the date
hereof.
(j) Resignation of Directors. The directors of the Company
immediately prior to the Effective Time shall have resigned as directors of
the Surviving Corporation effective as of the Effective Time.
(k) Escrow Agreement. The Shareholder and the Escrow Agent
shall have executed and delivered an Escrow Agreement in a form mutually
acceptable to the Purchaser, the Shareholder and the Escrow Agent, securing
the indemnification obligations of the Shareholder pursuant to Article VII
hereof.
(l) AOL Instruments. AOL and the Company shall have
effectuated the transactions contemplated in Section 2.2(a). The Purchaser
shall have received evidence satisfactory to the Purchaser of the termination,
cancellation and/or surrender of each of (i) the Note and Warrant Purchase
Agreement dated March 31, 1995, among AOL, the Company, the Shareholder and
Douma, (ii) the Note dated April 3, 1995, of the Company to AOL in the
principal amount of $270,000, (iii) the Stock Purchase Warrant dated March 31,
1995 issued by the Company to AOL, (iv) the Security Agreement dated March 31,
1995 (the "AOL Security Agreement") by and between the Company and AOL. The
Purchaser shall also have received evidence satisfactory to it of the
termination of the employee agreement among the Company, the Shareholder and
AOL and the termination of the employee agreement among the Company, Douma and
AOL. Furthermore, the Purchaser shall have received evidence satisfactory to it
that any and all security interests filed against the Company and/or any of its
<PAGE>
assets in connection with or pursuant to the AOL Security Agreement shall have
been fully released and terminated.
(m) Board Election. The Shareholder shall have been elected
to the Board of Directors of the Purchaser.
(n) Stockholders' Agreement. The Shareholder and the
Purchaser shall have, pursuant to an amendment in a form mutually acceptable to
the Purchaser and the Shareholder, become parties to the Amended and Restated
Stockholders' Agreement among the Purchaser and the investors named therein
(the "Stockholders' Agreement"), as the same may be amended, restated or
modified in connection with the Financing.
(o) Employment Agreements. Each of the Purchaser and the
Shareholder shall have executed and delivered the employment agreement
substantially in the form of Exhibit D-1 hereto (the "Silveous Employment
Agreement") and each of the Purchaser and Douma shall have executed and
delivered the employment agreement substantially in the form of Exhibit D-2
hereto (the "Douma Employment Agreement").
(p) Non-Disclosure Agreements. Each of the employees of the
Company (other than the Shareholder and Douma) in their prospective capacity as
an employee of Purchaser effective immediately upon the Closing, shall have
executed and delivered an agreement with Purchaser, effective as of the
Effective Time, in the form of Exhibit Z attached hereto (the "Non-Disclosure
Agreements," each a "Non-Disclosure Agreement"), providing for, among other
things, non-disclosure of confidential information, assignment of proprietary
rights and restrictions upon such person from competing with the Surviving
Corporation and Purchaser as provided therein.
5.3. Conditions to obligations of the Company. The
obligations of the Company, the Shareholder and AOL to perform this Agreement
and the Articles of Merger are subject to the satisfaction of the following
conditions unless waived (to the extent such conditions can be waived) by the
Company:
(a) Representations and Warranties of Purchaser. The
representations and warranties of Purchaser and Acquisition Sub set forth in
Section 3.3 hereof shall be true and correct in all material respects (except
for any representation or warranty that by its terms is qualified by
materiality, in which case it shall be true and correct in all respects) as of
the date of this Agreement and as of the Closing Date as though made at and as
of such dates, respectively, and the Company shall have received a certificate
signed by the Chief Financial Officer of each of Purchaser and Acquisition Sub
to that effect.
(b) Performance of Obligations of Purchaser and Acquisition
Sub. Purchaser and Acquisition Sub shall have performed in all material
respects their respective obligations required to be performed by them under
this Agreement and the
<PAGE>
Articles of Merger prior to or as of the Closing Date and the Company shall have
received a certificate signed by the Chief Financial Officer of each of
Purchaser and Acquisition Sub to that effect.
(c) Authorization of Merger. All action necessary to
authorize the execution, delivery and performance of this Agreement by
Purchaser, the execution, delivery and performance of this Agreement and the
Articles of Merger by Acquisition Sub, and the consummation of the transactions
contemplated hereby and by the Articles of Merger shall have been duly and
validly taken by Purchaser and Acquisition Sub and by Purchaser as the sole
shareholder of Acquisition Sub.
(d) Opinions of Counsel to Purchaser and Acquisition Sub.
The Company shall have received an opinion dated as of the Closing Date of
O'Sullivan Graev & Karabell, LLP ("OGK"), in a form reasonably acceptable to
the Company and its counsel.
(e) Government Consents, Authorizations, Etc. All consents,
authorizations, orders or approvals of, and filings or registrations with, any
Governmental Authority which are required for or in connection with the
execution and delivery by Purchaser and Acquisition Sub of this Agreement and
the Articles of Merger and the consummation by Purchaser and Acquisition Sub of
the transactions contemplated hereby or thereby shall have been obtained or
made.
(f) Option Agreements. Purchaser shall have executed and
delivered an option agreement with each of the Shareholder and Douma (each, an
"Option Agreement" and collectively, the "Option Agreements"), substantially
in the form of Exhibit G-1 and Exhibit G-2 hereto, effective as of the
Effective Time, providing for the grant of options for Purchaser Common Stock
to each of the Shareholder and Douma.
(g) Stockholders' Agreement. The Purchaser shall have
executed and delivered the amendment to the Stockholders' Agreement in a form
mutually acceptable to the Purchaser and the Shareholder.
(h) Employment Agreements. The Purchaser shall have executed
and delivered the Silveous Employment Agreement and the Douma Employment
Agreement to the respective Company Principals.
(i) The Company Principals shall have received a letter
reasonably satisfactory to them from the then Chief Executive Officer of the
Purchaser with respect to the matters set forth in Paragraphs 3(a)(v), (vi) and
(vii) of the LOI.
<PAGE>
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Compliance With the Code. The parties shall comply with
Section 1060(e) of the Code and any regulations promulgated thereunder, as
applicable.
6.2. Restriction on Transfer.
(a) The Merger Shares to be issued at the Effective Time
pursuant to the Merger and any shares of capital stock or other securities
received with respect thereto (collectively, the "Restricted Securities") shall
not be sold, transferred, assigned, pledged, encumbered or otherwise disposed
of (each, a "Transfer") except upon the conditions specified in this Section
6.2, which conditions are intended to insure compliance with the provisions of
the Securities Act. Each of the Shareholder and AOL shall observe and comply
with the Securities Act and the rules and regulations promulgated by the SEC
thereunder as now in effect or hereafter enacted or promulgated, and as from
time to time amended, in connection with any Transfer of Restricted Securities
beneficially owned by them.
(b) Each certificate representing Restricted Securities
issued to the Shareholder and each certificate for such securities issued to
subsequent transferees of any such certificate shall (unless otherwise
permitted by the provisions of Sections 6.2(c) and 6.2(d) hereof) be stamped or
otherwise imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES OR "BLUE-SKY"
LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM. ADDITIONALLY, THE TRANSFER OF
THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION 6.2
OF TEE AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF JANUARY 31,
1997 AMONG iVILLAGE, INC., HRS ACQUISITION CORPORATION, HEALTH
RESPONSEABILITY SYSTEMS, INC. AND THE OTHER SIGNATORIES THERETO AND NO
TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED. UPON THE FULFILLMENT OF CERTAIN OF
SUCH CONDITIONS, iVILLAGE, INC. HAS AGREED TO DELIVER TO THE HOLDER
HEREOF A NEW CERTIFICATE, NOT BEARING THIS LEGEND, FOR THE SECURITIES
REPRESENTED HEREBY REGISTERED IN THE NAME OF THE HOLDER HEREOF. COPIES
OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE
BY THE
<PAGE>
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF iVILLAGE,
INC."
(c) The Shareholder agrees, prior to any Transfer of
Restricted Securities, to give written notice to Purchaser of her intention to
effect such Transfer and to comply in all other respects with the provisions of
this Section 6.2. Each such notice shall describe the manner and circumstances
of the proposed Transfer and shall be accompanied by the written opinion,
addressed to Purchaser, of counsel for the holder of such Restricted
Securities, stating that in the opinion of such counsel (which opinion and
counsel shall be reasonably satisfactory to Purchaser) such proposed transfer
does not involve a transaction requiring registration or qualification of such
Restricted Securities under the Securities Act or the securities or "blue-sky"
laws of any relevant state of the United States; provided, however, that no
such opinion of counsel shall be necessary for a Transfer pursuant to Rule 144.
The holder thereof shall thereupon, with the written consent of Purchaser, be
entitled to Transfer such Restricted Securities in accordance with the terms of
the notice delivered by it to Purchaser. Each certificate or other instrument
evidencing the securities issued upon the Transfer of any such Restricted
Securities (and each certificate or other instrument evidencing any
untransferred balance of such Restricted Securities) shall bear the legend set
forth in Section 6.2(b) unless (x) in such opinion of counsel of Purchaser
registration of any future Transfer is not required by the applicable
provisions of the Securities Act or (y) Purchaser shall have waived the
requirement of such legends. The Shareholder shall not Transfer any Restricted
Securities until such opinion of counsel has been given (unless waived by
Purchaser or unless such opinion is not required in accordance with the
provisions of this Section 6.2(c)).
(d) Notwithstanding the foregoing provisions of this Section
6.2, the restrictions imposed by this Section 6.2 upon the transferability of
Restricted Securities shall cease and terminate when (i) any such shares are
sold or otherwise disposed of pursuant to an effective registration statement
under the Securities Act or as otherwise contemplated by Section 6.2(c) and,
pursuant to Section 6.2(c), the securities so transferred are not required to
bear the legend set forth in Section 6.2(c) or (ii) the holder of such
Restricted Securities has met the requirements for Transfer of such Restricted
Securities pursuant to subparagraph (k) of Rule 144. Whenever the restrictions
imposed by this Section 6.2 shall terminate, as herein provided, the holder of
Restricted Securities as to which such restrictions have terminated shall be
entitled to receive from Purchaser, without expense, a new certificate not
bearing the restrictive legend set forth in Section 6.2(b) and not containing
any other reference to the restrictions imposed by this Section 6.2.
(e) The Shareholder understands and agrees that Purchaser,
at its discretion, may cause stop transfer orders to be placed with its
transfer agent with respect to certificates
<PAGE>
for Restricted Securities owned by such Securityholder but not as to
certificates for such shares of Purchaser Common Stock as to which the legend
set forth in paragraph (b) of this Section 6.2 is no longer required because one
or more of the conditions set forth in Section 6.2(d) shall have been satisfied.
6.3. Piggyback Registration.
(a) As used in this Section 6.3, the following terms shall
have the following meanings:
(i) "Other Shares" shall mean at any time those
shares of Purchaser Common Stock that do not constitute Primary
Shares, Registrable Shares or Registrable Founders Shares.
(ii) "Primary Shares" shall mean at any time the
authorized but unissued shares of Purchaser Common Stock or shares of
Purchaser Common Stock held in treasury.
(iii) "Registrable Founder's Shares" shall have the
meaning as set forth in that certain Amended and Restated
Registration Rights Agreement dated as of May 6, 1996 among the
Purchaser and the stockholders identified therein.
(iv) "Registrable Shares" shall mean the shares of
Purchaser Common Stock that constitute Restricted Securities that are
held by the Shareholder and that have not theretofore been sold to
the public pursuant to a registration statement under the Securities
Act or pursuant to Rule 144.
(v) "Rule 144" shall mean Rule 144 promulgated under
the Securities Act, as amended from time to time, or any successor or
complementary provision thereto.
(b) Subject to the provisions set forth below and to the
last sentence of this Section 6.3(b),.if Purchaser at any time or times
following six months after an initial underwritten public offering of shares of
Purchaser Common Stock proposes for any reason to register Primary Shares under
the Securities Act (other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any successor forms thereto), it shall promptly give written
notice to the Shareholder of its intention so to register such shares and, upon
the written request, given within 30 days after delivery of such notice by
Purchaser, of any Securityholder to include in such registration Registrable
Shares (which request shall specify the number of Registrable Shares proposed
to be included in such registration by the Shareholder), Purchaser shall use
its best efforts to cause all such Registrable Shares to be included in such
registration on the same terms and conditions as the securities otherwise being
sold in such registration; provided, however, that the rights granted to the
Shareholder hereunder shall be subject at all times to the contractual rights
of any third parties now or hereafter granted;
<PAGE>
further provided, however, that if the managing underwriter in the good faith
exercise of its reasonable judgment advises Purchaser in writing that the
inclusion of all Registrable Shares proposed to be included in such
registration would interfere with the successful marketing (including pricing)
of Primary Shares or Other Shares proposed to be registered by Purchaser, then
the number of Primary Shares, Registrable Shares and Other Shares proposed to
be included in such registration shall be included in the following order:
(i) first, the Primary Shares and Other Shares; and
(ii) second, the Registrable Shares and the
Registrable Founders Shares requested to be included in such
registration, pro rata based upon the number of Registrable Shares
and Registrable Founders Shares proposed to be included in such
registration; provided that it is agreed that for purpose of this
subsection 6.3 and the rights granted herein, the Registrable Shares
shall be treated on a pari passu basis with and with respect to the
Registrable Founders' Shares.
If any registration hereunder is to be underwritten, Purchaser and each holder
of Registrable Shares to be registered by such registration statement shall, as
a condition to participating in such registration, enter into an underwriting
agreement in customary form with a managing underwriter selected for such
underwriting by Purchaser. If any such holder elects not to include any or all
of its, his or her Registrable Shares in any registration statement filed by
the Purchaser, such holder shall nevertheless continue to have the right to
include any of its, his or her Registrable Shares in any subsequent
registration statement or registration statements as may be filed by the
Purchaser with respect to offerings of its securities, subject to the terms and
conditions set forth in this Section 6. Anything to the contrary contained
herein notwithstanding, Purchaser shall not be required to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 6.3 after Purchaser has effected four (4) such requested registrations
pursuant to this Section 6.3 in which any such requesting holder has been given
the opportunity to "participate"; provide that for the purposes of this
sentence "participate" shall mean the registration of at least 50% of the
amount of Registrable Shares originally requested to be registered in each such
election pursuant to this subsection 6.3.
(c) In consideration for Purchaser agreeing to its
obligations under this Section 6.3, if Purchaser shall include Registrable
Shares in a registration pursuant to Section 6.3(b)) for the sale thereof to
the public, the Shareholder agrees, upon the request of the managing
underwriter of such registration, to enter into an agreement not to sell, make
any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of, any Registrable Shares, other than those Registrable Shares
<PAGE>
actually included in such registration pursuant to Section 6.3(b) and sold to
the public thereunder, without the prior written consent of the underwriters
which period shall not begin more than 10 days prior to the effectiveness of
the registration statement pursuant to which such public offering shall be made
and shall not last more than 180 days after the effective date of such
registration statement; provided, that the Shareholder shall be bound by this
provision only if, and to the extent, the executive officers of Purchaser
owning Purchaser Common Stock shall be bound by such a provision.
(d) In connection with any registration pursuant to this
Section 6.3, Purchaser shall in its sole discretion determine the terms and
conditions of such registration, including, without limitation, the timing
thereof; the scope of the offering contemplated thereby (i.e., whether the
offering shall be a combined primary offering and a secondary offering or
limited only to a secondary offering); the manner of distribution of
Registrable Shares; the period of effectiveness of registration for permissible
sales of Registrable Securities thereunder consistent with the plan of
distribution agreed upon by Purchaser and the Shareholder; and all other
material aspects of the registration and the registration process. In
connection therewith, Purchaser may require that any such registration be
underwritten, in which event the managing underwriter shall be selected by
Purchaser.
(e) In connection with any registration of any Registrable
Shares under the Securities Act pursuant to this Agreement, Purchaser shall
indemnify and hold harmless the Shareholder against any losses, claims, damages
or liabilities, joint or several (or actions in respect thereof), to which the
Shareholder may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the registration statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Shares, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading or, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, or any violation by Purchaser of the Securities Act or state
securities or "blue-sky" laws applicable to Purchaser and relating to action or
inaction required of Purchaser in connection with such registration or
qualification under state securities or "blue-sky" laws; provided, however,
that Purchaser shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
<PAGE>
omission made in said registration statement, preliminary prospectus, final
prospectus, amendment, supplement or document incident to registration or
qualification of any Registrable Shares in reliance upon and in conformity with
written information furnished to Purchaser by the Shareholder with respect to
information regarding the Shareholder for use in the preparation thereof.
(ii) In connection with any registration of
Registrable Shares under the Securities Act pursuant to this
Agreement, the Shareholder shall indemnify and hold harmless (in the
same manner and to the same extent as set forth in the preceding
paragraph of this Section 6.3(d)) Purchaser, each director of
Purchaser, each officer of Purchaser who shall sign such registration
statement, each underwriter, broker or other person acting on behalf
of Purchaser and each person who controls any of the foregoing
persons within the meaning of the Securities Act with respect to any
statement or omission from such registration statement, any
preliminary prospectus or final prospectus contained therein or
otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of
any Registrable Share, if such statement or omission was made in
reliance upon and in conformity with written information furnished to
Purchaser or such underwriter by the Shareholder for use in
connection with the preparation of such registration statement,
preliminary prospectus, final prospectus, amendment, supplement or
document; provided that the maximum liability in respect of such
indemnification shall be limited, in the case of the Shareholder, to
an amount equal to the net proceeds received by the Shareholder from
the sale of such Registrable Shares effected pursuant to such
registration statement.
(f) The Shareholder shall furnish to Purchaser such written
information regarding the Shareholder as Purchaser shall reasonably deem
necessary in connection with any registration, qualification or compliance
contemplated by this Section 6.3.
(g) Anything to the contrary contained herein
notwithstanding, the rights of the holders of Registrable Shares and the
obligations of Purchaser under Section 6.3(b) hereof shall terminate and be of
no further force or effect (i) as to any holder of Registrable Shares, at such
time as all Registrable Shares held by such holder may be sold under Rule 144
during any three-month period and (ii) as to all holders of Registrable Shares,
on the third anniversary of the Effective Date.
(h) The Shareholder may not assign her rights under this
Section 6.3 to any purchaser or transferee of Restricted Securities without the
prior written consent of Purchaser; pr vided, however, that any such purchaser
or transferee shall, as a condition to the effectiveness of such assignment if
consented to by Purchaser, be required to execute a counterpart to this
Agreement agreeing to be treated as the Shareholder is
<PAGE>
treated hereunder solely for purposes of this Section 6.3, whereupon such
purchaser or transferee shall have the benefits of, and shall be subject to the
restrictions contained in, this Section 6.3.
(i) All expenses incurred by Purchaser in complying with
this Section 6.3, including, without limitation, all registration and filing
fees (including all expenses incident to filing with the NASD), fees and
expenses of complying with securities and "blue-sky" laws, printing expenses
and fees and expenses of Purchaser's counsel and accountants, shall be borne by
Purchaser; provided, however, that all fees and expenses of counsel for the
holders of Registrable Shares or any of them and all underwriting discounts,
taxes and selling commissions applicable to the Registrable Shares, and any
expenses and fees that would not have been incurred by Purchaser but for
inclusion of Registrable Shares in such registration, shall not be borne by
Purchaser but shall be borne by the holders of Registrable Shares pro rata
based on the number of Registrable Shares so registered.
6.4. Disclosure of Information; Non-Competition. Each of the
Company Principals acknowledges and recognizes that the Subject Business has
been conducted or is currently planned to be conducted by the Company
throughout the world, and further acknowledges and recognizes the highly
competitive nature of the industry in which the Subject Business is involved
and that, accordingly, in consideration of the premises contained herein, the
consideration to be received hereunder and the direct and indirect benefits to
each of the Company Principals of the transactions contemplated hereby, and in
consideration of and as an inducement to Purchaser and Acquisition Sub to enter
into to this Agreement and to consummate the transactions contemplated hereby:
(a) From and after the Effective Time, neither of the
Company Principals shall use or disclose to any Person, except as required by
law or judicial process, any Confidential Information, for any reason or
purpose whatsoever, nor shall he or she make use of any of the Confidential
Information for his or her own purposes or for the benefit of any Person except
Purchaser and the Surviving Corporation. For purposes of this Agreement,
"Confidential Information" shall mean Intellectual Property Rights of the
Company, the Surviving Corporation or Purchaser or its Affiliates and all
information of a proprietary nature relating to the Company and/or its business
or operations, the Surviving Corporation or Purchaser or its Affiliates or the
Subject Business (other than information that is in the public domain at the
time of receipt thereof by the Company Principals, or otherwise becomes public
other than as a result of the breach by either of the Company Principals of his
or her agreement hereunder or is rightfully received from a third party without
any obligation of confidentiality to Purchaser or the Company or is
independently developed by either of the Company Principals). As used herein,
the term "Subject Business" means and includes any business located anywhere in
the world that develops or
<PAGE>
produces any internet channel the content Of which is similar to any internet
channel produced or under active development by the Company.
(b) Neither of the Company Principals shall, during the
two-year period beginning at the Effective Time, (i) directly or indirectly
engage, whether such engagement shall be as an officer, director, partner,
shareholder, Affiliate or other participant, in any business that competes with
the Subject Business (a "Competitive Business") or represent in any way any
Competitive Business, whether such engagement or representation shall be for
profit or not (provided, that nothing contained herein shall prevent either of
the Company Principals from holding up to 2% of the outstanding voting capital
stock of any company), (ii) interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between Purchaser and the Company and
the Surviving Corporation, on the one hand, and any third party, on the other
hand, including, without limitation, any licensee, licensor, customer,
supplier, consultant or employee of Purchaser or any Affiliate thereof, the
Company or the Surviving Corporation, or (iii) affirmatively assist or induce
others to engage in any Competitive Business in any manner described in the
foregoing clauses (i) and (ii); provided, however, that at such time and in the
event that the employment of either of the Company Principals, with the
Purchaser or the Company is involuntary terminated without "cause" by Purchaser
("cause" being as defined in the applicable employment agreement for each of
the Company Principals) and Purchaser is not compensating the Shareholder or
Douma, as the case may be, with salary, severance, bonuses or similar payments
in an amount commensurate with their respective salaries on the date of such
termination, such agreement not to compete shall thereupon be limited, as to
the Shareholder or Douma, as the case may be, to the conduct of a Competitive
Business with respect to any healthcare or health-related products, services or
content on Internet/online and narrowband and broadband delivery systems.
6.5. Employee Options. Within a reasonable time following the
Closing, the Purchaser will grant (i) 69,000 non-transferable, incentive stock
options to the employees listed on Schedule 6.6 hereto in the amounts set forth
opposite the name of each such employee and (ii) 21,000 non-transferable, non-
qualified stock options to the persons named on Schedule 6.6 hereto in the
amounts set forth opposite the name of each such person. Any options granted
pursuant to this subsection 6.6 will be granted in accordance with and subject
to the Purchaser's then effective stock option plan and the Code. The incentive
stock options granted pursuant to the terms hereof will also be granted in
accordance with and be subject to the requirements of the Code. The
non-qualified stock options will be granted on substantially the same terms as
non-qualified stock options granted by the Purchaser to other non-employee
consultants.
<PAGE>
ARTICLE VII
INDEMNIFICATION
7.1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
(a) "Affiliate" as to any person means any entity,
directly or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such person.
(b) "Event of Indemnification" shall mean and include (i) the
untruth, inaccuracy or breach of any representation or warranty of the Company,
any of the Company Principals or AOL (including the underlying facts and
circumstances related thereto) contained in Section 3.1, or 3.2, any Exhibit
hereto or any document delivered in connection herewith, (ii) the breach of
covenants and agreements by the Company, any of the Company Principals or AOL
and (iii) any claim by any person or entity heretofore providing content or
services to the Company for use by the Company in its BetterHealth.com service
with respect to consideration for, or authority to use any such content or
services.
(c) "Indemnified Persons" shall mean and include Purchaser,
Acquisition Sub and the Surviving Corporation and their respective Affiliates
(but shall not include the Shareholder or AOL), successors and assigns, and the
respective officers and directors of each of the foregoing.
(d) "Indemnifying Persons" shall mean and include each of
the Company Principals (but shall not include the Company) and their respective
successors and assigns, heirs or personal representatives.
(e) "Losses" shall mean any and all losses, claims, damages,
liabilities, expenses, assessments and Taxes sustained, suffered or incurred by
any Indemnified Person arising from or in connection with any such matter which
is the subject of indemnification under Section 7.2 hereof.
7.2. Indemnification Generally. Subject to Section 7.6
hereof, the Indemnifying Persons shall indemnify the Indemnified Persons for,
and hold each of them harmless from and against, any and all Losses arising
from or in connection with any Event of Indemnification; provided that each of
the Company Principals' liability under this Section 7.2 shall be on a joint
and several basis with each other.
The indemnifications set forth herein of the Shareholder
shall be secured pursuant to and in accordance with the Escrow Agreement. Any
claims for Losses hereunder may be satisfied pursuant to and in accordance with
the terms of the
<PAGE>
Escrow Agreement, notwithstanding the foregoing allocations of
responsibilities.
7.3. Assertion of Claims. No claim shall be brought under
Section 7.2 hereof unless the Indemnified Persons, or any of them, at any time
prior to the applicable Survival Date, if any, give the Indemnifying Persons
(a) written notice of the existence of any such claim, specifying the nature
and basis of such claim and the amount thereof, to the extent known or (b)
written notice pursuant to Section 7.4 of any third party claim, the existence
of which might give rise to such a claim. Upon the giving of such written
notice as aforesaid prior to the applicable Survival Date, the Indemnified
Persons, or any of them, shall have the right to commence legal proceedings
subsequent to the Survival Date for the enforcement of their rights under
Section 7.2 hereof.
7.4. Notice and Defense of Third Party Claims. The
obligations and liabilities of the Indemnifying Persons with respect to Losses
resulting from the assertion of liability by third parties (each, a "Third
Party Claim") shall be subject to the following terms and conditions:
(a) The Indemnified Persons shall promptly (and, in any
event, within five Business Days) give written notice to the Indemnifying
Persons of any Third Party Claim which might give rise to any Loss by the
Indemnified Persons, stating the nature and basis of such Third Party Claim,
and the amount thereof to the extent known. Such notice shall be accompanied by
copies of all relevant documentation with respect to such Third Party Claim,
including, without limitation, any summons, complaint or other pleading which
may have been served, any written demand or any other document or instrument.
(b) The Indemnified Persons shall assume the defense of any
Third Party Claims with counsel of their own choosing, which counsel shall be
reasonably satisfactory to the Indemnifying Persons, and shall act reasonably
and in with their good faith business judgment in handling such Third Party
Claims and shall not effect any settlement without the written consent of the
Indemnifying Persons, which consent shall not unreasonably be withheld or
delayed. The Indemnifying Persons shall have the right to participate at their
own expense in the defense of any Third Party Claims. The Indemnifying Persons
and the Indemnified Persons shall make available to each other and their
counsel and accountants all books and records and information relating to any
Third Party Claims, keep each other fully apprised as to the details and
progress of all proceedings relating thereto and render to each other such
assistance as may be reasonably required to ensure the proper and adequate
defense of any and all Third Party Claims.
7.5. Survival of Representations and Warranties. Subject to
the further provisions of this Section 7.5, the respective representations and
warranties of (a) each of the Company Principals, AOL and the Purchaser set
forth in Sections 3.1, 3.2 and 3.3, respectively, shall survive the Effective
Time until eighteen (18) months following the Closing Date, except that the
representations and warranties contained in (i) Sections 3.1(h), 3.2(a), and
3.2(c) shall not so terminate but shall survive the Closing indefinitely and
(ii) Section 3.1(o) shall not so terminate but shall survive the Closing until
the applicable statute of limitations shall have expired with respect to all
matters referenced therein and (b) the Company shall be deemed to be conditions
to the Closing and shall not survive the Closing and shall cease and terminate
upon the Closing and shall be of no further force or effect thereafter. For
convenience of reference, the date upon which any representation or warranty
contained herein shall terminate is referred to herein as the "Survival Date."
All covenants and agreements of Purchaser or the Shareholder contained herein
shall survive the Closing in accordance with their respective terms. Anything
contained herein to the contrary notwithstanding, the representations and
warranties of the Company contained in this Agreement (including, without
limitation, the Company Disclosure Schedule) (i) are being given by the Company
on behalf of the Shareholder and for the purpose of binding the Shareholder to
the terms and provisions of this Article VII and the Escrow Agreement, and as an
inducement to Purchaser and Acquisition Sub to enter into this Agreement and to
approve the Merger (and the Company acknowledges that Purchaser and Acquisition
Sub have expressly relied thereon) and (ii) are solely for the benefit of the
Indemnified Persons and each of them. Accordingly, no third party (including,
without limitation, the Shareholder) or any other holder of Company Common Stock
or anyone acting on behalf of any thereof) other than the Indemnified Persons,
and each of them, shall be a third party or other beneficiary of such
representations and warranties and no such third party shall have any rights of
contribution against the Company or the Surviving Corporation with respect to
such representations or warranties or any matter subject to or resulting in
indemnification under this Article Vil or otherwise.
7.6. Limitation on Indemnification.
(a) Anything to the contrary contained in Article VII
notwithstanding, the Indemnifying Persons shall not be obligated to indemnify
the Indemnified Persons pursuant to this Article VII with respect to any Losses
pursuant to Section 7.1(b)(i) until the aggregate amount of such Losses exceeds
seventy-five thousand dollars ($75,000) (the "Basket Amount"), whereupon the
Shareholder shall be obligated to indemnify the Indemnified Persons for all
Losses in excess of the Basket Amount; provided, however, that the Shareholder
shall be obligated to indemnify the Indemnified Persons for the first dollar of
all Losses arising out of or related to a breach of the representation and
warranty contained in Sections 3.1(c), 3.1(e), 3.1(x), 3.1(ah), 3.1(af) and
3.2(a); provided further, however, that the aggregate maximum indemnification
liability of the Indemnifying Persons pursuant to this Article VII with respect
to any Losses pursuant to an Event
<PAGE>
of Indemnification under subsection 7.2 (except with respect to the
indemnification by the Shareholder set forth in Section 6.3(e)(ii) which shall
not be subject to the limitation set forth herein) shall be the total fair
market value of the aggregate consideration received by the Shareholder
pursuant to subsection 2.1(a). Notwithstanding anything stated herein to the
contrary, the Indemnifying Persons will not be liable to the Indemnified
Persons pursuant to this Article VII for any consequential or incidental
damages.
(b) For purposes of satisfying an indemnification obligation
of the Shareholder under this Article VII, each share of Purchaser Common Stock
tendered by or on behalf of the Shareholder in satisfaction of any
indemnification of the Shareholder under this Article VII shall have a value
determined as set forth in the Escrow Agreement.
ARTICLE VIII
TERMINATION; AMENDMENT, MODIFICATION AND WAIVER
8.1. Termination. This Agreement may be terminated, and the
Merger abandoned, notwithstanding the approval by Purchaser, Acquisition Sub
and the Company of this Agreement, at any time prior to the Effective Time, by:
(a) the mutual consent of Purchaser, Acquisition Sub and the
Company; or
(b) any Party, if the conditions set forth in Section 5.1
hereof shall not have been met by March 31, 1997, except if such conditions
have not been met solely as a result of the action or inaction of the party
seeking to terminate; or
(c) Purchaser and Acquisition Sub if the conditions set forth
in Section 5.2 hereof shall not have been met, and the Company if the
conditions set forth in Section 5.3 hereof shall not have been met, in either
case by March 31, 1997, except if such conditions have not been met solely as a
result of the action or inaction of the party seeking to terminate; or
(d) either Party, if such party shall have determined in its
sole discretion, exercised in good faith, that the Merger contemplated by this
Agreement has become impracticable by reason of the institution of any
litigation, proceeding or investigation to restrain or prohibit the
consummation of the Merger, or which questions the validity or legality of the
transactions contemplated by this Agreement.
Any termination pursuant to this Section 8.1 (other than a termination pursuant
to Section 8.1(a) hereof) shall be effected by written notice from the party or
parties so terminating to the other parties hereto.
<PAGE>
8.2. Effect of Termination. In the event of the termination of this
Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect, except for Section 6.4(a), Section 4.13, Article VII, this
Section 8.2, and Article IX, each of which shall survive the termination of this
Agreement; provided, however, that the liability of any party for any breach by
such party of the representations, warranties, covenants or agreements of such
party set forth in this Agreement occurring prior to the termination of this
Agreement shall survive the termination of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1. Expenses. As used in this Agreement, "Transaction Costs"
shall mean, with respect to any party, all actual, out-of-pocket expenses
incurred by such party to third parties, in connection with this Agreement, the
Merger and all other transactions provided for herein and therein; but shall
not in any event include general overhead; the time spent by employees of such
party internally; postage, telephone, telecopy, photocopy and delivery expenses
of such party; permit and filing fees; and other non-material expenses that are
incidental to the ordinary course of business. Each party hereto shall bear its
own fees and expenses in connection with the transactions contemplated hereby;
provided, however, that in the event the Merger shall be consummated, Purchaser
and Acquisition Sub shall bear all Transaction Costs of Purchaser and
Acquisition Sub and the Shareholder shall bear all Transaction Costs of the
Company (to be effected by either direct payment of such Transaction Costs or a
contribution of cash to the Company by the Shareholder immediately prior to the
Effective Time in an amount equal to all such Transaction Costs of the
Company), that have not been paid by the Company before the Closing Date and
whether or not such fees and expenses are reflected in the Company Disclosure
Schedule or the Schedule of Expenses (such Transaction Costs of the Company
being herein collectively referred to as the "Company Expenses").
9.2. Entire Agreement. This Agreement (including the Company
Disclosure Schedule and the Exhibits attached hereto) and the other writings
referred to herein contain the entire agreement among the parties hereto with
respect to the transactions contemplated hereby and supersede all prior
agreements or understandings, written or oral, among the parties with respect
thereto.
9.3. Descriptive Headings. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
9.4. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and
<PAGE>
sufficient if delivered personally or sent by nationally-recognized overnight
courier or by registered or certified mail, postage prepaid, return receipt
requested or by telecopier, with confirmation as provided above addressed as
follows:
if to Purchaser or Acquisition Sub, to:
iVillage, Inc.
170 Fifth Avenue
New York, New York 10010
Attention: Candice Carpenter,
Chairman and Chief Executive
Officer
Telecopier: (212) 604-9133;
with copies to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Martin H. Levenglick, Esq.
Telecopier: (212) 408-2420;
if to the Company, to:
Health ResponseAbility Systems, Inc.
585 Grove Street
Herndon, Virginia 22170
Attention:
Telecopier: (703) 904-6908
with a copy to:
Shaw Pittman Potts & Trowbridge
1501 Farm Credit Drive, Suite 400
McLean, Virginia 22102
Attention: Steven L. Meltzer, Esq.
Telecopier: (703) 821-2397; and
if to the Shareholder, Douma or AOL, at their respective addresses
set forth on the signature pages attached hereto;
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such
notices or communications shall be deemed to be received (a) in the case of
personal delivery or telecopy, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the
date when sent and (c) in the case of mailing, on the third business day
following the date on which the piece of mail containing such communication was
posted.
9.5. Counterparts. This Agreement may be executed in any
number of counterparts by original or facsimile signature,
<PAGE>
each such counterpart shall be an original instrument, and all such
counterparts together shall constitute one and the same agreement.
9.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the Virginia Statute and with the laws of the
State of New York applicable to contracts made and to be performed wholly
therein (without regard to principles of conflicts of laws).
9.7. Benefits of Agreement. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Except as
expressly provided herein, no person other than the parties hereto shall be or
shall be deemed to be third party beneficiaries of any provision or term of
this Agreement.
9.8. Pronouns. As used herein, all pronouns shall include the
masculine, feminine, neuter, singular and plural thereof whenever the context
and facts require such construction.
9.9. Amendment, Modification and Waiver. This Agreement shall
not be altered or otherwise amended except pursuant to (a) an instrument in
writing signed by all of the parties hereto and (b) in the case of a waiver or
consent, an instrument in writing signed by the party against whom enforcement
is sought; provided, however, that after the approval and adoption of this
Agreement and the Merger by the Shareholder and AOL, no amendment of this
Agreement shall be made which pursuant to the Virginia Statute or other law
requires the further approval of the Shareholder or AOL; provided further,
however, that any party to this Agreement may waive any obligation owed to it
by any other party under this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as
a waiver of any subsequent breach.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement and Plan of Reorganization to be executed on its behalf as of
the day and year first above written.
iVILLAGE, INC.
By: /s/ Candice Carpenter
-------------------------
Name: Candice Carpenter
Title: CEO
HRS ACQUISITION CORPORATION
By: /s/ Candice Carpenter
-------------------------
Name: Candice Carpenter
Title: President
HEALTH RESPONSEABILITY SYSTEMS, INC.
By:
-------------------------
Name:
Title:
-------------------------
Elin Silveous
585 Grove Street
Herndon, Virginia 22170
-------------------------
Allen Douma
585 Grove Street
Herndon, Virginia 22170
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement and Plan of Reorganization to be executed on its behalf as of the day
and year first above written.
iVILLAGE, INC.
By:
---------------------------------
Name:
Title:
HRS ACQUISITION CORPORATION
By:
---------------------------------
Name:
Title:
HEALTH RESPONSEABILITY SYSTEMS, INC.
By: /s/ Elin V. Silveous
---------------------------------
Name: Elin V. silveous
Title: President
/s/ Elin Silveous
-------------------------------
Elin Silveous
585 Grove Street
Herndon, Virginia 22170
/s/ Allen Douma
-------------------------------
Allen Douma
585 Grove Street
Herndon, Virginia 22170
<PAGE>
AMERICA ONLINE, INC.
By: /s/ Lennert J. Leader
-------------------------------
Name: Lennert J. Leader
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
22000 AOL Way
Dulles, Virginia 20166
Attention:
Telecopier:
<PAGE>
AMENDMENT NO. 1 dated as of March 31,
1997, to the AGREEMENT AND PLAN OR
REORGANIZATION AND MERGER dated as of
January 31, 1997 (the "Agreement"), among
iVILLAGE, INC., a Delaware corporation,
HEALTH RESPONSEABILITY SYSTEMS, INC., a
Virginia corporation ("Better Health"),
ELIN SILVEOUS, the sole shareholder of
Better Health, and the other signatories
thereto.
The parties desire to amend the Agreement to extend the
termination date thereof to May 15, 1997. All capitalized terms used but not
otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
NOW, THEREFORE, pursuant to Section 9.10 of the Agreement,
the undersigned hereby amend the Agreement as follows:
Section 8.1(b) of the Agreement is hereby amended by deleting
any reference to the date "March 31, 1997" and inserting in
place thereof the reference to the date "May 15, 1997."
EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT SHALL
REMAIN IN FULL FORCE AND EFFECT.
This Amendment shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly therein.
This Amendment may be executed in any number of counterparts,
and each such counterpart shall be deemed to be an original instrument, but all
such counterparts shall constitute one agreement.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this
Amendment No. 1 as of the date first written above.
SHAREHOLDER: iVILLAGE, INC.
/s/ Elin Silveous By: /s/ Candice Carpenter
- --------------------------- -------------------------
Elin Silveous Name: Candice Carpenter
Title: CEO
HEALTH RESPONSEABILITY
SYSTEMS, INC.
By: /s/ Elin V. Silveous
-----------------------
Name: Elin V. Silveous
Title: President
AMERICA ONLINE, INC.
By:
-----------------------
Name:
Title
-2-
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this
Amendment No. 1 as of the date first written above.
SHAREHOLDER: iVILLAGE, INC.
By:
- --------------------------- -------------------------
Elin Silveous Name:
Title:
HEALTH RESPONSEABILITY
SYSTEMS, INC.
By:
-------------------------
Name:
Title:
AMERICA ONLINE, INC.
By: /s/ Miles Gilburne
-----------------------
Name: Miles Gilburne
Title
-2-
<PAGE>
AMENDMENT NO. 2 dated as of May 15,
1997, to the AGREEMENT AND PLAN OR
REORGANIZATION AND MERGER dated as of
January 31, 1997 (the "Agreement") (as
amended by that certain Amendment No. 1
dated as of March 31, 1997), among
iVILLAGE, INC., a Delaware corporation,
HEALTH RESPONSEABILITY SYSTEMS, INC., a
Virginia corporation, ELIN SILVEOUS, the
sole shareholder of Better Health, and the
other signatories thereto.
The parties desire to amend the Agreement to, among other
things, extend the termination date thereof to May 23, 1997 and to modify
certain terms of the Agreement in order to reflect the conversion of certain
cash consideration payable to AOL into rights to receive Purchaser Common
Stock. All capitalized terms used but not otherwise defined herein shall have
the meanings ascribed thereto in the Agreement.
NOW, THEREFOR, pursuant to Section 9.10 of the Agreement, the
undersigned hereby amend the Agreement as follows:
1. Subsection 2.1(b)(i)(B) is hereby amended by deleting in line 3 of
such subsection after the word "receive" the words "in the aggregate
$2,000,000 in cash" and inserting in lieu thereof the words "609,000
shares of Purchaser Common stock";
2. Subsection 2.2(a) is hereby amended by deleting in line 12 of such
subsection after the word "receive" the words "$2,000,000 in cash"
and inserting in lieu thereof the words "609,000 shares of Purchaser
Common Stock";
3. Subsection 3.2(c) is hereby amended by inserting the following clause
(iii) after clause (ii) thereof:
"(iii) Investment Representations.
AOL (a) is acquiring the shares of the Purchaser Common
Stock, being issued to it pursuant to the Merger for investment and for
its own account and not as a nominee or agent for any other person and
with no present intention of distributing or reselling such shares or
any part thereof in any transactions that would be in violation of the
Securities Act or any state securities or "blue-sky" laws, (b) has had
an opportunity to ask questions of and has received satisfactory
answers from the officers of Purchaser or persons acting on Purchaser's
behalf concerning Purchaser
<PAGE>
and the terms and conditions of an investment in Purchaser Common
Stock, (c) has sufficient knowledge and experience in financial
affairs and is capable of evaluating the risks of acquiring and
holding shares of Purchaser Common Stock, (d) is aware of Purchaser's
business affairs and financial condition and has acquired sufficient
information about Purchaser to reach an informed and knowledgeable
decision to acquire the shares of Purchaser Common Stock to be issued
to it in the Merger, (e) can afford to suffer a complete loss of its
investment in shares of Purchaser Common Stock and (f) understands (i)
that the shares of Purchaser Common Stock to be issued to it in the
Merger have not been registered for sale under the Securities Act or
any state securities or "blue-sky" laws in reliance upon an exemption
therefrom, which exemption depends upon, among other things, the bona
fide nature of the investment intent of AOL as expressed hereunder,
(ii) that such shares of Purchaser Common Stock must be held
indefinitely and not sold until such shares are registered under the
Securities Act and any applicable state securities or "blue-sky" laws,
unless an exemption from such registration is available, (iii) that,
except as provided in Section 6.3, Purchaser is under no obligation to
so register such shares and (iv) that the certificates evidencing such
shares will be imprinted with a legend in the form set forth in Section
6.2(b) that prohibits the transfer of such shares, except as provided
in Section 6.2. AOL is an "accredited investor" within the meaning of
Rule 501(a) under the Securities Act. AOL has no plan or intention to
sell, exchange or dispose of any of the shares of Company Common Stock
received in connection with the transactions contemplated herein.";
4. Subsection 6.2(c) is hereby amended by deleting such subsection in
its entirety and inserting the following in lieu thereof:
"(c) The Shareholder and AOL agree, prior to any Transfer of
Restricted Securities, to give written notice to Purchaser of their
intention to effect such Transfer and to comply in all other respects
with the provisions of this Section 6.2. Each such notice shall
describe the manner and circumstances of the proposed Transfer and
shall be accompanied by the written opinion, addressed to Purchaser,
of counsel for the holder of such Restricted Securities, stating that
in the opinion of such counsel (which opinion and counsel shall be
reasonably satisfactory to Purchaser) such proposed transfer does not
involve a transaction requiring registration or qualification of such
Restricted Securities under the Securities Act or the securities or
"blue-sky" laws of any relevant state of the Untied States; provided,
however, that no such opinion of counsel shall be necessary for a
Transfer pursuant to Rule 144. The holder thereof shall thereupon,
with the written consent of
-2-
<PAGE>
Purchaser, be entitled to Transfer such Restricted Securities in
accordance with the terms of the notice delivered by it to Purchaser.
Each certificate or other instrument evidencing the securities issued
upon the Transfer of any such Restricted Securities (and each
certificate or other instrument evidencing any untransferred balance
of such Restricted Securities) shall bear the legend set forth in
Section 6.2(b) unless (x) in such opinion of counsel of Purchaser
registration of any future Transfer is not required by the applicable
provisions of the Securities Act or (y) Purchaser shall have waived
the requirement of such legends. Neither the Shareholder nor AOL shall
Transfer any Restricted Securities until such opinion of counsel has
been given (unless waived by Purchaser or unless such opinion is not
required in accordance with the provisions of this Section 6.2(c)).";
5. Subsection 6.2(e) is hereby amended by deleting such subsection in its
entirety and inserting the following in lieu thereof:
"(e) Each of the Shareholder and AOL understand and agree that
Purchaser, at its discretion, may cause stop transfer orders to be
placed with its transfer agent with respect to certificates for
Restricted Securities owned by such Securityholder but not as to
certificates for such shares of Purchaser Common Stock as to which the
legend set forth in paragraph (b) of this Section 6.2 is no longer
required because one or more of the conditions set forth in Section
6.2(d) shall have been satisfied.";
6. Section 6.3 is hereby amended by deleting such section in its entirety
and inserting the following in lieu thereof:
(a) "As used in this Section 6.3, the following terms shall
have the following meanings:
(i) "Other Shares" shall mean at any time those shares of
Purchaser Common Stock that do not constitute Primary Shares,
Registrable Shares or Registrable Founders Shares.
(ii) "Primary Shares" shall mean at any time the authorized
but unissued shares of Purchaser Common Stock or shares of Purchaser
Common Stock held in treasury.
(iii) "Registrable Founder's Shares" shall have the meaning
as set forth in that certain Amended and Restated Registration Rights
Agreement dated as of May 6, 1996 among the Purchaser and the
stockholders identified therein.
(v) "Registrable Shares" shall mean the shares of Purchaser
Common Stock that constitute Restricted Securities
-3-
<PAGE>
that are held by the Shareholder or AOL and that have not theretofore
been sold to the public pursuant to a registration statement under the
Securities Act or pursuant to Rule 144.
(v) "Rule 144" shall mean Rule 144 promulgated under the
Securities Act, as amended from time to time, or any successor or
complementary provision thereto.
(b) Subject to the provisions set forth below and to the last
sentence of this Section 6.3(b), if Purchaser at any time or times following six
months after an initial underwritten public offering of shares of Purchaser
Common Stock proposes for any reason to register Primary Shares under the
Securities Act (other than on From S-4 or Form S-8 promulgated under the
Securities Act or any successor forms thereto), it shall promptly give written
notice to the Shareholder and AOL of its intention so to register such shares
and, upon the written request, given within 30 days after delivery of such
notice by Purchaser, of any Securityholder to include in such registration
Registrable Shares (which request shall specify the number of Registrable Shares
proposed to be included in such registration by such Securityholder),
Purchaser shall use its best efforts to cause all such Registrable Shares to be
included in such registration on the same terms and conditions as the securities
otherwise being sold in such registration; provided, however, that the rights
granted to the Shareholder and AOL hereunder shall be subject at all times to
the contractual rights of any third parties now or hereafter granted; further
provided, however, that if the managing underwriter in the good faith exercise
of its reasonable judgment advises Purchaser in writing that the inclusion of
all Registrable Shares proposed to be included in such registration would
interfere with the successful marketing (including pricing) of Primary Shares or
Other Shares proposed to be registered by Purchaser, then the number of Primary
Shares, Registrable Shares and Other Shares proposed to be included in such
registration shall be included in the following order:
(i) first, the primary Shares and Other Shares; and
(ii) second, the Registrable Shares and the Registrable
Founders Shares requested to be included in such registration, pro
rata based upon the number of Registrable Shares and Registrable
Founders Shares proposed to be included in such registration; provided
that it is agreed that for purpose of this subsection 6.3 and the
rights granted herein, the Registrable Shares shall be treated on a
pari passu basis with and with respect to the Registrable Founders'
Shares.
If any registration hereunder is to be underwritten,
Purchaser and each holder of Registrable Shares to be registered by such
registration statement shall, as a condition to
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<PAGE>
participating in such registration, enter into an underwriting agreement in
customary form with a managing underwriter selected for such underwriting by
Purchaser. If any such holder elects not to include any or all of its, his or
her Registrable Shares in any registration statement filed by the Purchaser,
such holder shall nevertheless continue to have the right to include any of its,
his or her Registrable Shares in any subsequent registration statement or
registration statements as may be filed by the Purchaser with respect to
offerings of its securities, subject to the terms and conditions set forth in
this Section 6. Anything to the contrary contained herein notwithstanding,
Purchaser shall not be required to take any action to effect any such
registration, qualification or compliance pursuant to this Section 6.3 after
Purchaser has effected four (4) such requested registrations pursuant to this
Section 6.3 in which any such requesting holder has been given the opportunity
to "participate"; provided that for the purposes of this sentence "participate"
shall mean the registration of at lease 50% of the amount of Registrable Shares
originally requested to be registered in each such election pursuant to this
subsection 6.3.
(c) In consideration for Purchaser agreeing to its
obligations udner this Section 6.3, if Purchaser shall include Registrable
Shares in a registration pursuant to Section 6.3(b)) for the sale thereof to
the public, each of the Shareholder and AOL agrees, upon the request of the
managing underwriter of such registration, to enter into an agreement not to
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of, any Registrable Shares, other than those Registrable
Shares actually included in such registration pursuant to Section 6.3(b) and
sold to the public thereunder, without the prior written consent of the
underwriters which period shall not begin more than 10 days prior to the
effectiveness of the registration statement pursuant to which such public
offering shall be made and shall not last more than 180 days after the
effective date of such registration statement; provided, that the Shareholder
and AOL shall be bound by this provision only if, and to the extent, the
executive officers of Purchaser owning Purchaser Common Stock shall be bound by
such a provision.
(d) In connection with any registration pursuant to this
Section 6.3, Purchaser shall in its sole discretion determine the terms and
conditions of such registration, including, without limitation, the timing
thereof; the scope of the offering contemplated thereby (i.e., whether the
offering shall be a combined primary offering and a secondary offering or
limited only to a secondary offering); the manner of distribution of
Registrable Shares; the period of effectiveness of registration for permissible
sales of Registrable Securities thereunder consistent with the plan of
distribution agreed upon by Purchaser, the Shareholder and AOL; and all other
material aspects of the registration and the registration process. In
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<PAGE>
connection therewith, Purchaser may require that any such registration be
underwritten, in which event the managing underwriter shall be selected by
Purchaser.
(e) (i) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, Purchaser shall indemnify
and hold harmless the Shareholder and AOL against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which the
Shareholder and/or AOL may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the registration statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under with they were made not
misleading, or any violation by Purchaser of the Securities Act or state
securities or "blue-sky" laws applicable to Purchaser and relating to action or
inaction required of Purchaser in connection with such registration or
qualification under state securities or "blue-sky" laws; provided however, that
Purchaser shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, preliminary prospectus, final prospectus,
amendment, supplement or document incident to registration or qualification of
any Registrable Shares in reliance upon and in conformity with written
information furnished to Purchaser by the Shareholder or AOL, as the case may
be, with respect to information regarding the Shareholder or AOL, as the case
may be, for use in the preparation thereof.
(ii) In connection with any registration of Registrable Shares
under the Securities Act pursuant to this Agreement, the Shareholder
shall indemnify and hold harmless (in the same manner and to the same
extent as set forth in the preceding paragraph of this Section 6.3 (e))
Purchaser, each director of Purchaser, each officer of Purchaser who
shall sign such registration statement, each underwriter, broker or
other person acting on behalf of Purchaser and each person who controls
any of the foregoing persons within the meaning of the Securities Act
with respect to any statement or omission from such registration, any
preliminary prospectus or final prospectus contained therein
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<PAGE>
or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of
any Registrable Share, if such statement or omission was made in
reliance upon and in conformity with written information furnished to
Purchaser or such underwriter by the Shareholder for use in connection
with the preparation of such registration statement, preliminary
prospectus, final prospectus, amendment, supplement or document;
provided that the maximum liability in respect of such indemnification
shall be limited, in the case of the Shareholder, to an amount equal to
the net proceeds received by the Shareholder from the sale of such
Registrable Shares effective pursuant to such registration statement.
(iii) In connection with any registration of Registrable
Shares under the Securities Act pursuant to this Agreement, AOL shall
indemnify and hold harmless (in the same manner and to the same extent
as set forth in clause (i) of this Section 6.3(c)) Purchaser, each
director of Purchaser, each officer of Purchaser, who shall sign such
registration statement, each underwriter, broker or other person acting
on behalf of Purchaser and each person who controls any for the
foregoing persons within the meaning of the Securities Act with respect
to any statement or omission from such registration statement, any
preliminary prospectus or final prospectus contained therein or
otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of
any Registrable Share, if such statement or omission was made in
reliance upon and in conformity with written information furnished to
Purchaser or such underwriter by AOL for use in connection with the
preparation of such registration statement, preliminary prospectus,
final prospectus, amendment, supplement or document; provided that the
maximum liability in respect of such indemnification shall be limited,
in the case of AOL, to an amount equal to the net proceeds received by
AOL from the sale of such Registrable Shares effected pursuant to such
registration statement.
(f) The Shareholder and/or AOL, as applicable, shall furnish to Purchaser
such written information regarding the Shareholder or AOL, as the case may be,
as Purchaser shall reasonably deem necessary in connection with any
registration, qualification or compliance contemplated by this Section 6.3.
(g) Anything to the contrary contained herein notwithstanding, the rights
of the holders of Registrable Shares and the obligations of Purchaser under
Section 6.3(b) hereof shall terminate and be of no further force or effect (i)
as to any holder of Registrable Shares, at such time as all Registrable Shares
held by such holder may be sold under Rule 144 during any
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<PAGE>
three-month period and (ii) as to all holders of Registrable Shares, on the
third anniversary of the Effective Date.
(h) Neither the Shareholder nor AOL may assign their respective rights
under this Section 6.3 to any purchaser or transferee of Restricted Securities
without the prior written consent of Purchaser; provided, however, that any such
purchaser or transferee shall, as a condition to the effectiveness of such
assignment if consented to by Purchaser, be required to execute a counterpart to
this Agreement agreeing to be treated as the Shareholder or AOL, as the case may
be, is treated hereunder solely for purposes of this Section 6.3, whereupon such
purchaser or transferee shall have the benefits of, and shall be subject to the
restrictions contained in, this Section 6.3.
(i) All expenses incurred by Purchaser in complying with this Section 6.3,
including, without limitation, all registration and filing fees (including all
expenses incident to filing with the NASD), fees and expenses of complying with
securities and "blue-sky" laws, printing expenses and fees and expenses of
Purchaser's counsel and accountants, shall be borne by Purchaser; provided,
however, that all fees and expenses of counsel for the holders of Registrable
Shares or any of them and all underwriting discounts, taxes and selling
commissions applicable to the Registrable Shares, and any expenses and fees that
would not have been incurred by Purchaser but for inclusion of Registrable
Shares in such registration, shall not be borne by Purchaser but shall be borne
by the holders of Registrable Shares pro rata based on the number of Registrable
Shares so registered.";
7. Section 6.5 is hereby amended by deleting in line 8 of such section after
the word "this" the words "subsection 6.6" and inserting in lieu thereof the
words "subsection 6.5";
8. Section 8.1(b) and (c) are hereby amended by deleting any reference to the
date "March 31, 1997" (as amended by Amendment No. 1 to be "May 15, 1997)
and inserting in place thereof the reference to the date "May 23, 1997.";
9. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT SHALL REMAIN IN FULL FORCE
AND EFFECT.
10. This Amendment shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be
performed wholly therein.
11. This Amendment may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts shall constitute one agreement.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
No. 2 as of the date first written above.
SHAREHOLDER iVILLAGE, INC.
/s/ Elin Silveous By: /s/ Steven Ellis
- ------------------------ -------------------------
Elin Silveous Name: Steven Ellis
Title: VP, Finance
HEALTH RESPONSEABILITY SYSTEMS, INC.
By: /s/ Allen Douma
-------------------------
Name: Allen Douma
Title: CEO
AMERICA ONLINE, INC.
By: /s/ Lennert J. Leader
-------------------------
Name: Lennert J. Leader
Title: Senior Vice President,
Chief Financial Officer
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<PAGE>
AMENDMENT NO. 3 dated as of May 16, 1997, to the
AGREEMENT AND PLAN OR REORGANIZATION AND MERGER dated as
of January 31, 1997 (the "Agreement") (as amended by that
certain Amendment No. 1 dated as of March 31, 1997 and
that certain Amendment No. 2 dated as of May 15, 1997),
among iVILLAGE, INC., a Delaware corporation, HEALTH
RESPONSEABILITY SYSTEMS, INC., a Virginia corporation,
ELIN SILVEOUS, the sole shareholder of Better Health, and
the other signatories thereto.
The parties desire to amend the Agreement to, among other things, to
modify certain terms of the Agreement in order to reflect the increase in the
number of Purchaser Common Stock that Elin Silveous will receive. All
capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Agreement.
NOW, THEREFORE, pursuant to Section 9.10 of the Agreement, the
undersigned hereby amend the Agreement as follows:
1. Subsection 2.1(a)(ii) is hereby amended by deleting the words "1,038,000
shares of Purchaser Common Stock" and inserting in lieu thereof the words
"1,300,200 shares of Purchaser Common Stock";
2. Subsection 2.1(b)(1)(A) is hereby amended by deleting the words
"1,038,000 shares of Purchaser Common Stock" and inserting in lieu
thereof the words "1,300,200 shares of Purchaser Common Stock";
3. Subsection 2.2(b) is hereby amended by inserting the following sentence
after the last sentence thereof: "Of the Purchaser Common Stock being
issued to AOL hereunder, the first shares of Purchaser Common Stock with
a total aggregate value of $270,000 shall be paid to AOL as repayment of
the AOL Note, and the remaining shares of Purchaser Common Stock shall be
consideration in exchange for the AOL Warrant.";
4. Subsection 2.3(b)(ii) is hereby amended by deleting the words "103,800
Merger Shares" and inserting in lieu thereof the words "130,020 Merger
Shares";
5. Section 5.3 is hereby amended by inserting the following subsection after
the last subsection thereof:
<PAGE>
"(j) Acquisition Stock Option Plan. The proposed 1997 Acquisition Stock
Option Plan will have been approved by the requisite number of
shareholders pursuant to a shareholder written consent."
6. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT SHALL REMAIN IN FULL
FORCE AND EFFECT.
7. This Amendment shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be
performed wholly therein.
8. This Amendment may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all
such counterparts shall constitute one agreement.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
No. 3 as of the date first written above.
SHAREHOLDER iVILLAGE, INC.
/s/ Elin Silveous By: /s/ [ILLEGIBLE]
- ------------------------ -------------------------
Elin Silveous Name: [ILLEGIBLE]
Title: Chief Executive Officer
HEALTH RESPONSEABILITY SYSTEMS, INC.
By: /s/ Allen Douma
-------------------------
Name: Allen Douma
Title: Chief Executive Officer
AMERICA ONLINE, INC.
By: /s/ Lennert J. Leader
-------------------------
Name: Lennert J. Leader
Title: Senior Vice President,
Chief Financial Officer
<PAGE>
AMENDMENT NO. 4 dated as of May 23, 1997, to the
AGREEMENT AND PLAN OR REORGANIZATION AND MERGER dated as
of January 31, 1997 (the "Agreement") (as amended by that
certain Amendment No. 1 dated as of March 31, 1997,
that certain Amendment No. 2 dated as of May 15, 1997 and
that certain Amendment No. 3 dated May 23, 1997), among
iVILLAGE, INC., a Delaware corporation, HEALTH
RESPONSEABILITY SYSTEMS, INC., a Virginia corporation,
ELIN SILVEOUS, the sole shareholder of Better Health, and
the other signatories thereto.
The parties desire to amend the Agreement to, among other things,
extend the termination date thereof to May 28, 1997 and to modify certain
terms of the Agreement in order to reflect the conversion of certain cash
consideration payable to AOL into rights to receive Purchaser Common Stock.
All capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Agreement.
NOW, THEREFORE, pursuant to Section 9.10 of the Agreement, the
undersigned hereby amend the Agreement as follows:
1. Subsection 8.1(b) and (c) are hereby amended by deleting any reference to
the date "March 31, 1997" (as amended by Amendment No. 2 to be "May 23,
1997) and inserting in place thereof the reference to the date "May 28,
1997.";
2. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT SHALL REMAIN IN FULL
FORCE AND EFFECT.
3. This Amendment shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and to be
performed wholly therein.
4. This Amendment may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all
such counterparts shall constitute one agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
No. 4 as of the date first written above.
SHAREHOLDER iVILLAGE, INC.
/s/ Elin Silveous By: /s/ Steven Ellis
- ------------------------ -------------------------
Elin Silveous Name: Steven Ellis
Title: Vice President, Finance
HEALTH RESPONSEABILITY SYSTEMS, INC.
By: /s/ Allen Douma
-------------------------
Name: Allen Douma
Title: Chief Executive Officer
AMERICA ONLINE, INC.
By: /s/ [ILLEGIBLE]
-------------------------
Name: [ILLEGIBLE]
Title: President and Chief Executive
Officer; [ILLEGIBLE]
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF
DECEMBER 10, 1996,
AMONG
iVILLAGE, INC.
PP ACQUISITION CORPORATION
PARENTSPLACE.COM, INC.
AND
THE STOCKHOLDER OF PARENTSPLACE.COM, INC.
<PAGE>
SCHEDULES
Schedule I - Escrow Shares
Schedule II - Company Shares
Schedule 3.1(ah) - Officers and Directors of the Company
EXHIBITS
Exhibit A - Form of Merger Agreement
Exhibit B - Form of Non-Competition Agreements
Exhibit C - Form of Escrow Agreement
Exhibit D - Form of Termination Agreement
Exhibit E - Termination of Burst!Media Agreement
Exhibit F - Form of Release
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<PAGE>
Term Section or
Other Location
Acquisition Sub........................................ Caption
Actions................................................ 3.1(o)(i)
Affiliate.............................................. 6.1(a)
Agreement.............................................. Preamble
Agreement of Merger.................................... Preamble
AOL.................................................... 3.3 (d)(vii)(A)
Basket Amount.......................................... 6.6(a)
Benefit Arrangements................................... 3.1(t)(ii)
Business Day........................................... 1.7
Business Plan.......................................... 3.1(a)(ii)
Charter................................................ 3.1(a)(iii)
Closing................................................ 1.7
Closing Date........................................... 1.7
Code................................................... 1.6
Cohen.................................................. Caption
Company................................................ Caption
Company Balance Sheet.................................. 3.1(e)(i)
Company Common Stock................................... Preamble
Company Disclosure Schedule 3.1
Company Expenses....................................... 7.1
Company Financial Statements........................... 3.1(e)(i)
Company Returns........................................ 3.1(h)(i)
Company Rights......................................... 3.1(k)(i)
Company Stock Fraction................................. 2.1(c)(ii)
Competitive Business................................... 5.5(b)
Confidential Information............................... 5.5(a)
Confidentiality Agreements............................. 3.1(k)(v)
Constituent Corporations............................... 1.1
Delaware Statute....................................... Preamble
Designated Persons..................................... 3.1(o)(iii)
Effective Time......................................... 1.2
Employee............................................... 3.1(t)(i)
Employee Plans......................................... 3.1(t)(i)
Encumbrances........................................... 3.1(i)(iii)
ERISA.................................................. 3.1(t)(i)
ERISA Affiliate........................................ 3.1(t)(i)
Escrow Agreement....................................... 4.2(h)
Escrow Shares.......................................... 2.2(a)
Event of Indemnification............................... 6.1(b)
FAS No. 5.............................................. 3.1(f)(ii)
Form 10-Q.............................................. 3.3(b)
Fully Diluted Company Share Amount..................... 2.1
Fully Diluted Company Shares........................... 2.1
Governmental Authority................................. 3.1(o)(i)
Indemnification Amount................................. 6.2
Indemnified Persons.................................... 6.1(c)
Intellectual Property Rights........................... 3.1(k)
-viii-
<PAGE>
Term Section or
Other Location
Leased Real Property................................... 3.1(j)(i)
Leases................................................. 3.1(j)(ii)
Liability.............................................. 3.1(f)(i)
Licensed Software...................................... 3.1(l)(i)
Losses................................................. 6.1(d)
Material Adverse Change................................ 3.1(g)(i)
Material Adverse Effect................................ 3.1(a)(iii)
Merger................................................. 1.1
Merger Shares.......................................... 2.1(c)(i)
Needleman.............................................. Caption
New Certificate........................................ 2.2(b)
Non-Competition Agreements............................. 4.2(a)
Old Certificate........................................ 2.2(b)
Option Agreement....................................... 4.3(e)
Option Agreements...................................... 4.3(e)
Other Shares........................................... 5.3(a)(i)
Owned Software......................................... 3.1(1)(i)
Preferred Stock........................................ Preamble
Primary Shares......................................... 5.3(a)(ii)
Purchaser.............................................. Caption
Purchaser Common Stock................................. Preamble
Purchaser Disclosure Schedule.......................... 3.3
Registrable Shares..................................... 5.3(a)(iii)
Restricted Securities.................................. 5.2(a)
Rule 144............................................... 5.3(d)(iv)
Schedule of Expenses................................... 4.2(e)
Series A Preferred Stock............................... 3.3(d)(i)
Series B Preferred Stock............................... 3.3(d)(i)
Series B-1 Preferred Stock............................. 3.3(d)(i)
Site................................................... 3.1(z)
Software............................................... 3.1(l)(i)
Stockholders........................................... Caption
Subject Business....................................... 5.5(a)
Subsidiary............................................. 3.1(b)
Survival Date.......................................... 6.5
Surviving Corporation.................................. 1.1
Tax.................................................... 3.1(h)(ii)
Taxes.................................................. 3.1(h)(ii)
Termination Agreement.................................. 4.2(l)
Third Party Claim...................................... 6.4
to the best knowledge of the Company
and the Stockholder.................................... 3.1(aj)
Total Purchaser Share Amount 2.1
Transaction Costs...................................... 7.1
Transfer............................................... 5.2(a)
TZM&M.................................................. 4.2(b)
Warrant Shares......................................... 3.3(d)(vii)
World Wide Web......................................... 3.1(z)
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
dated as of December 10, 1996, among
iVILLAGE, INC., a Delaware corporation
("Purchaser"), PP ACQUISITION
CORPORATION, a Delaware corporation and
a direct, wholly-owned subsidiary
of Purchaser ("Acquisition Sub"),
PARENTSPLACE.COM, INC., a Delaware
corporation (the "Company"), and the
sole stockholder of the Company (the
"Stockholder"). For purposes of this
Agreement, the term "Stockholder" shall
mean (i) the sole stockholder of the
Company set forth on Schedule II hereto,
Jacqueline B. Needleman ("Needleman")
and David L. Cohen ("Cohen"), jointly
and severally.
The Boards of Directors of Purchaser, Acquisition Sub and the
Company have each duly approved and adopted this Agreement and Plan of
Reorganization (this "Agreement"), the Agreement of Merger in substantially the
form of Exhibit A attached hereto (the "Agreement of Merger") and the proposed
merger of Acquisition Sub with and into the Company in accordance with this
Agreement, the Agreement of Merger and the Delaware General Corporation Law (the
"Delaware Statute"), whereby, among other things, the issued and outstanding
shares of common stock, no par value, of the Company (the "Company Common
Stock"), will be exchanged and converted into shares of common stock, $.0005
par value, of Purchaser (the "Purchaser Common Stock") in the manner set forth
in Article II hereof and in the Agreement of Merger, upon the terms and subject
to the conditions set forth in this Agreement and the Agreement of Merger.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived from this Agreement and the Agreement of Merger and the
representations, warranties, covenants, agreements, conditions and promises
contained herein and therein, the parties hereby agree as follows:
<PAGE>
ARTICLE I
GENERAL
1.1. The Merger.
In accordance with the provisions of this Agreement, the Agreement of
Merger and the Delaware Statute, Acquisition Sub shall be merged with and into
the Company (the "Merger"), which at and after the Effective Time shall be, and
is sometimes herein referred to as, the "Surviving Corporation". Acquisition Sub
and the Company are sometimes referred to as the "Constituent Corporations".
1.2. The Effective Time of the Merger.
Subject to the provisions of this Agreement, the Agreement of Merger
shall be executed and delivered to and filed with the Secretary of State of the
State of Delaware by each of the Constituent Corporations on the Closing Date in
the manner provided under Section 251 of the Delaware Statute. The Merger shall
become effective (the "Effective Time") upon the filing of the Agreement of
Merger with the Secretary of State of the State of Delaware.
1.3. Effect of Merger.
At the Effective Time the separate existence of Acquisition Sub shall
cease and Acquisition Sub shall be merged with and into the Surviving
Corporation, and the Surviving Corporation shall possess all of the rights,
privileges, powers and franchises as well of a public as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of the
Constituent Corporations as provided in Section 259 of the Delaware Statute.
1.4. Charter and By-Laws of Surviving Corporation.
From and after the Effective Time and pursuant to the Agreement of
Merger: (i) the Charter of the Company shall be amended so that Article IV of
the Company's Certificate of Incorporation shall read in its entirety as
follows: "The total number of shares of all classes of stock which the
corporation shall have authority to issue is 1,000, all of which shall consist
of Common Stock, $.O1 par value per share", and, as so amended, shall be the
Charter of the Surviving Corporation, unless and until altered, amended or
repealed as provided in the Delaware Statute, (ii) the by-laws of Acquisition
Sub shall be the by-laws of the Surviving Corporation, unless and until altered,
amended or repealed as provided in the Delaware Statute, the Charter or such
by-laws, (iii) the directors of Acquisition Sub shall be the directors of the
Surviving Corporation, unless
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<PAGE>
and until removed, or until their respective terms of office shall have expired,
in accordance with the Delaware Statute, the Charter and the by-laws of the
Surviving Corporation, as applicable and (iv) the officers of Acquisition Sub
shall be the officers of the Surviving Corporation, unless and until removed, or
until their terms of office shall have expired, in accordance with the Delaware
Statute, the Charter and the by-laws of the Surviving Corporation, as
applicable.
1.5. Taking of Necessary Action.
Prior to the Effective Time, the parties hereto shall do or cause to be
done all such acts and things as may be necessary or appropriate in order to
effectuate the Merger as expeditiously as reasonably practicable, in accordance
with this Agreement, the Agreement of Merger and the Delaware Statute.
1.6. Tax-Free Reorganization.
For Federal income tax purposes, the parties intend that the Merger be
treated as a tax-free reorganization within the meaning of Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended (the "Code"), by reason of
Section 368(a)(2)(E) of the Code. Each party shall not take a position on any
tax return or reports inconsistent with this Section 1.6, and shall use their
reasonable efforts to maintain such reporting in the context of an audit. Each
party shall give the other prompt notice of any challenges or investigations
undertaken by any taxing agency in connection with such reporting, and shall
keep such other party fully informed of all aspects of such ongoing challenge or
investigation.
1.7. Closing.
Subject to the provisions of Article V, the closing of the Merger (the
"Closing") will take place at 1:00 p.m. (Eastern Standard Time) on December 10,
1996 (the "Closing Date"), unless another date is agreed to in writing by the
parties. The Closing shall take place at the offices of O'Sullivan Graev &
Karabell, LLP, 30 Rockefeller Plaza, New York, New York 10112, unless another
place is agreed to in writing by the parties. As used herein, the term "Business
Day" shall mean any day other than a Saturday, Sunday or day on which banks are
permitted to close in the State of New York.
-3-
<PAGE>
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1. Total Consideration; Effect on Capital Stock.
The entire consideration payable by Purchaser with respect to all
outstanding shares of capital stock of the Company and for all options,
warrants, rights, calls, commitments or agreements of any character to which the
Company is a party or by which it is bound calling for the issuance of shares of
capital stock of the Company or any securities convertible into or exercisable
or exchangeable for, or representing the right to purchase or otherwise receive,
directly or indirectly, any such capital stock, or other arrangement to acquire,
at any time or under any circumstance, capital stock of the Company or any such
other securities (the "Fully Diluted Company Shares") shall be an aggregate of
200,000 shares of Purchaser Common Stock (the "Total Purchaser Share Amount").
For purposes of the calculation of the exchange ratio for Purchaser Common Stock
under Section 2.1(c) hereof, it is assumed that the number of Fully Diluted
Company Shares is 1,500 (the "Fully Diluted Company Share Amount"). At the
Effective Time, subject and pursuant to the terms and conditions of this
Agreement and the Agreement of Merger, by virtue of the Merger and without any
action on the part of the Constituent Corporations or the holders of the capital
stock of the Constituent Corporations:
(a) Capital Stock of Acquisition Sub. Each issued and outstanding share
of common stock, par value $.01 per share, of Acquisition Sub shall be converted
into one share of common stock, par value $.01 per share, of the Surviving
Corporation.
(b) Cancellation of Certain Shares of Company Stock. Each share of
Company Stock that is authorized but unissued shall cease to exist and no
Purchaser Common Stock or other consideration shall be delivered in exchange
therefor.
(c) Exchange Ratio for Company Stock. Subject to Section 2.2, each
share of Company Common Stock issued and outstanding at the Effective Time,
including all accrued and unpaid dividends thereon, shall be exchanged and
converted into the right to receive the Company Stock Fraction of a share of
Purchaser Common Stock in accordance with Section 2.2(b); provided, however,
that the aggregate number of shares of Purchaser Common Stock issuable to the
Stockholder of the Company shall be rounded to the nearest whole share and no
fractional shares of Purchaser Common Stock shall be issued in the Merger. For
convenience of reference, the shares of Purchaser Common Stock to be issued upon
the exchange and conversion of Company Common Stock in accordance with this
Section 2.1(c) are sometimes hereinafter collectively referred to as the "Merger
Shares".
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(i) For purposes of this Agreement,
(A) The term "Company Stock Fraction" shall be equal to the
fraction representing the ratio obtained by dividing (x) the Total
Purchaser Share Amount by (y) the Fully Diluted Company share Amount; and
(B) all calculations under this Section 2.1(c) shall be
rounded to the nearest one billionth (.000000001).
2.2. Escrow Deposit; Exchange of Certificates.
(a) Escrow Deposit. At the Effective Time, Purchaser shall cause to be
deposited with the Escrow Agent a certificate together with a stock power duly
endorsed in blank for transfer on behalf of the Stockholder and the Stockholder,
by its execution and delivery of this Agreement, hereby authorizes and directs
Purchaser to make such deposit on its behalf, representing that number of Merger
Shares to be issued to the Stockholder as is set forth opposite the
Stockholder's name on Schedule I hereto (constituting in the aggregate one
hundred percent (100%) of the total number of Merger Shares being issued in the
Merger to the Stockholder (collectively, the "Escrow Shares")).
(b) Procedure for Exchange. Immediately following the Effective Time,
Purchaser shall deliver to each holder of record, other than the Company or any
subsidiary of the Company and Purchaser or any subsidiary of Purchaser, of a
certificate or certificates which immediately prior to the Effective Time
represented issued and outstanding shares of Company Common Stock (each, an "Old
Certificate") a certificate (a "New Certificate") representing that number of
Merger Shares which such holder has the right to receive, if any, pursuant to
Section 2.1(c)(i) with respect to such Old Certificate against receipt by
Purchaser of such Old Certificate for cancellation and (ii) an executed letter
of transmittal, and the Old Certificate so surrendered shall forthwith be
canceled (the certificates representing the Escrow Shares having theretofore
been deposited on behalf of the Stockholder into escrow as contemplated by
Section 2.2(a) hereof). In the event of a transfer of ownership of shares of
Company Common Stock which is not registered on the transfer records of the
Company, a New Certificate representing the proper number of shares of Purchaser
Common Stock may be issued to a transferee if the Old Certificate representing
such Company Common Stock is presented to Purchaser, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock or other transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Old Certificate shall be deemed, on and
after the Effective Time, to represent only the right to receive upon such
surrender, New Certificates representing Merger Shares (other
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than the Escrow Shares) as contemplated by Section 2.1(c)(i), without interest.
All Escrow Shares shall be held by, and distributed in accordance with, the
terms and provisions of the Escrow Agreement.
(c) No Further Ownership Rights in Company Stock. All shares of
Purchaser Common Stock issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms of this Article II shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock. If, after the Effective Time, any Old
Certificate is presented to the Surviving Corporation for any reason, such Old
Certificate shall be canceled and exchanged as provided in this Article II.
(d) No Liability. Neither Purchaser, Acquisition Sub nor the Company
shall be liable to any holder of shares of Company Common Stock or Purchaser
Common Stock, as the case may be, for shares (or dividends or distributions with
respect thereto) of Purchaser Common Stock to be issued in exchange for Company
Common Stock pursuant to this Section 2.2, if, on or after the expiration of
six months following the Effective Date, such shares are delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Company.
The Company and the Stockholder hereby jointly and severally represent
and warrant to Purchaser and Acquisition Sub that, except as disclosed in the
disclosure schedule dated the date hereof, certified as being such disclosure
schedule by the President of the Company and delivered by the Company to
Purchaser and Acquisition Sub simultaneously herewith (which disclosure schedule
shall reference with specificity the representations and warranties to which the
disclosures contained therein relate) (the "Company Disclosure Schedule"):
(a) Organization; Good Standing; Qualification and Power. The Company
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, (ii) has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted and as proposed to be conducted pursuant to
the Preliminary Business Plan dated September 25, 1996 (the "Business Plan") and
the Related Agreements, to enter into this Agreement and the Agreement of
Merger, to perform its obligations hereunder and thereunder, and to consummate
the
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transactions contemplated hereby and thereby and (iii) except as set forth on
the Company Disclosure Schedule, is duly qualified and in good standing to do
business in those jurisdictions listed in the Company Disclosure Schedule and in
all other jurisdictions in which the failure to be so qualified and in good
standing could reasonably be expected to have a material adverse effect on the
business, properties, Liabilities, assets, operations, results of operations,
condition (financial or otherwise), prospects or affairs (a "Material Adverse
Effect") of the Company. The Company has delivered to Purchaser true and
complete copies of the Charter and by-laws of the Company, in each case as
amended to the date hereof. As used herein, "Charter" shall mean, with respect
to any corporation, those instruments that at the time constitute its corporate
charter as filed or recorded under the general corporation law of the
jurisdiction of its incorporation, including the articles or certificate of
incorporation or organization, and any amendments thereto, as the same may have
been restated, and any amendments thereto (including any articles or
certificates of merger or consolidation or certificates of designation or
similar instruments which effect any such amendment) which became effective
after the most recent such restatement.
(b) Equity Investments. The Company has never had, nor does it
currently have, any subsidiaries, nor has it ever owned, nor does it currently
own, any capital stock or other proprietary interest, directly or indirectly, in
any corporation, association, trust, partnership, joint venture or other
entity. There are no options, warrants, rights, calls, commitments or
agreements of any character to which the Company is a party or by which it is
bound calling for the issuance of shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for, or representing
the right to purchase or otherwise receive, any such capital stock, or other
arrangement to acquire, at any time or under any circumstance, capital stock of
the Company or any such other securities. As used herein, a "subsidiary" of any
corporation means another corporation an amount of whose voting securities
sufficient to elect at least a majority of its Board of Directors is owned
directly or indirectly by such corporation.
(c) Capital Stocks Securities. The authorized capital stock of the
Company consists of 1,500 shares of Company Common Stock, of which 1,500 shares
are outstanding. All outstanding shares of Company Common Stock are validly
issued and outstanding, fully paid and non-assessable and not subject to
preemptive rights. The Company Disclosure Schedule sets forth a true and
complete list of the holders of shares of Company Common Stock and the number
and class or series of such shares owned of record and beneficially by each such
holder. Except as set forth in the Company Disclosure Schedule, there are no
voting trusts, voting agreements, proxies, first refusal rights, first offer
rights, co-sale rights, transfer restrictions or other
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agreements, instruments or understandings (whether written or oral, formal or
informal) with respect to the voting, transfer or disposition of Company Stock
to which the Company is a party or by which it is bound, or, to the best
knowledge of the Company and the Stockholder, among or between any persons other
than the Company.
(d) Authority; No Consents. The execution, delivery and performance by
the Company of this Agreement and the Agreement of Merger and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the Company; and
this Agreement and the Agreement of Merger have been, and the Agreement of
Merger when executed and delivered by the Company will be, duly and validly
executed and delivered by the Company, and this Agreement and the Agreement of
Merger are the valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors' rights and remedies generally from time to time in effect and to
general equitable principles. Neither the execution, delivery and performance of
this Agreement or the Agreement of Merger nor the consummation by the Company of
the transactions contemplated hereby or thereby nor compliance by the Company
with any provision hereof or thereof will (A) conflict with, (B) result in any
violations of, (C) cause a default under (with or without due notice, lapse of
time or both), (D) give rise to any right of termination, amendment,
cancellation or acceleration of any obligation contained in or the loss of any
material benefit under or (E) result in the creation of any Encumbrance on or
against any assets, rights or property of the Company under any term, condition
or provision of (X) any instrument or agreement to which the Company is a party,
or by which the Company or any of its properties, assets or rights may be bound,
(y) any law, statute, rule, regulation, order, writ, injunction, decree, permit,
concession, license or franchise of any Governmental Authority applicable to the
Company or any of its properties, assets or rights or (z) the Company's Charter
or by-laws. Except as contemplated by this Agreement, no permit, authorization,
consent or approval of or by, or any notification of or filing with, any
Governmental Authority or other person is required in connection with the
execution, delivery and performance by the Company of this Agreement or the
Agreement of Merger or the consummation of the transactions contemplated hereby
or thereby, except for (i) the filing of the Agreement of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business and (ii) such other consents, waivers, authorizations, filings,
approvals and registrations which if not obtained or made would not have a
Material Adverse Effect on the Company or materially impair the ability of the
Company and the Stockholder to
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consummate the transactions contemplated by this Agreement or the Agreement of
Merger, including, without limitation, the Merger.
(e) Financial Information.
(i) The Company has previously delivered to Purchaser the unaudited
balance sheet of the Company as at September 30, 1996 (the "Company Balance
Sheet") and the related statements of operations, cash flow and
stockholders' equity for the period June 25, 1996 to September 30, 1996,
prepared by the Company (the "Company Financial Statements").
(ii) The Company Financial Statements (A) are true and complete,
(B) are in accordance with the books and records of the Company, and (C)
fairly present the financial condition of the Company as at the respective
dates thereof and the results of operations of the Company for respective
periods then ended.
(f) Absence of Undisclosed Liabilities. At September 30, 1996, (i) the
Company had no liability or obligation of any nature (whether known or unknown,
matured or unmatured, fixed or contingent, secured or unsecured, accrued,
absolute or otherwise ("Liability")) required to be set forth on the Company
Balance Sheet, in order for the Company Balance Sheet to fairly present the
financial condition of the Company at September 30, 1996, which was not provided
for or disclosed thereon, and (ii) all liability reserves established by the
Company and set forth thereon were adequate for all such Liabilities at
September 30, 1996. There were no material loss contingencies (as such term is
used in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March, 1975 "FAS No. 5" which were
not adequately provided for on the Company Balance Sheet as required by FAS No.
5.
(g) Absence of Changes. Since September 30, 1996, the Company has been
operated in the ordinary course, consistent with past practice, and there has
not been:
(i) any material adverse change in the business, assets,
properties, Liabilities, operations, results of operations, condition
(financial or otherwise), prospects or affairs (a "Material Adverse
Change") of the Company;
(ii) any damage, destruction or loss, whether or not covered by
insurance, having or which could reasonably be expected to have a Material
Adverse Effect;
(iii) (A) any Liability created, assumed, guaranteed or incurred,
or (B) any material transaction, contract or commitment entered into, by
the Company, in the case of
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either clause (A) or (B) other than in the ordinary course of business;
(iv) any payment, discharge or satisfaction of any material
Encumbrance or Liability by the Company or any cancellation by the Company
of any material debts or claims or any amendment, termination or waiver of
any rights of material value to the Company;
(v) any declaration, setting aside or payment of any dividend or
other distribution of any assets of any kind whatsoever with respect to any
shares of the capital stock of the Company, or any direct or indirect
redemption, purchase or other acquisition of any such shares of the capital
stock of the Company;
(vi) any stock split, reverse stock split, combination,
reclassification or recapitalization of any Company Common Stock, or any
issuance of any other security in respect of or in exchange for, any shares
of Company Common Stock;
(vii) any issuance by the Company of any shares of its capital
stock or any debt security or securities, rights, options or warrants
convertible into or exercisable or exchangeable for any shares of its
capital stock or debt security;
(viii) any license, sale, transfer, pledge, mortgage or other
disposition of any material tangible or intangible asset (including any
Intellectual Property Rights) of the Company, other than licenses, sales
and transfers in the ordinary course of business;
(ix) any termination of, or written indication of an intention to
terminate or not renew, any material contract, license, commitment or other
agreement between the Company and any other person;
(x) any material write-down or write-up of the value of any asset
of the Company, or any material write-off of any accounts receivable or
notes receivable of the Company or any portion thereof;
(xi) any increase in or modification of compensation payable or to
become payable to any director, officer, employee, consultant or agent of
the Company, or the entering into of any employment contract with any
officer or employee;
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(xii) any change in the manner in which inventory of the Company is
valued or any increase in inventory levels in excess of historical levels
for comparable periods;
(xiii) any increase in or modification or acceleration of any
benefits payable or to become payable under any bonus, pension, severance,
insurance or other benefit plan, payment or arrangement (including, but not
limited to, the granting of stock options, restricted stock awards or stock
appreciation rights) made to, for or with any director, officer, employee,
consultant or agent of the Company;
(xiv) the making of any loan advance or capital contribution to or
investment in any person or the engagement in any transaction with any
employee, officer, director or stockholder of the Company, other than (A)
advances to employees in the ordinary course of business for travel and
similar business expenses or (B) other loans and advances in an aggregate
amount which did not exceed $25,000 outstanding at any one time;
(xv) any change in the accounting methods or practices followed by
the Company or any change in depreciation or amortization policies or rates
theretofore adopted;
(xvi) any forward sales commitments at a price less than the
Company's cost of sales for such commitments;
(xvii) any termination of employment of any officer or key employee
of the Company or any expression of intention by any officer or key
employee of the Company to resign from such office or employment with the
Company;
(xviii) any amendments or changes in the Company's Charter or
by-laws;
(xix) any labor dispute or, to the best knowledge of the Company
and the Stockholder, any union organizing campaign;
(xx) the commencement of any litigation or other action by the
Company or, to the best knowledge of the Company and the Stockholder, the
commencement or threat of commencement of any litigation or other action
against the Company; or
(xxi) any agreement, understanding, authorization or proposal,
whether in writing or otherwise, for the Company to take any of the actions
specified in items (i) through (xx) above.
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(h) Tax Matters. The Company: (i) has filed in a timely and proper
manner, consistent with then applicable laws, all Federal, state and local Tax
returns and Tax reports required to be filed by them through the Closing Date,
taking into account all appropriate extensions (the "Company Returns"), with the
appropriate governmental agencies in all jurisdictions in which Company Returns
are required to be filed and has paid all amounts shown thereon to be due; and
(ii) has paid all Taxes required to have been paid on or before the Closing
Date. All Taxes attributable to all taxable periods of the Company ending on or
before September 30, 1996, to the extent not required to have been previously
paid have been adequately provided for on the Company Balance Sheet. The Company
will not accrue a Tax liability from the date of the Company Balance Sheet up to
and including the Closing Date, other than a Tax liability accrued in the
ordinary course of business. No federal, state or local tax audits or other
administrative or court proceedings are presently pending with respect to any of
the Company Returns. The Company has not been notified by any taxing authority
that any such audit or proceeding is going to be commenced. No waivers of
statutes of limitations have been given or requested with respect to the
Company. Except as contested in good faith and disclosed in the Company
Disclosure Schedule, any deficiencies asserted or assessments (including
interest and penalties) made through the date of the Company Balance Sheet as a
result of any examination by the Internal Revenue Service or by any other taxing
authorities of any Company Return have been fully paid or are adequately
provided for on the Company Balance Sheet. No additional Taxes have been
proposed or asserted since September 30, 1996. The Company has not made an
election to be treated as a "consenting corporation" under Section 341(f) of
the Code. The Company has not and will not, on or before the Closing Date,
incur any Tax liability pursuant to Section 541 of the Code. The Company has not
agreed to, nor is required to make any adjustment under Section 481(a) of the
Code by reason of a change in accounting method or otherwise. The Company is not
now, nor has it ever been, a member of a consolidated or combined group for
Federal, state or local tax purposes nor has it ever been included in a
consolidated or combined tax return for Federal, state or local tax purposes.
The Company is not a party to any agreement or contract with any "disqualified
individual" (as defined in Section 280G(c) of the Code) that, individually or
taking into account any other agreements or contracts currently in effect
between the Company and such disqualified individual, will result in the
disallowance of any deduction for any payment under such agreement or contract
as an "excess parachute payment" (as defined in Section 280G(b)(1) of the
Code). The Company and each of its predecessors have complied with all
applicable Laws relating to the payment and withholding of Taxes, and has
withheld and paid over all amounts required by Laws to be withheld and paid from
the wages and salaries of employees, and the Company is not liable for any Taxes
for failure to comply with such Laws. As used in this Agreement, "Tax" means any
of
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the Taxes and "Taxes" means, with respect to any entity, (A) all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, alternative or add-on minimum
taxes, customs duties and other taxes, fees, assessments or charges of any kind
whatsoever, together with all interest and penalties, additions to tax and other
additional amounts imposed by any taxing authority (domestic or foreign) on such
entity and (B) any liability for the payment of any amount of the type described
in the immediately preceding clause (A) as a result of (i) being a "transferee"
(within the meaning of Section 6901 of the Code or any other applicable law) of
another entity, (ii) a member of an affiliated or combined group or (iii) any
contractual obligation.
(i) Title to Assets, Properties and Rights and Related Matters. The
Company has good and marketable title to all assets, properties and interests in
properties, real, personal or mixed, reflected, respectively, on the Company
Balance Sheet or acquired after September 30, 1996 (except property sold or
otherwise disposed of since September 30, 1996, in the ordinary course of
business and accounts receivable and notes receivable paid in full subsequent to
September 30, 1996), or not so reflected therein but used or useful in the
conduct or operation of the Company's business, free and clear of all
Encumbrances, of any kind or character, except for (i) those Encumbrances set
forth in the Company Disclosure Schedule and (ii) liens for current taxes not
yet due and payable and (iii) statutory mechanics and materialmen's liens. The
assets, properties and interests in properties of the Company are in good
operating condition and repair in all material respects (ordinary wear and tear
excepted). The assets, properties and interests in properties of the Company to
be owned, leased or licensed by the Surviving Corporation at the Effective Time
shall include all assets, properties and interests in properties (real, personal
and mixed, tangible and intangible) and all rights, leases, licenses and other
agreements necessary to enable the Surviving Corporation to carry on the
business of the Company as presently conducted by the Company. As used herein,
the term "Encumbrances" shall mean and include security interests, mortgages,
liens, pledges, guarantees, charges, easements, reservations, restrictions,
clouds, equities, rights of way, options, rights of first refusal and all other
encumbrances, whether or not relating to the extension of credit or the
borrowing of money.
(j) Real Property-Owned or Leased. The Company does not currently
own, nor has it or any of its predecessors ever owned, any real property. The
Company Disclosure Schedule contains a list and brief description of (i) all
real property leased by the
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Company, together with all buildings and other structures and material
improvements located on such real property (the "Leased Real Property"), and
(ii) with respect to each lease covering the Leased Real Property (collectively,
the "Leases"), (A) the name of the lessor, (B) any requirement of consent of the
lessor to assignment (including assignment by way of merger or change of
control) and (C) the termination date of the Lease. The Company is the owner and
holder of all the leasehold estates purported to be granted by each Lease and
all Leases are in full force and effect and constitute valid and binding
obligations of the Company. The Company has made available to Parent true and
complete copies of all Leases. Except as set forth in the Company Disclosure
Schedule, all improvements included in the Leased Real Property are in good
operating condition and repair in all material respects (ordinary wear and tear
excepted) and there does not exist any condition which interferes with the
economic value or use of such property and improvements.
(k) Intellectual Property.
(i) The Company owns free and clear of all Encumbrances, has the
exclusive right to use, sell, license (or sublicense) transmit, broadcast,
deliver (electronically or otherwise) and dispose of, and has the right to
bring actions for the infringement of, all Intellectual Property Rights
(other than the Licensed Software) necessary or required for the conduct of
its business as currently conducted and as proposed to be conducted as
described in the Business Plan (collectively, the "Company Rights") (which
rights are described in the Company Disclosure Schedule).
(ii) the execution, delivery and performance of this Agreement and
the Agreement of Merger and the consummation of the Merger and the
consummation of the other transactions contemplated hereby and thereby,
will not breach, violate or conflict with any instrument or agreement
governing any Company Rights, will not cause the forfeiture or termination
or give rise to a right of forfeiture or termination of any Company Right
or in any way impair the right of the Company or the Surviving Corporation
to use, sell, license (or sublicense), transmit, broadcast, deliver
(electronically or otherwise) or dispose of or to bring any action for the
infringement of, any Company Right or portion thereof;
(iii) there are no royalties, honoraria, fees or other payments
payable by the Company to any person by reason of the ownership, use,
license (or sublicense), sale, transmission, broadcast, delivery
(electronically or otherwise) or disposition of the Company Rights, other
than sales commissions paid in the ordinary course of business;
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(iv) neither the manufacture, marketing, license, sale,
transmission, broadcast, delivery (electronically or otherwise) or use of
any product or service currently or currently proposed to be licensed,
sold, marketed, transmitted, broadcast, delivered (electronically or
otherwise) or used by the Company or currently under development by the
Company, violates any license or agreement of the Company with any third
party or infringes any common law or statutory rights of any other party,
including, without limitation, rights relating to defamation, contractual
rights, Intellectual Property Rights and rights of privacy or publicity;
nor, to the best knowledge of the Company and the Stockholder, is any third
party infringing upon, or violating any license or agreement with the
Company relating to, any Company Right; and there is no pending or
threatened claim or litigation contesting the validity, ownership or right
to use, sell, license, transmit, broadcast, deliver (electronically or
otherwise) or dispose of any Company Right, nor to the best knowledge of
the Company and the Stockholder, is there a basis for any such claim, nor
has the Company received any notice asserting that any Company Right or the
proposed use, manufacture, sale, license, transmission, broadcast, delivery
(electronically or otherwise) or disposition thereof conflicts or will
conflict with the rights of any other party, nor, to the best knowledge of
the Company and the Stockholder, is there any basis for any such assertion;
and
(v) all officers, employees and consultants of or to the Company
have executed and delivered to and in favor of the Company an agreement
regarding the protection of confidential and proprietary information and
the assignment to the Company of all Intellectual Property Rights arising
from the services performed for the Company by such persons (collectively,
the "Confidentiality Agreements"). The Company has made and will continue
through the Effective Time to make commercially reasonable efforts to
safeguard and maintain the secrecy and confidentiality of, and its
proprietary rights in, all Company Rights.
The Company Disclosure Schedule contains a true and complete list of all (A) of
the Company's patents, patent applications, trademarks, trademark applications,
trade names, service marks, service mark applications, copyrights and copyright
applications and (B) other filings and formal actions made or taken pursuant to
Federal, state, local and foreign laws by the Company to perfect or protect its
interest in the Company Rights. As used herein, the term "Intellectual Property
Rights" shall mean all industrial and intellectual property rights, including,
without limitation, patents, patent applications, patent rights, trademarks,
trademark applications, trade names, service marks, service mark applications,
copyrights, copyright applications,
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franchises, licenses, databases, computer programs and other computer software
(including, but not limited to, the Software), user interfaces, know-how, trade
secrets, customer lists, proprietary technology, processes and formulae, source
code, object code, algorithms, architecture, structure, display screens,
layouts, development tools, instructions, templates, marketing materials,
inventions, trade dress, logos and designs and all documentation and media
constituting, describing or relating to the foregoing.
(1) Company Software.
(i) The Company Disclosure Schedule sets forth a true and complete
list and description of all software systems and applications (A) designed
or developed by employees of the Company or by consultants or independent
contractors on the Company's behalf (the "Owned Software") or (B) licensed
by the Company from any third party or constituting "off-the-shelf"
software (the "Licensed Software"), in each case that is manufactured or
used by the Company in the operation of its business or marketed, licensed
or sold or proposed to be marketed, licensed or sold by the Company to
third parties (collectively, the "Software") and, in the case of Licensed
Software, the Company Disclosure Schedule identifies each license agreement
with respect thereto.
(ii) All of the owned Software is original and is protected by the
copyright laws of the United States. The Company owns the Owned Software
free and clear of Encumbrances (other than valid third party patent
rights of which the Company is unaware) and has not sold, assigned,
licensed, distributed or in any other way disposed of or Encumbered the
Owned Software other than licenses granted in the ordinary course of
business as disclosed on the Company Disclosure Schedule.
(iii) The Licensed Software is validly held and used by the Company
and is currently, and after giving effect to the Merger, will be, fully
utilizable by the Company pursuant to the applicable license agreement with
respect thereto without the consent of or notice to any third party. To the
best knowledge of the Company and the Stockholder, all of the Company's
computer hardware has validly licensed software installed therein and the
Company's use thereof does not conflict with or violate any such license.
(iv) The Company has not knowingly altered its data, or any
Software or supporting software that may in turn damage the integrity of
the data, whether stored in electronic, optical or magnetic or other form.
To the best knowledge of the Company and the Stockholder, the Software does
not contain any viruses (the Company having employed
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standard virus checkers to identify the same). The Company has furnished
Purchaser with all existing documentation relating to the use, maintenance
and operation of the Software, all of which, to the best knowledge of the
Company and the Stockholder, is true and accurate.
(m) Agreements, Etc. The Company Disclosure Schedule sets forth a true
and complete list of all written or oral contracts, agreements and other
instruments to which the Company is a party. The Company has furnished to
Purchaser true and complete copies of all such agreements listed in the Company
Disclosure Schedule and (x) each such agreement (A) is the legal, valid and
binding obligation of the Company and, to the best knowledge of the Company and
the Stockholder, the legal, valid and binding obligation of each other party
thereto, in each case enforceable in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights and remedies generally from time to time in effect
and to general equitable principles, (B) is in full force and effect and (y)
neither the Company nor, to the best knowledge of the Company, the other party
or parties thereto is or are in material default thereunder.
(n) No Defaults. The Company has in all material respects performed all
the obligations required to be performed by it to date and is not in default or
alleged to be in default under (x) its Charter or by-laws or (ii) any material
agreement, lease, contract, commitment, instrument or obligation to which the
Company is a party or by which any of its properties, assets or rights are or
may be bound or affected, and, to the best knowledge of the Company and the
Stockholder, there exists no event, condition or occurrence which, with or
without due notice or lapse of time, or both, would constitute such a default by
it of any of the foregoing.
(o) Litigation, Etc. There are no (i) actions, suits, claims,
investigations or legal or administrative or arbitration proceedings
(collectively, "Actions") pending, or to the best knowledge of the Company and
the Stockholder, threatened against the Company, whether at law or in equity, or
before or by any Federal, state, municipal, foreign or other governmental court,
department, commission, board, bureau, agency or instrumentality ("Governmental
Authority"), (ii) judgments, decrees, injunctions or orders of any Governmental
Authority or arbitrator against the Company or (iii) disputes with vendors.
There are no Actions pending or, to the best knowledge of the Company and the
Stockholder, threatened, nor, to the best knowledge of the Company and the
Stockholder, any basis therefor, with respect to (A) the current employment by,
or association with, the Company, or future employment by, or association with,
Purchaser or the Surviving Corporation, of any of the present officers or
employees of or consultants to the Company (collectively, "Designated Persons"),
(B) the use, in connection with any
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business presently conducted or proposed to be conducted by the Company or the
Surviving Corporation, of any information, techniques or processes presently
utilized or proposed to be utilized by the Company, Purchaser, the Surviving
Corporation or any of the Designated Persons, that the Company, Purchaser, the
Surviving Corporation or any of the Designated Persons are or would be
prohibited from using as the result of a violation or breach of, or conflict
with any agreements or arrangements between any Designated Person and any other
person, or any legal considerations applicable to unfair competition, trade
secrets or confidential or proprietary information or (C) the validity,
ownership or right to use, manufacture, sell, license or dispose of, with
respect to or under any Company Rights. The Company has delivered to Purchaser
all material documents and correspondence relating to such matters referred to
in the Company Disclosure Schedule.
(p) Accounts and Notes Receivable. All the accounts receivable and
notes receivable owing to the Company as of the date hereof constitute, and as
of the Effective Time will constitute, valid and enforceable claims arising from
bona fide transactions in the ordinary course of business, and there are no
known or asserted claims, refusals to pay or other rights of set-off against any
thereof. There is (a) no account debtor or note debtor delinquent in its payment
by more than 90 days, (b) no account debtor or note debtor that has refused (or,
to the best knowledge of the Company and the Stockholder, threatened to refuse)
to pay its obligations for any reason, (c) to the best knowledge of the Company
and the Stockholder, no account debtor or note debtor that is insolvent or
bankrupt and (d) no account receivable or note receivable which is pledged to
any third party by the Company. Except to the extent of a reserve which the
Company has established specifically for doubtful accounts receivable and notes
receivable (which reserve is set forth on the Company Balance Sheet, is
reasonable under the circumstances and is consistent with past practice), all of
the accounts receivable of the Company existing at the Closing shall be paid in
full by not later than the ninetieth (90th) day after the Closing and all of the
notes receivable shall be paid in accordance with the terms thereof.
(q) Accounts and Notes Payable. All accounts payable and notes payable
by the Company to third parties as of the date hereof arose in the ordinary
course of business, and, except as set forth in the Company Disclosure Schedule,
there is no such account payable or note payable delinquent in its payment,
except those contested in good faith and already disclosed in the Company
Disclosure Schedule.
(r) Compliance; Governmental Authorizations. The Company has complied
and is presently in compliance in all material respects with all material
Federal, state, local or foreign laws, statutes, ordinances, judgments,
regulations and orders
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applicable to it or its business, properties, facilities or operations
(including, by way of example and not in limitation thereof, any of the
foregoing that concern the protection of the environment or human health). The
Company has all material Federal, state, local and foreign governmental
authorizations, consents, approvals, licenses and permits necessary in the
conduct of its business as presently conducted or as proposed to be conducted as
described in the Business Plan, such authorizations, consents, approvals,
licenses and permits are in full force and effect, no violations are or have
been recorded in respect of any thereof and no proceeding is pending or, to the
best knowledge of the Company and the Stockholder, threatened to revoke or limit
any thereof. The Company Disclosure Schedule contains a true and complete list
of all such governmental licenses, authorizations, consents, approvals, permits,
orders, decrees and other compliance agreements under which the Company is
operating or bound, the Company is not in default or alleged to be in default
under any thereof and the Company has furnished to Purchaser true and complete
copies thereof. None of such authorizations, consents, approvals, licenses and
permits shall be affected in any material respect by the Merger or the
transactions contemplated hereby.
(s) Labor Relations; Employees. Except as set forth in the Company
Disclosure Schedule, (A) the Company is not delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to date or amounts required to
be reimbursed to such employees, (B) upon termination of the employment of any
such employees, neither the Company, Purchaser, Purchaser, Acquisition Sub nor
the Surviving Corporation will by reason of anything done prior to the Closing
be liable to any of such employees for so-called "severance pay" or any other
payments, (C) the Company is in compliance in all material respects with all
material Federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices, terms and conditions of employment
and wages and hours, (D) no employee has notified the Company that such employee
will terminate his or her employment or engagement with the Company or the
Surviving Corporation. To the best knowledge of the Company and the Stockholder,
no employee of the Company is in violation of any term of any employment
contract, patent disclosure agreement or any other contract or agreement
relating to the relationship of such employee with the Company or any other
party because of the nature of the business conducted or proposed to be
conducted by the Company pursuant to the Business Plan or the execution and
delivery of the Confidentiality Agreement by such employee.
(t) Employee Benefit Plans and Contracts.
(i) The Company has no "employee benefit plan", as defined in
Section 3(3) of the Employee Retirement Income
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Security Act of 1974, as amended ("ERISA"), and no other material written
or formal plans or agreements involving direct or indirect compensation
(including any employment agreements entered into between the Company and
any Employee of the Company) currently or previously maintained,
contributed to or entered into by the Company or any ERISA Affiliate
thereof for the benefit of any Employee or former Employee under which the
Company or any ERISA Affiliate thereof has any present or future obligation
or liability (the "Employee Plans"). For purposes of the preceding
sentence, "ERISA Affiliate" shall mean any entity which is a member of (A)
a "controlled group of corporations", as defined in Section 414(b) of the
Code, (B) a group of entities under "common control", as defined in Section
414(c) of the Code or (C) an "affiliated service group", as defined in
Section 414(m) of the Code or treasury regulations promulgated under
Section 414(o) of the Code, any of which includes the Company. For purposes
of this Section 3.1(t), "Employee" means any common law employee,
consultant or director of the Company.
(ii) The Company Disclosure Schedule lists each employment,
severance or other similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including
any self-insured arrangements), workers' benefits, vacation benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (A) is not an
Employee Plan, (B) is entered into, maintained or contributed to, as the
case may be, by the Company, (C) covers any Employee or former Employee,
and (D) under which the Company has any present or future obligation or
liability. Such contracts, plans and arrangements as are described above,
are hereinafter referred to collectively as the "Benefit Arrangements".
Each Benefit Arrangement has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all material
laws, statutes, rules, regulations, orders and judgments which are
applicable to such Benefit Arrangements.
(u) Certain Agreements. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due, to any
director or employee of the Company from the Company, under any Employee Plan,
Benefit Arrangement or otherwise, (ii) materially increase any benefits
otherwise payable under any Employee Plan or the Benefit Arrangement or (iii)
result in the acceleration of the time of payment or vesting of any such
benefits.
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(v) Insurance. The Company Disclosure Schedule contains a list of all
policies of liability, theft, fidelity, fire, product liability, errors and
omissions, workmen's compensation, indemnification of directors and officers and
other similar forms of insurance held by the Company (specifying the insurer,
the amount of coverage, the type of insurance, the policy number and any pending
claims thereunder) and a history of all claims made by the Company thereunder
and the status thereof. All such policies of insurance are in full force and
effect and all premiums with respect thereto are currently paid and, to the best
knowledge of the Company and the Stockholder, no basis exists for termination of
any thereof on the part of the insurer. The amounts of coverage under such
policies of insurance are adequate for the assets and properties of the Company.
The Company has not, during the last three fiscal years, been denied or had
revoked or rescinded any policy of insurance.
(w) Bank Accounts; Powers of Attorney. The Company Disclosure Schedule
sets forth a true and complete list of (i) all bank accounts and safe deposit
boxes of the Company and all persons who are signatories thereunder or who have
access thereto and (ii) the names of all persons, firms, associations,
corporations or business organizations holding general or special powers of
attorney from the Company and a summary of the terms thereof.
(x) Brokers. The Company has not, nor have any of its officers,
directors, stockholders or employees, employed any broker or, finder or incurred
any liability for any brokerage fees, commissions or finders fees in connection
with the transactions contemplated hereby.
(y) Related Transactions. Except as set forth in the Company Disclosure
Schedule, no current or former director, officer or stockholder that is an
affiliate of the Company or any associate (as defined in the rules promulgated
under the Exchange Act) thereof, is now, or since the inception of the Company
has been, (i) a party to any transaction with the Company (including, but not
limited to, any contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property from, or
borrowing money from, or otherwise requiring payments to, any such director,
officer or affiliated stockholder of the Company or associate thereof), or (ii)
the direct or indirect owner of an interest in any corporation, firm,
association or business organization which is a present or potential competitor,
supplier or customer of the Company (other than non-affiliated holdings in
publicly-held companies), nor does any such person receive income from any
source other than the Company which relates to the business of, or should
properly accrue to, the Company.
(z) Traffic/Usage. The Company Disclosure Schedule set forth the number
of page views per month and the number of visits
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of unique hosts per month to ParentsPlace.com, the Company's site on the World
Wide Web (the "Site"), which numbers represent such monthly page views and
unique hosts since July 16, 1995. The Company Disclosure Schedule describes the
Company's usage statistics. "World Wide Web" means the specific part of the
Internet that contains, among other things, documents written in HTML and from
which a world wide web document can provide links to other documents or sites on
the Internet.
(aa) Business Plan. The Company has heretofore delivered to purchaser
and Acquisition Sub a true and complete copy of Business Plan. The Company
acknowledges that the Business Plan, historical financials of the Company and
site usage statistics have been material to Purchaser and Acquisition Sub in
their decision to enter into this Agreement and to enter into the transactions
contemplated hereby.
(ab) Minute Books. The minute books of the Company provided to
Purchaser for review contain a complete summary of all meetings of and actions
by directors and stockholders of the Company from the time of its incorporation
to the date of such review and reflect all actions referred to in such minutes
accurately in all material respects.
(ac) Board Approval. The Board of Directors of the Company has
unanimously (i) approved this Agreement and each of the Related Agreements to
which the Company is a party and the transactions contemplated hereby and
thereby, (ii) determined that the Merger is in the best interests of the
Stockholder of the Company and is on terms that are fair to such Stockholder and
(iii) recommended that the Stockholder of the Company approve the Merger in
accordance with the Delaware Statute.
(ad) Vote Required. The affirmative vote of at least 51% of the
outstanding shares of the Company Stock approving the Merger and this Agreement
is the only vote of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement and the transactions contemplated
hereby.
(ae) Company Not an Interested Stockholder or an Acquiring Person. As
of the date of this Agreement, neither the Company nor, to the best knowledge of
the Company and the Stockholder, any of its Affiliates is an "Interested
Stockholder" of Purchaser as such term is defined in Section 203 of the Delaware
Statute or Purchaser's Charter.
(af) Section 1203 of the California Statute Not Applicable. The
provisions of Section 1203 of the California Statute do not apply to this
Agreement, the Agreement of Merger, the Merger or the transactions contemplated
hereby or thereby.
(ag) Company Expenses. The Schedule of Expenses being delivered at the
Closing sets forth a true, correct and complete
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schedule of all Company Expenses that have been incurred or paid by or on behalf
of the Company (whether or not theretofore billed) through the Effective Time,
and there are no Company Expenses other than as set forth therein.
(ah) Officers and Directors. Set forth on Schedule 3.1(ah) is a list of
current officers and directors of the Company.
(ai) Disclosure. Neither Section 3.1 of this Agreement (including the
Company Disclosure Schedule) nor any document, written information, written
statement, financial statement, certificate or exhibit furnished to Purchaser or
Acquisition Sub by or on behalf of the Company pursuant hereto (including,
without limitation, the Business Plan, except in such case as otherwise set
forth in the Company Disclosure Schedule), contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements or facts contained herein and therein
not misleading in light of the circumstances under which they were made. All
information and documentation requested by the Purchaser of the Company in
connection with the Purchaser's due diligence investigation of the Company has
been furnished to the Purchaser.
(aj) Knowledge Definition. As used herein, "to the best knowledge of
the Company and the Stockholder" and like phrases shall mean and include (i)
actual knowledge and (ii) that knowledge which a prudent business person
(including the officers and directors of the Company) could have obtained in the
management of his or her business affairs after making due inquiry and
exercising due diligence with respect thereto. In connection therewith, the
knowledge (both actual and constructive) of any officer or director of the
Company shall be imputed to be the knowledge of the Company.
3.2. Several Representations and Warranties of the Stockholder.
The Stockholder represents and warrants to Purchaser and Acquisition
Sub with respect to himself and herself as follows:
(a) Title; Absence of Certain Agreements. The Stockholder is the lawful
and record owner of, and has good and marketable title to the shares of Company
Common Stock set forth opposite the name of the Stockholder on Schedule II
attached hereto, with the full power and authority to vote such Company Common
Stock and transfer and otherwise dispose of such Company Common Stock, free and
clear of all Encumbrances. There are no agreements or understandings between the
Stockholder or any other person with respect to the voting, sale or other
disposition of Company Common Stock or any other matter relating to Company
Common Stock.
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<PAGE>
(b) Authority - General. The Stockholder has full and absolute power
and authority to enter into this Agreement and the Escrow Agreement being
executed and delivered by the Stockholder simultaneously herewith and this
Agreement and the Escrow Agreement is the valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting creditors, rights and remedies generally from time to time
in effect and to general equitable principles. Neither the execution, delivery
and performance of this Agreement and the Escrow Agreement, nor the consummation
of the transactions contemplated hereby or thereby nor compliance by the
Stockholder with any of the provisions hereof or thereof will (i) (A) conflict
with, (B) result in any violations of, (C) cause a default under (with or
without due notice, lapse of time or both), (D) give rise to any right of
termination, amendment, cancellation or acceleration of any obligation contained
in or the loss of any material benefit under or (E) result in the creation of
any Encumbrance upon or against any assets, rights or property of the Company
(or against any Company Common Stock, Purchaser capital stock or common stock of
the Surviving Corporation), under any term, condition or provision of (x) any
agreement or instrument to which the Stockholder is a party, or by which the
Stockholder or any of his or its properties, assets or rights may be bound, or
(y) any law, statute, rule, regulation, order, writ, injunction, decree, permit,
concession, license or franchise of any Governmental Authority applicable to the
Stockholder or any of his or its properties, assets or rights, which conflict,
breach, default or violation or other event would prevent the consummation of
the transactions contemplated by this Agreement, the Agreement of Merger or the
Escrow Agreement. Except as specified in Section 3.1(d) hereof or otherwise
contemplated by this Agreement, no permit, authorization, consent or approval
of or by, or any notification of or filing with, any Governmental Authority or
other person is required in connection with the execution, delivery and
performance by the Stockholder of this Agreement, the Escrow Agreement or the
consummation by the Stockholder of the transactions contemplated hereby or
thereby.
(c) Investment Representations.
(i) The Stockholder (A) is acquiring the shares of the Purchaser
Common Stock being issued to the Stockholder pursuant to the Merger for
investment and for the Stockholder's own account and not as a nominee or
agent for any other person and with no present intention of distributing or
reselling such shares or any part thereof in any transactions that would be
in violation of the Securities Act or any state securities or "blue-sky"
laws, (B) has had an opportunity to ask questions of and has received
satisfactory answers from the officers of Purchaser or persons acting on
Purchaser's behalf concerning Purchaser
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<PAGE>
and the terms and conditions of an investment in Purchaser Common Stock,
(C) has sufficient knowledge and experience in financial affairs and is
capable of evaluating the risks of acquiring and holding shares of
Purchaser Common Stock, (d) is aware of Purchaser's business affairs and
financial condition and has acquired sufficient information about Purchaser
to reach an informed and knowledgeable decision to acquire the shares of
Purchaser Common Stock to be issued to him or it in the Merger, (E) can
afford to suffer a complete loss of his or her investment in shares of
Purchaser Common Stock and (F) understands (1) that the shares of Purchaser
Common Stock to be issued to him or her in the Merger have not been
registered for sale under the Securities Act or any state securities or
"blue-sky" laws in reliance upon an exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of the investment
intent of the Stockholder as expressed hereunder, (2) that such shares of
Purchaser Common Stock must be held indefinitely and not sold until such
shares are registered under the Securities Act and any applicable state
securities or "blue-sky" laws, unless an exemption from such registration
is available, (3) that, except as provided in Section 7.3, Purchaser is
under no obligation to so register such shares and (4) that the
certificates evidencing such shares will be imprinted with a legend in the
form set forth in Section 7.3(c) that prohibits the transfer of such
shares, except as provided in Section 7.2.
(d) Employee - Stockholder Representation. If the Stockholder is also
an employee of the Company, to the best of the Stockholder's knowledge (i) none
of the compensation to be received by the Stockholder in connection with the
Merger will be separate consideration for, or allocable to, any of his or its
shares of Company Common Stock; (ii) none of the shares of Purchaser Common
Stock received by the Stockholder pursuant to the Merger will be separate
consideration for, or allocable to, any employment agreement between the
Stockholder and Purchaser or the Surviving Corporation; and (iii) the
compensation to be paid to the Stockholder by Purchaser or the Surviving
Corporation will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar serices.
3.3 Representations and Warranties of Purchaser.
Purchaser represents and warrants to the Stockholder, except as
disclosed in the disclosure schedule dated the date hereof, certified as being
such disclosure schedule by the Chief Executive Officer of the Purchaser and
delivered by the Purchaser to the Company and the Stockholder simultaneously
herewith (which disclosure schedule shall reference with specificity the
representations and warranties to which the disclosures contained therein
relate) (the "Purchaser Disclosure Schedule"):
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(a) Organization; Good Standing; Qualification and Power. Each of
Purchaser and Acquisition Sub (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and (ii)
has all requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as now being conducted, to
enter into this Agreement and each of the Related Agreements to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Purchaser has delivered to the
Company true and complete copies of the Charter and by-laws of each of Purchaser
and Acquisition Sub, in each case as amended to the date hereof.
(b) Authority. The execution, delivery and performance by Purchaser of
this Agreement and the Escrow Agreement and the execution, delivery and
performance of this Agreement and the Agreement of Merger by Acquisition Sub,
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Purchaser
and Acquisition Sub, respectively. This Agreement and the Escrow Agreement are
valid and binding obligations of Purchaser, enforceable against Purchaser in
accordance with their respective terms; and this Agreement and the Agreement of
Merger are the valid and binding obligations of Acquisition Sub, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights and remedies generally from time to time in effect
and to general equitable principles. Neither the execution, delivery and
performance by Purchaser of this Agreement and the Escrow Agreement, the
execution, delivery and performance of this Agreement and the Agreement of
Merger by Acquisition Sub, nor the consummation of the transactions contemplated
hereby or thereby, will (A) conflict with, (B) result in any violations of, (C)
cause a default under (with or without due notice, lapse of time or both), (D)
give rise to any right of termination, amendment, cancellation or acceleration
of any obligation contained in or the loss of any material benefit under, (E)
result in the creation of any Encumbrance on or against any assets, rights or
property of Purchaser or Acquisition Sub, as the case may be, under any term,
condition or provision of (x) any instrument or agreement to which Purchaser or
Acquisition Sub is a party, or by which Purchaser or Acquisition Sub any of its
respective properties, assets or rights may be bound, (y) any law, statute,
rule, regulation, order, writ, injunction, decree, permit, concession, license
or franchise of any Governmental Authority applicable to Purchaser or
Acquisition Sub any of its respective properties, assets or rights or (z)
Purchaser's Charter or by-laws, as amended through the date hereof,
respectively, which conflict, breach, default, violation or other event would
prevent the consummation of the transactions contemplated by this Agreement, the
Escrow Agreement. Except as contemplated by this Agreement, no permit,
authorization, consent or approval of or by, or any notification of or filing
with, any Governmental Authority or other person is
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required in connection with the execution, delivery and performance by Purchaser
of this Agreement or the Escrow Agreement or the execution, delivery and
performance by Acquisition Sub of this Agreement and the Agreement of Merger or
the consummation of the transactions contemplated hereby or thereby, except for
(i) the filing with the SEC of such reports and information under the Securities
Act, and the rules and regulations promulgated by the SEC thereunder, as may be
required in connection with this Agreement and the transactions contemplated
hereby, (ii) the filing of such documents with, and the obtaining of such orders
from, various state securities and blue-sky authorities as are required in
connection with the transactions contemplated hereby, (iii) the filing of the
Agreement of Merger with the Secretary of State of the State of Delaware and
(iv) such other consents, waivers, authorizations, filings, approvals and
registrations which if not obtained or made would not have a Material Adverse
Effect on Purchaser or materially impair the ability of Purchaser to consummate
the transactions contemplated by this Agreement, including, without limitation,
the Merger.
(c) Litigation. Except as set forth in the Purchaser Disclosure
Schedule, there is no claim, action, suit, litigation, proceeding, arbitration,
or, to the knowledge of Purchaser, investigation of any kind to which Purchaser
is a party, at law or in equity (including actions or proceedings seeking
injunctive relief), pending or, to the knowledge of Purchaser, threatened
against Purchaser, except for claims, suits, litigations, proceedings,
arbitrations or investigations which individually or in the aggregate cannot
reasonably be expected to have a material adverse effect on Purchaser's
operations or financial condition; and (ii) Purchaser is not subject to any
continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of Purchaser, continuing
investigation by, any Governmental Authority, or any judgment, order, writ,
injunction, decree or award of any Governmental Authority or arbitrator,
including, without limitation, cease-and-desist or other orders, except for such
matters which are not reasonably expected to have a material adverse effect on
Purchaser's operations or financial condition.
(d) Capital Stock.
(i) The authorized capital stock of Purchaser consists of
25,000,000 shares of Purchaser Common Stock and 15,000,000 shares of
Preferred Stock, $.0005 par value (the "Preferred Stock"), of which
1,000,000 shares have been designated as Series A Preferred Stock, $.0005
par value (the "Series A Preferred Stock"), 5,669,846 shares have been
designated as Series B Preferred Stock, $.0005 par value (the "Series B
Preferred Stock") and 300,000 shares have been designated as Series B-1
Preferred Stock, $.0005 par value (the "Series B-1 Preferred Stock"). On
the date
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hereof, (i) 3,250,005 shares of Common Stock are issued and outstanding,
(ii) 1,000,000 shares of Series A Preferred Stock are issued and
outstanding, (iii) 4,477,746 shares of Series B Preferred Stock are issued
and outstanding, (iv) 300,000 shares of Series B-1 Preferred Stock are
issued and outstanding, (v) 300,000 shares of Series B Preferred Stock are
reserved for issuance upon conversion of shares of Series B-1 Preferred
Stock, (vi) 120,000 shares of Series B Preferred Stock are reserved for
issuance in accordance with a Series B Preferred Stock Purchase Agreement
dated as of May 6, 1996, among Purchaser and the other parties thereto,
(vii) 852,100 shares (the "Warrant Shares") of Series B Preferred Stock are
reserved for issuance upon exercise or exchange of (A) the stock
subscription warrants dated September 19, 1995 issued to and held by
America Online, Inc. ("AOL") and (B) the stock subscription warrants dated
May 6, 1996 issued to and held by AOL, (viii) 1,000,000 shares of Common
Stock are reserved for conversion of shares of Series A Preferred Stock,
(ix) 4,897,746 shares of Common Stock are reserved for conversion of Series
B Preferred Stock and Series B-1 Preferred Stock, (ix) 852,100 shares of
Common Stock are reserved for conversion of the Warrant Shares and (x)
1,550,000 shares of Common Stock are reserved for future issuance upon
exercise of options or as restricted stock granted to employees of
Purchaser. All outstanding shares of Purchaser Common Stock are validly
issued, fully paid and non-assessable and not subject to preemptive rights.
Purchaser has duly authorized and reserved for issuance the Merger Shares,
and, when issued in accordance with the terms of Article II, the Merger
Shares will be validly issued, fully paid and nonassessable and free of
preemptive rights. Purchaser directly owns all the outstanding shares of
capital stock of Acquisition Sub, and all of such shares are validly
issued, fully paid and nonassessable and not subject to preemptive rights.
(ii) Except as set forth in paragraph (i) above and on the
Purchaser Disclosure Schedule, immediately after the Closing, there are no
outstanding (A) securities convertible into or exchangeable for shares of
capital stock or other securities of the Company, (B) options, warrants,
or other rights to purchase or otherwise acquire from the Company shares
of such capital stock, or securities convertible into or exchangeable for
shares of such capital stock, or (iii) contracts, agreements or commitments
relating to the issuance by the Company of any shares of such capital
stock, any such convertible or exchangeable securities, or any such
options, warrants or other rights. On the date hereof and in accordance
with the Certificate of Incorporation of Purchaser, as amended and in
effect on the date hereof, each one share of Preferred Stock is convertible
into one share of Common Stock.
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(e) Brokers. Neither Purchaser nor any of its officers, directors or
employees have employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated hereby.
(f) Tax-Free Reorganization
(i) Prior to the Merger, Purchaser will be in Control of
Acquisition Sub. As used in this Agreement, "Control" shall have the
meaning found in Section 368(c) of the Code ("Control").
(ii) Purchaser has no present plan or intention to cause the
Company to issue additional shares of its stock, or to take any other
action, that would result in Purchaser ceasing to Control the Company.
(iii) Purchaser has no present plan or intention to reacquire any
of the Merger Shares issued pursuant to the Merger (other than to the
extent contemplated by the provisions of Article VI hereof).
(iv) Neither Purchaser nor Acquisition Sub is or will be at the
Effective Time in investment company with the meaning of Section 368(a)
(2)(F)(iii) and (iv) of the Code.
(v) Neither Purchaser nor Acquisition Sub is, or will be at the
Effective Time, under the jurisdiction of a court in Title 11 or similar
case within the meaning of Section 368(a)(3)(A) of the Code.
(vi) Purchaser formed Acquisition Sub solely for the purpose of
effecting the Merger, and, at all times prior to the Effective Time,
Acquisition Sub has not conducted any business or investment activities and
will have no liabilities other than in the ordinary course of business
(other than as related to the consummation of the transaction contemplated
thereby).
(vii) Purchaser has no present plan or intention to (A) liquidate
the Company, to merge the Company with or into another corporation,
including the Purchaser or its affiliates, to sell, distribute, or
otherwise dispose of the capital stock of the Company, except for transfers
of stock to corporations controlled by Purchaser, as described in both
Section 368(a)(2)(C) of the Code or Treasury Regulation Section
1.368-2(j)(4), or (B) cause the Company to sell or otherwise dispose of
any of its assets or of any of the assets acquired from Acquisition Sub in
the Merger, except for dispositions made in the ordinary course of business
or transfers of assets to a corporation controlled by the
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Company, as described in both Section 368(a)(2)(C) and Treasury Regulation
Section 1.368-2(j)(4).
(viii) Purchaser has a current intention to directly or indirectly
continue the historic business of the Company or use a significant portion
of its historic business assets in a business.
ARTICLE IV
CLOSING ACTIONS, DELIVERABLES
4.1. Actions Being Taken At Or Prior To Closing.
The following actions are being taken at or prior to the Closing:
(a) Stockholder Approval; Agreement of Merger. This Agreement and the
Merger shall have been duly and validly approved and adopted by the stockholders
of the Company in accordance with the Delaware Statute and the Company's
Charter and By-laws, and the Agreement of Merger shall have been executed and
delivered by Acquisition Sub and the Company and filed with and accepted by the
Secretary of State of the State of Delaware.
(b) Approvals. All authorizations, consents, orders or approvals of, or
declarations or filings with or expiration of waiting periods imposed by any
Governmental Authority necessary for the consummation of the transactions
contemplated hereby shall have been obtained or made or shall have occurred.
4.2. Deliverables To Purchaser and Acquisition Sub.
The following documents and other items are being delivered to the
Purchaser and Acquisition Sub at the Closing:
(a) Non-Competition Agreements. Each of Cohen and Needleman, in their
prospective capacity as an employee of Purchaser effective immediately upon the
Closing, is executing and delivering an agreement with Purchaser, effective as
of the Effective Time, in the form of Exhibit B attached hereto (the "Non-
Competition Agreements"), providing for, among other things, non-disclosure of
confidential information and restrictions upon such person from competing with
the Surviving Corporation and Purchaser as provided therein.
(b) Opinion of the Company's and the Stockholder's Counsel. A favorable
opinion dated the Closing Date is being delivered by Tomlinson, Zisko, Morosoli
& Maser, LLP ("TZM&H"),
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counsel to the Company and the Stockholder, in form and substance reasonably
satisfactory to Purchaser and Acquisition Sub.
(c) Consents and Approvals. Duly executed copies of all consents and
approvals contemplated by this Agreement or the Company Disclosure Schedule, in
form and substance satisfactory to Purchaser and Acquisition Sub, are being
delivered by the Company.
(d) Government Consents, Authorizations, Etc. Copies of all consents,
authorizations, orders or approvals of, and filings or registrations with, any
Governmental Authority which are required for or in connection with the
execution and delivery by the Company of this Agreement and the Stockholders'
Agreements and the consummation by the Company of the transactions contemplated
hereby, are being delivered by the Company.
(e) Company Expenses. A true, correct and complete schedule (the
"Schedule of Expenses") of all Company Expenses paid or incurred by or on behalf
of the Company through the Closing Date, accompanied by a certificate signed by
the President of the Company certifying the accuracy and completeness thereof,
is being delivered by the Company; and the Company is furnishing evidence
satisfactory to Purchaser and Acquisition Sub that the Stockholder has either
paid directly or contributed to the Company in cash an amount equal, in the
aggregate, to the amount of Company Expenses that exceed the amount of Company
Expenses to be paid by Purchaser pursuant to Section 5.4.
(f) Company Expenses Release. A written instrument in form and
substance reasonably satisfactory to Purchaser and Acquisition Sub is being
delivered by each third party identified on the Schedule of Expenses (i)
acknowledging receipt by each such party of full payment of all fees and
expenses of such party constituting Company Expenses and (ii) releasing
Purchaser, Acquisition Sub, the Surviving Corporation and their Affiliates from
any liabilities or obligations in respect of the payment of any fees and
expenses that are or may be characterized as Company Expenses.
(g) Resignation of Directors. Resignations are being delivered by each
of the directors of the Company immediately prior to the Effective Time,
effective as of the Effective Time.
(h) Escrow Agreement. The Stockholder and Purchaser are executing and
delivering an Escrow Agreement in the form of Exhibit C attached hereto (the
"Escrow Agreement"), securing the indemnification obligations of the Stockholder
pursuant to Article VI hereof.
(i) Officers' Certificates. Certain officers, certificates are being
delivered by the Company.
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(j) Conversion, Exercise and Exchange of Certain Securities into
Capital Stock of the Company. All outstanding rights, options (other than
employee stock options), warrants and other securities (whether debt or equity),
directly or indirectly exercisable or exchangeable for, or convertible into,
shares of capital stock of the Company shall have either been exercised or
exchanged for or converted into capital stock of the Company or canceled and
terminated effective as of the date hereof.
(k) Termination Agreement. Cohen and Needleman are each executing and
delivering a Termination Agreement in the form of Exhibit D attached hereto
(each a "Termination Agreement"), providing for the termination of the
Indemnification Agreements each dated as of June 26, 1996, by and between the
Company and each of Cohen and Needleman.
(l) Termination of Burst!Media Agreement. The Company is executing and
delivering an agreement in the form of Exhibit E attached hereto, terminating
the Agreement dated June 10, 1996, between the Company and Burst!Media.
(m) Releases. The Company is delivering to Purchaser releases in the
form of Exhibit F attached hereto executed by each person or entity that has
provided content or services to the Company for use by the Company in its
ParentsPlace.com service.
4.3. Deliverables to the Stockholder.
The following documents and other items are being delivered to the
Stockholder at the Closing:
(a) Opinion of Counsel to Purchaser and Acquisition Sub. A favorable
opinion dated the Closing Date is being delivered by O'Sullivan Graev
& Karabell, LLP, counsel to Purchaser and Acquisition Sub, in form and substance
reasonably satisfactory to the Company.
(b) Government Consents, Authorizations, Etc. Copies of all consents,
authorizations, orders or approvals of, and filings or registrations with, any
Governmental Authority which are required for or in connection with the
execution and delivery by Purchaser and Acquisition Sub of this Agreement and
the Related Agreements and the consummation by Purchaser and Acquisition Sub of
the transactions contemplated hereby or thereby, are being delivered by
Purchaser.
(c) Payment of Expenses. Evidence satisfactory to the Stockholder of
payment by Purchaser or Surviving Corporation of the Company Expenses in
accordance with the first sentence of Section 5.4, is being delivered by
Purchaser.
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(d) Representation Letter, Consents and Certificates. Certain Officers
certificates are being delivered by Purchaser
(e) Option Agreements. Purchaser is executing and delivering an option
agreement with each of Cohen and Needleman (each, an "Option Agreement" and
collectively, the "Option Agreements"), effective as of the Effective Time, in
substantially the form previously approved by the Board of Directors of
Purchaser, providing for the grant of Incentive Stock Options of Purchaser to
each of Cohen and Needleman.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. Compliance With the Code.
The parties shall comply with Section 1060(e) of the Code and any
regulations promulgated thereunder, as applicable.
5.2. Restriction on Transfer.
(a) The shares of Purchaser Common Stock to be issued to the
Stockholder at the Effective Time pursuant to the Merger and any shares of
capital stock or other securities received with respect thereto (collectively,
the "Restricted Securities") shall not be sold, transferred, assigned, pledged,
encumbered or otherwise disposed of (each, a "Transfer") except upon the
conditions specified in this Section 5.2, which conditions are intended to
insure compliance with the provisions of the Securities Act. The Stockholder
shall observe and comply with the Securities Act and the rules and regulations
promulgated by the SEC thereunder as now in effect or hereafter enacted or
promulgated, and as from time to time amended, in connection with any Transfer
of Restricted Securities beneficially owned by the Stockholder.
(b) Each certificate representing Restricted Securities issued to the
Stockholder and each certificate for such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions of Sections 5.2(c) and 5.2(d) hereof) be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES OR "BLUE-SKY" LAWS.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR AN
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EXEMPTION THEREFROM. ADDITIONALLY, THE TRANSFER OF THESE
SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN
SECTION 5.2 OF THE AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF DECEMBER 10, 1996 AMONG iVILLAGE, INC., PP
ACQUISITION CORPORATION, PARENTSPLACE.COM, INC. AND THE
OTHER SIGNATORIES THERETO AND NO TRANSFER OF THESE
SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED. UPON THE FULFILLMENT OF
CERTAIN OF SUCH CONDITIONS, iVILLAGE, INC. HAS AGREED TO
DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT
BEARING THIS LEGEND, FOR THE SECURITIES REPRESENTED
HEREBY REGISTERED IN THE NAME OF THE HOLDER HEREOF.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF iVILLAGE, INC."
(c) The Stockholder agrees, prior to any Transfer of Restricted
Securities, to give written notice to Purchaser of the Stockholder's intention
to effect such Transfer and to comply in all other respects with the provisions
of this Section 5.2. Each such notice shall describe the manner and
circumstances of the proposed Transfer and shall be accompanied by the written
opinion, addressed to Purchaser, of counsel for the holder of such Restricted
Securities, stating that in the opinion of such counsel (which opinion and
counsel shall be reasonably satisfactory to Purchaser) such proposed transfer
does not involve a transaction requiring registration or qualification of such
Restricted Securities under the Securities Act or the securities or "blue-sky"
laws of any relevant state of the United States; provided; however, that no such
opinion of counsel shall be necessary for a Transfer pursuant to Rule 144. The
holder thereof shall thereupon, with the written consent of Purchaser, be
entitled to Transfer such Restricted Securities in accordance with the terms of
the notice delivered by it to Purchaser. Each certificate or other instrument
evidencing the securities issued upon the Transfer of any such Restricted
Securities (and each certificate or other instrument evidencing any
untransferred balance of such Restricted Securities) shall bear the legend set
forth in Section 5.2(b) unless (x) in such opinion of counsel of Purchaser
registration of any future Transfer is not required by the applicable provisions
of the Securities Act or (y) Purchaser shall have waived the requirement of such
legends. No Stockholder shall Transfer any Restricted Securities until such
opinion of counsel has been given (unless waived by Purchaser or unless such
opinion is not required in accordance with the provisions of this Section
5.2(c)).
(d) Notwithstanding the foregoing provisions of this Section 5.2, the
restrictions imposed by this Section 5.2 upon the transferability of Restricted
Securities shall cease and terminate when (i) any such shares are sold or
otherwise disposed of pursuant to an effective registration statement under the
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Securities Act or as otherwise contemplated by Section 5.2 (c) and, pursuant to
Section 5.2 (c) , the securities so transferred are not required to bear the
legend set forth in Section 5.2(c) or (ii) the holder of such Restricted
Securities has met the requirements for Transfer of such Restricted Securities
pursuant to subparagraph (k) of Rule 144. Whenever the restrictions imposed by
this Section 5.2 shall terminate, as herein provided, the holder of Restricted
Securities as to which such restrictions have terminated shall be entitled to
receive from Purchaser, without expense, a new certificate not bearing the
restrictive legend set forth in Section 5.2(b) and not containing any other
reference to the restrictions imposed by this Section 5.2.
(e) The Stockholder understands and agrees that Purchaser, at its
discretion, may cause stop transfer orders to be placed with its transfer agent
with respect to certificates for Restricted Securities owned by the Stockholder
but not as to certificates for such shares of Purchaser Common Stock as to which
the legend set forth in paragraph (b) of this Section 5.2 is no longer required
because one or more of the conditions set forth in Section 5.2(d) shall have
been satisfied.
5.3. Piggyback Registration.
(a) As used in this Section 5.3, the following terms shall have the
following meanings:
(i) "Other Shares" shall mean at any time those shares of Purchaser
Common Stock that do not constitute Primary Shares or Registrable Shares.
(ii) "Primary Shares" shall mean at any time the authorized but
unissued shares of Purchaser Common Stock or shares of Purchaser Common
Stock held in Treasury.
(iii) "Registrable Shares" shall mean the shares of Purchaser
Common Stock that constitute Restricted Securities that are held by any
Stockholder and that have not theretofore been sold to the public pursuant
to a registration statement under the Securities Act or pursuant to Rule
144.
(iv) "Rule 144" shall mean Rule 144 promulgated under the
Securities Act, as amended from time to time, or any successor or
complementary provision thereto.
(b) Subject to the provisions set forth below and to the last sentence
of this Section 5.3(b), if Purchaser at any time following six months after an
initial underwritten public offering of shares of Purchaser Common Stock
proposes for any reason to register Primary Shares under the Securities Act
(other than on Form S-4 or Form S-8 promulgated under the Securities Act
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or any successor forms thereto), it shall promptly give written notice to the
Stockholder of its intention so to register such shares and, upon the written
request, given within 30 days after delivery of such notice by Purchaser, of the
Stockholder to include in such registration Registrable Shares (which request
shall specify the number of Registrable Shares proposed to be included in such
registration by the Stockholder), Purchaser shall use its best efforts to cause
all such Registrable Shares to be included in such registration on the same
terms and conditions as the securities otherwise being sold in such
registration; provided, however, that the rights granted to the Stockholder
hereunder shall be subject at all times to the contractual rights of any third
parties now or hereafter granted; further provided, however, that if the
managing underwriter in the good faith exercise of its reasonable judgment
advises Purchaser in writing that the inclusion of all Registrable Shares
proposed to be included in such registration would interfere with the successful
marketing (including pricing) of Primary Shares or Other Shares proposed to be
registered by Purchaser, then the number of Primary Shares, Registrable Shares
and Other Shares proposed to be included in such registration shall be included
in the following order:
(i) first, the Primary Shares and Other Shares.and
(ii) second, the Registrable Shares requested to be included in
such registration, pro rata based upon the number of Registrable Shares
proposed to be included in such registration.
If any registration hereunder is to be underwritten, Purchaser and the
Stockholder holding Registrable Shares to be registered by such registration
statement shall, as a condition to participating in such registration, enter
into an underwriting agreement in customary form with a managing underwriter
selected for such underwriting by Purchaser. If the Stockholder elects not to
include any or all of its Registrable Shares in any registration statement filed
by the Purchaser, the Stockholder shall nevertheless continue to have the right
to include any of its Registrable Shares in any subsequent registration
statement or registration statements as may be filed by the Purchaser with
respect to offerings of its securities, subject to the terms and conditions set
forth in this Section 5. Anything to the contrary contained herein
notwithstanding, Purchaser shall not be required to take any action to effect
any such registration, qualification or compliance pursuant to this Section 5.3
after Purchaser has effected four (4) such requested registrations pursuant to
this Section 5.3 in which the Stockholder has been given the opportunity to
participate.
(c) In consideration for Purchaser agreeing to its obligations under
this Section 5.3, if Purchaser shall include Registrable Shares in a
registration pursuant to Section 5.3(b))
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for the sale thereof to the public, the Stockholder agrees, upon the request of
the managing underwriter of such registration, to enter into an agreement not to
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of, any Registrable Shares, other than those Registrable
Shares actually included in such registration pursuant to Section 5.3(b) and
sold to the public thereunder, without the prior written consent of the
underwriters which period shall not begin more than 10 days prior to the
effectiveness of the registration statement pursuant to which such public
offering shall be made and shall not last more than 180 days after the effective
date of such registration statement; provided, that the Stockholder shall be
bound by this provision only if, and to the extent, the executive officers of
Purchaser owning Purchaser Common Stock shall be bound by such a provision.
(d) In connection with any registration pursuant to this Section 5.3,
Purchaser shall in its sole discretion determine the terms and conditions of
such registration, including, without limitation, the timing thereof; the scope
of the offering contemplated thereby (i.e., whether the offering shall be a
combined primary offering and a secondary offering or limited only to a
secondary offering); the manner of distribution of Registrable Shares; the
period of effectiveness of registration for permissible sales of Registrable
Securities thereunder consistent with the plan of distribution agreed upon by
Purchaser and the Stockholder; and all other material aspects of the
registration and the registration process. In connection therewith, Purchaser
may require that any such registration be underwritten, in which event the
managing underwriter shall be selected by Purchaser.
(e) (i) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, Purchaser shall indemnify
and hold harmless the Stockholder against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which the
Stockholder may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the registration statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Shares, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or, with respect to any prospectus, necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
or any violation by Purchaser of the Securities Act or state securities
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or "blue-sky" laws applicable to Purchaser and relating to action or inaction
required of Purchaser in connection with such registration or qualification
under state securities or "blue-sky" laws; provided, however, that Purchaser
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, preliminary prospectus, final prospectus, amendment,
supplement or document incident to registration or qualification of any
Registrable Shares in reliance upon and in conformity with written information
furnished to Purchaser by the Stockholder with respect to information regarding
such Stockholder for use in the preparation thereof.
(ii) in connection with any registration of Registrable Shares
under the Securities Act pursuant to this Agreement, the Stockholder shall
indemnify and hold harmless (in the same manner and to the same extent as set
forth in the preceding paragraph of this Section 5.3(d)) Purchaser, each
director of Purchaser, each officer of Purchaser who shall sign such
registration statement, each underwriter, broker or other person acting on
behalf of Purchaser and each person who controls any of the foregoing persons
within the meaning of the Securities Act with respect to any statement or
omission from such registration statement, any preliminary prospectus or final
prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Share, if such statement or omission was made
in reliance upon and in conformity with written information furnished to
Purchaser or such underwriter by such Stockholder for use in connection with the
preparation of such registration statement, preliminary prospectus, final
prospectus, amendment, supplement or document; provided that the maximum
liability in respect of such indemnification shall be limited, in the case of
the Stockholder, to an amount equal to the net proceeds received by the
Stockholder from the sale of such Registrable Shares effected pursuant to such
registration statement.
(f) The Stockholder shall furnish to Purchaser such written information
regarding the Stockholder as Purchaser shall reasonably deem necessary in
connection with any registration, qualification or compliance contemplated by
this Section 5.3.
(g) Anything to the contrary contained herein notwithstanding, the
rights of the holders of Registrable Shares and the obligations of Purchaser
under Section 5.3(b) hereof shall terminate and be of no further force or
effect (i) as to any holder of Registrable Shares, at such time as all
Registrable Shares held by such holder may be sold under Rule 144 during any
three-month period and (ii) as to all holders of Registrable Shares, on the
third anniversary of the Effective Date.
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(h) The Stockholder may not assign its rights under this Section 5.3 to
any purchaser or transferee of Restricted Securities without the prior written
consent of Purchaser; provided, however, that any such purchaser or transferee
shall, as a condition to the effectiveness of such assignment if consented to by
Purchaser, be required to execute a counterpart to this Agreement agreeing to be
treated as a Stockholder hereunder solely for purposes of this Section 5.3,
whereupon such purchaser or transferee shall have the benefits of, and shall be
subject to the restrictions contained in, this Section 5.3.
(i) All expenses incurred by Purchaser in complying with this Section
5.3, including, without limitation, all registration and filing fees (including
all expenses incident to filing with the NASD), fees and expenses of complying
with securities and "blue-sky" laws, printing expenses and fees and expenses of
Purchaser's counsel and accountants, shall be borne by Purchaser; provided,
however, that all fees and expenses of counsel for the Registrable Shares or any
of them and all underwriting taxes and selling commissions applicable to the
Registrable Shares, and any expenses and fees that would not have been incurred
by Purchaser but for inclusion of Registrable Shares in such registration, shall
not be borne by Purchaser but shall be borne by the holders of Registrable
Shares pro rata based on the number of Registrable Shares so registered.
5.4. Payment of Certain Fees and Expenses.
At the Closing, Purchaser is paying, or causing the Surviving
Corporation to pay, in cash, against presentation of statements therefore, to
TZM&M, counsel to the Company, $19,000 in respect of legal fees and expenses
incurred in connection with the Merger. Except as expressly provided in this
Section 5.4, neither Purchaser, Acquisition Sub, the Company nor the Surviving
Corporation shall pay or in any respect be liable for any Company Expenses.
5.5. Disclosure of Information; Non-Competition.
Each of Cohen and Needleman acknowledges and recognizes that the
Subject Business has been conducted or is currently planned to be conducted by
the Company throughout the world, and further acknowledge and recognize the
highly competitive nature of the industry in which the Subject Business is
involved and that, accordingly, in consideration of the premises contained
herein, the consideration to be received hereunder and the direct and indirect
benefits to each of Cohen and Needleman of the transactions contemplated hereby,
and in consideration of and as an inducement to Purchaser and Acquisition Sub to
enter into to this Agreement and to consummate the transactions, contemplated
hereby:
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(b) "Event of Indemnification shall mean and include (i) the untruth,
inaccuracy or breach of any representation or warranty of the Company or the
Stockholder (including the underlying facts and circumstances related thereto)
contained in Section 3.1, or 3.2 any Exhibit hereto or any document delivered in
connection herewith, (ii) the breach of covenants and agreements by the
Stockholder, (iii) any claim by any person or entity heretofore providing
content or services to the Company for use by the Company in its ParentsPlace
service with respect to agreement for, or authority to use any such content or
services.
(c) "Indemnified Persons" shall mean and include Purchaser, Acquisition
Sub and the Surviving Corporation and their respective Affiliates (but shall not
include the Stockholder), successors and assigns, and the respective officers
and directors of each of the foregoing.
(d) "Losses" shall mean any and all losses, claims, damages,
liabilities, expenses (including reasonable attorneys' and accountants' fees),
assessments and Taxes sustained, suffered or incurred by any Indemnified Person
arising from or in connection with any such matter which is the subject of
indemnification under Section 6.2 hereof.
6.2. Indemnification Generally.
Subject to Section 6.6 hereof, the Stockholder shall indemnify the
Indemnified Persons for, and hold each of them harmless from and against, any
and all Losses arising from or in connection with any Event of Indemnification.
The sole and exclusive remedy for an Event of Indemnification shall be (i) by
recourse to the Escrow Fund (as defined in the Escrow Agreement), (ii) by
cancellation of up to fifty percent (50%) of the options granted to each of
Needleman and Cohen pursuant to the Option Agreements and (iii) by recourse to
up to fifty percent (50%) of the shares of Purchaser Common Stock hereafter
acquired by either Needleman or Cohen upon exercise of their respective options
pursuant to their respective Option Agreements; provided, however, that in no
event shall more than fifty percent of the shares of Purchaser Common Stock
(subject to equitable adjustment for stock splits, dividends, combinations,
reclassifications and like occurrences) referred to in clauses (i) and (ii)
above, in the aggregate (or options therefor) be canceled and/or transferred in
connection with this Section 6.2. An indemnification pursuant to this Section
6.2 shall be effected solely in accordance with the terms and provisions of the
Escrow Agreement and the Option Agreements, as the case may be, and shall be
subject to the qualifications and limitations set forth therein (it being
understood that nothing contained in this Section 6.2 shall in any way limit,
impair, modify or otherwise affect the rights of the Indemnified Persons
(including rights available under the Securities Act or the Exchange Act), (A)
to
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<PAGE>
bring any claim, demand, suit or cause of action otherwise available to the
Indemnified Persons based upon an allegation or allegations that the Company or
the Stockholder, or either of them, had an intent to defraud or made a willful
misrepresentation or willful omission of a material fact in connection with this
Agreement, the Agreement of Merger or the Escrow Agreement and the transactions
contemplated hereby or thereby or (B) to enforce any judgment of a court of
competent jurisdiction which finds or determines that the Company or the
Stockholder, or either of them, had an intent to defraud or made a willful
misrepresentation or omission of a material fact in connection with this
Agreement or the Agreement of Merger and the transactions contemplated hereby or
thereby).
6.3. Assertion of Claims.
No claim shall be brought under Section 6.2 hereof unless the
Indemnified Persons, or any of them, at any time prior to the applicable
Survival Date, if any, give the Stockholder (a) written notice of the existence
of any such claim, specifying the nature and basis of such claim and the amount
thereof, to the extent known or (b) written notice pursuant to Section 6.4 of
any third party claim, the existence of which might give rise to such a claim.
Upon the giving of such written notice as aforesaid prior to the applicable
Survival Date, the Indemnified Persons, or any of them, shall have the right to
commence legal proceedings subsequent to the Survival Date for the enforcement
of their rights under Section 6.2 hereof.
6.4. Notice and Defense of Third Party Claims.
The obligations and liabilities of a Stockholder with respect to Losses
resulting from the assertion of liability by third parties (each, a "Third Party
Claim") shall be subject to the following terms and conditions:
(a) The Indemnified Persons shall promptly (and, in any event, within
five Business Days) give written notice to the Stockholder of any Third Party
Claim which might give rise to any Loss by the Indemnified Persons, stating the
nature and basis of such Third Party Claim, and the amount thereof to the extent
known. Such notice shall be accompanied by copies of all relevant documentation
with respect to such Third Party Claim, including, without limitation, any
summons, complaint or other pleading which may have been served, any written
demand or any other document or instrument.
(b) The Indemnified Persons shall assume the defense of any Third Party
Claims with counsel of their own choosing, which counsel shall be reasonably
satisfactory to the Stockholder, and shall act reasonably and in accordance with
their good faith business judgment in handling such Third Party Claims and
shall not effect any settlement without the written consent of the
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<PAGE>
Stockholder, which consent shall not unreasonably be withheld or delayed. The
Stockholder shall have the right to participate at their own expense in the
defense of any Third Party Claims. The Stockholder and the indemnified Persons
shall make available to each other and their counsel and accountants all books
and records and information relating to any Third Party Claims, keep each other
fully apprised as to the details and progress of all proceedings relating
thereto and render to each other such assistance as may be reasonably required
to ensure the proper and adequate defense of any and all Third Party Claims.
6.5. Survival of Representations and Warranties.
Subject to the further provisions of this Section 6.5, the respective
representations and warranties of the parties set forth in Sections 3.1, 3.2 and
3.3 shall survive the Effective Time until the second anniversary following the
Closing Date, except that the representation and warranty contained in (a)
sections 3.2(a), and 3.2(d) shall not so terminate but shall survive the
Closing indefinitely and (b) Section 3.1(h) shall not so terminate but shall
survive the Closing until the applicable statute of limitations shall have
expired with respect to all matters referenced therein. For convenience of
reference, the date upon which any representation or warranty contained herein
shall terminate is referred to herein as the "Survival Date." All covenants and
agreements of Purchaser or the Stockholder contained herein shall survive the
Closing in accordance with their respective terms. Anything contained herein to
the contrary notwithstanding, the representations and warranties of the Company
contained in this Agreement (including, without limitation, the Company
Disclosure Schedule) (i) are being given by the Company on behalf of the
Stockholder and for the purpose of binding the Stockholder to the terms and
provisions of this Article VI and the Escrow Agreement, and as an inducement to
Purchaser and Acquisition Sub to enter into this Agreement and to approve the
Merger (and the Company acknowledges that Purchaser and Acquisition Sub have
expressly relied thereon) and (ii) are solely for the benefit of the
Indemnified Persons and each of them. Accordingly, no third party (including,
without limitation, the Stockholder) or any other holder of Company Common Stock
or anyone acting on behalf of any thereof) other than the Indemnified Persons,
and each of them, shall be a third party or other beneficiary of such
representations and warranties and no such third party shall have any rights of
contribution against the Company or the Surviving Corporation with respect to
such representations or warranties or any matter subject to or resulting in
indemnification under this Article VI or otherwise.
6.6. Limitation on Indemnification.
(a) Anything to the contrary contained in Article VI notwithstanding,
the Stockholder shall not be obligated to indemnify the Indemnified Persons
pursuant to this Article VI
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<PAGE>
with respect to any Losses pursuant to Section 6.1(b)(i) until the aggregate
amount of such Losses exceeds twenty-five thousand dollars ($25,000) (the
"Basket Amount"), whereupon the Stockholder shall be obligated to indemnify the
Indemnified Persons for all Losses in excess of the Basket Amount; provided,
however, that the Stockholder shall be obligated to indemnify the Indemnified
Persons for the first dollar of all Losses arising out of or related to a breach
of the representation and warranty contained in Sections 3.1(c), 3.1(ah) and
3.2(a); provided further, however, that the aggregate maximum indemnification
liability of the Stockholder pursuant to this Article VI with respect to any
Losses pursuant to Section 6.1(b)(i) shall be $662,500.
(b) For purposes of satisfying an indemnification obligation of the
Stockholder under this Article VI and for determining whether or not the maximum
indemnification liability of the Stockholder under this Article VI has been
satisfied, each share of Purchaser Common Stock tendered by or on behalf of the
Stockholder in satisfaction of any indemnification of the Stockholder under this
Article VI shall have a value determined as set forth in the Escrow Agreement
and options canceled in satisfaction of any indemnification of the Stockholder
under this Article VI shall be deemed to have a value equal to $2.50 per share
purchasable under such options (subject to equitable adjustment for stock
splits, stock dividends, reverse stock splits, combinations or similar actions).
In the event that the maximum indemnification liability of the Stockholder under
this Article VI has been satisfied, Purchaser agrees to instruct the Escrow
Agent to release to the Stockholder any remaining Escrow Shares or other funds
held by the Escrow Agent under the Escrow Agreement.
ARTICLE VII
MISCELLANEOUS
7.1. Expenses.
As used in this Agreement, "Transaction Costs" shall mean, with respect
to any party, all actual, out-of-pocket expenses incurred by such party to third
parties, in connection with this Agreement, the Merger and all other
transactions provided for herein and therein; but shall not in any event include
general overhead; the time spent by employees of such party internally; postage,
telephone, telecopy, photocopy and delivery expenses of such party; permit and
filing fees; and other non-material expenses that are incidental to the ordinary
course of business. Each party hereto shall bear its own fees and expenses in
connection with the transactions contemplated hereby; provided, however, that
in the event the Merger shall be consummated, (a) Purchaser and Acquisition Sub
shall bear all
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<PAGE>
Transaction Costs of Purchaser and Acquisition Sub and (b) except as expressly
provided in Section 5.4, which provides for certain specified expenses to be
paid by Purchaser or the Surviving Corporation, the Stockholder shall bear all
Transaction Costs of the Company (to be effected by either direct payment of
such Transaction Costs or a contribution of cash to the Company by the
Stockholder immediately prior to the Effective Time in an amount equal to all
such Transaction Costs of the Company), whether or not such fees and expenses
have been paid by the Company on or before the Closing Date and whether or not
such fees and expenses are reflected in the Company Disclosure Schedule or the
Schedule of Expenses (such Transaction Costs of the Company being herein
collectively referred to as the "Company Expenses").
7.2. Entire Agreement.
This Agreement (including the Company Disclosure Schedule and the
Exhibits attached hereto) and the other writings referred to herein contain the
entire agreement among the parties hereto with respect to the transactions
contemplated hereby and supersede all prior agreements or understandings,
written or oral, among the parties with respect thereto.
7.3. Descriptive Headings.
Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of this Agreement.
7.4. Public Announcements.
The parties hereto agree that, to the maximum extent feasible, they
shall advise and confer with each other prior to the issuance (and provide
copies to the other party prior to issuance) of any public announcements,
reports, statements or releases pertaining to the Merger; provided that the
parties shall not disclose the purchase price of the Merger in any such public
announcements.
7.5. Notices.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally-recognized overnight courier or by registered or certified mail,
postage prepaid, return receipt requested or by telecopier, with confirmation as
provided above addressed as follows:
if to Purchaser or Acquisition Sub, to:
iVillage, Inc.
170 Fifth Avenue
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<PAGE>
New York, New York 10010
Attention: Candice Carpenter,
Chairman and Chief Executive
Officer
Telecopier: (212) 604-9133;
with copies to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: Martin H. Levenglick, Esq.
Telecopier: (212) 408-2420;
if to the Company, to:
ParentsPlace.com, Inc.
1129 Bancroft Way
Berkeley, California 94702
Attention:
Telecopier:
with a copy to:
Tomlinson, Zisko, Morosoli & Maser, LLP
200 Page Mill Road, Second Floor
Palo Alto, California 94306
Attention: William E. Zisko, Esq.
Telecopier: (415) 324-1808; and
if to the Stockholder, at its address set forth on
Schedule I attached hereto;
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (a) in the case of personal
delivery or telecopy, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent and (c) in the case of mailing, on the third business day following
the date on which the piece of mail containing such communication was posted.
7.6. Counterparts.
This Agreement may be executed in any number of counterparts by
original or facsimile signature, each such counterpart shall be an original
instrument, and all such counterparts together shall constitute one and the same
agreement.
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<PAGE>
7.7. Governing Law.
This Agreement shall be governed by and construed in accordance with
the Delaware Statute and with the laws of the State of New York applicable to
contracts made and to be performed wholly therein (without regard to principles
of conflicts of laws).
7.8. Benefits of Agreement
All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
7.9. Pronouns.
As used herein, all pronouns shall include the masculine, feminine,
neuter, singular and plural thereof whenever the context and facts require such
construction.
7.10. Amendment, Modification and Waiver.
This Agreement shall not be altered or otherwise amended except
pursuant to (a) an instrument in writing signed by Purchaser and the
Stockholder, if Article VI is not affected by such alteration or amendment and
(b) an instrument in writing signed by (i) Purchaser, (ii) the Company and (iii)
the Stockholder, if Article VI is affected thereby; provided, however, that
after the approval and adoption of this Agreement and the Merger by the
Stockholder, no amendment of this Agreement shall be made which pursuant to the
Delaware Statute or other law requires the further approval of the Stockholder;
provided further, however, that any party to this Agreement may waive any
obligation owed to it by any other party under this Agreement. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement and Plan of Reorganization to be executed on its behalf as of the day
and year first above written.
iVILLAGE, INC.
By:/s/ Steve Ellis
----------------------------
Name: Steve Ellis
Title: VP Finance
PP ACQUISITION CORPORATION
By: /s/ Steve Ellis
---------------------------
Name: Steve Ellis
Title: VP Finance
PARENTSPLACE.COM, INC.
By:
-----------------------------
Name:
Title:
STOCKHOLDER:
--------------------------------
David L. Cohen and Jacqueline B.
Needleman, as Community Property
AGREED AND ACCEPTED AS TO
SECTION 5.5 AND ARTICLE VI ONLY
- -------------------------
Jacqueline B. Needleman
- --------------------------
David L. Cohen
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement and Plan of Reorganization to be executed on its behalf as of the
day and year first above written.
iVILLAGE, INC.
By:
-----------------------------
Name:
Title:
PP ACQUISITION CORPORATION
By:
------------------------------
Name:
Title:
PARENTSPLACE.COM, INC.
By: /s/ Jacqueline Needleman
-------------------------------
Name: Jacqueline Needleman
Title: CEO
STOCKHOLDER:
/s/ David L. Cohen
/s/ Jacqueline B. Needleman
-----------------------------------
David L. Cohen and Jacqueline B.
Needleman, as Community Property
AGREED AND ACCEPTED AS TO
SECTION 5.5 AND ARTICLE VI ONLY
/s/ Jacqueline b. Needleman
- ---------------------------
Jacqueline B. Needleman,
/s/ David L. Cohen
- ---------------------------
David L. Cohen
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/09/1995
950128121 - 2513815
CERTIFICATE OF INCORPORATION
OF
i Village Inc.
The undersigned, being of legal age, in order to form a corporation under
and pursuant to the laws of the State of Delaware, does hereby set forth as
follows:
FIRST: The name of the corporation is
i Village Inc.
SECOND: The address of the initial registered and principal office of this
corporation in this state is c/o United Corporate Services, Inc., 15 East North
Street, in the City of Dover, County of Kent, State of Delaware 19901 and the
name of the registered agent at said address is United Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the corporation laws of
the State of Delaware.
FOURTH: The corporation shall be authorized to issue the following shares:
Class Number of Shares Par Value
----- ---------------- ---------
COMMON 1,500 NO PAR VALUE
FIFTH: The name and address of the incorporator are as follows:
NAME ADDRESS
---- -------
Ray A. Barr 10 Bank Street
White Plains, New York 10606
<PAGE>
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for further
definition, limitation and regulation of the powers of the corporation and of
its directors and stockholders:
(1) The number of directors of the corporation shall be such as from
time to time shall be fixed by, or in the manner provided in the by-laws.
Election of directors need not be by ballot unless the By-Laws so provide.
(2) The Board of Directors shall have power without the assent or vote
of the stockholders:
(a) To make, alter, amend, change, add to or repeal the By-Laws
of the corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the corporation; to
determine the use and disposition of any surplus or net profits; and
to fix the times for the declaration and payment of dividends.
(b) To determine from time to time whether, and to what times and
places, and under what conditions the accounts and books of the
corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders.
(3) The directors in their discretion may submit any contract or act
for approval or ratification at any annual meeting of the stockholders, at
any meeting of the stockholders called for the purpose of considering any
such act or contract, or through a written consent in lieu of a meeting in
accordance with the requirements of the General Corporation Law of Delaware
as amended from time to time, and any contract or act that shall be so
approved or be so ratified by the vote of the holders of a majority of the
stock of the corporation which is represented in person or by proxy at such
meeting, (or by written consent whether received directly or through a
proxy) and entitled to vote thereon (provided that a lawful quorum of
stockholders be there represented in person or by proxy) shall be as valid
and as binding upon the corporation and upon all the stockholders as though
it had been approved, ratified, or consented to by every stockholder of the
corporation, whether or not the contract or act would otherwise be open to
legal attack because of directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this certificate, and to any
by-laws from time to time made by the stockholders; provided, however, that
no by-laws so made shall invalidate any prior act of the directors which
would have been valid if such by-law bad not been made.
<PAGE>
SEVENTH: No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transaction from which the director derived an improper personal benefit, it
being the intention of the foregoing provision to eliminate the liability of the
corporation's directors to the corporation or its stockholders to the fullest
extent permitted by Section 102(b)(7) of the Delaware General Corporation Law,
as amended from time to time. The corporation shall indemnify to the fullest
extent permitted by Sections 102(b) (7) and 145 of the Delaware General
Corporation Law, as amended from time to time, each person that such Sections
grant the corporation the power to indemnify.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware, may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
<PAGE>
NINTH: The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed by law, and all rights and powers conferred herein on
stockholders, directors and officers are subject to this reserved power.
IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under the penalties of perjury
this eighth day of June, 1995.
S/RAY A. BARR
----------------------------
Ray A. Barr, Incorporator
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
i VILLAGE INC.
FIRST
The name of the Corporation is i VILLAGE INC. (the "Corporation").
SECOND
Article Fourth of the Certificate of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
FOURTH: The Corporation shall be authorized to issue 11,100,000 shares of
all classes, consisting of (i) 7,600,000 shares of Common Stock, $.0005 par
value (the "Common Stock"), and (ii) 3,500,000 shares of Preferred Stock, $.0005
par value (the "Preferred Stock").
Of the Preferred Stock, 3,500,000 shares shall be designated as "Series A
Preferred Stock." The Series A Preferred Stock shall have the following
designations, preferences, and other rights:
1. Dividends. The holders of Series A Preferred Stock shall be entitled to
share in any dividends declared and paid upon or set aside for the Common Stock
of the Corporation pro rata in accordance with the number of shares of Common
Stock into which such shares of Series A Preferred Stock are then convertible
pursuant to Section 5.
2. Liquidation.
(a) Upon a Liquidation (as defined below), after payment or provision for
payment of the debts and other liabilities of the Corporation and all amounts
which the holders of any class of capital stock ranking senior to the Series A
Preferred Stock shall be entitled to receive upon such Liquidation, the holders
of Series A Preferred Stock shall be entitled to receive, out of the remaining
assets of the Corporation available for distribution to its stockholders, with
respect to each share of Series A Preferred Stock an amount (the
<PAGE>
"Preference Amount") equal to the sum of (i) $1 and (ii) all declared but unpaid
dividends payable with respect to such share under Section 1, before any
distribution shall be made to the holders of the Common Stock or any other
class of capital stock of the Corporation ranking junior to the Series A
Preferred Stock. If upon any Liquidation the assets of the Corporation available
for distribution to its stockholders shall be insufficient to pay the holders of
Series A Preferred Stock the full Preference Amounts to which they shall be
entitled, the holders of Series A Preferred Stock shall share pro rata in any
distribution of assets in accordance with such full Preference Amounts.
(b) Upon any Liquidation prior to the consummation of any Qualified
Capital Financing (as defined below), the holders of Series A Preferred Stock
shall, after any distribution under paragraph (a) above, further be entitled to
share in the distribution of the remaining assets of the Corporation to the
holders of Common Stock, pro rata in accordance with the number of shares of
Common Stock into which such shares of Series A Preferred Stock are then
convertible pursuant to Section 5. Upon any Liquidation after the consummation
of any Qualified Capital Financing, the holders of Series A Preferred Stock
shall, after any distribution under paragraph (a) above, not share in the
distribution of the remaining assets of the Corporation.
(c) "Liquidation" means any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, other than any
dissolution, liquidation or winding up in connection with any reincorporation of
the Corporation in another jurisdiction. "Qualified Capital Financing" means
the first issuance by the Corporation in one transaction or a series of related
transactions of shares of Preferred Stock after the Original Issuance Date for
an aggregate cash purchase price of at least $1,500,000. "Original Issuance
Date" means the date of original issuance of the first share of Series A
Preferred Stock.
3. Redemption Upon Corporate Transaction.
(a) In connection with any Corporate Transaction, each holder of shares of
Series A Preferred Stock may demand that the Corporation redeem (out of funds
legally available for that purpose) all or a portion of all shares of Series A
Preferred Stock then held by such holder for a cash amount per share equal to
its Preference Amount. The Corporation shall send notice of any proposed
Corporate Transaction by first-class certified mail, return receipt requested,
postage prepaid, to the holders of record of the shares of Series A Preferred
Stock at their respective addresses as they appear on the books of the
Corporation. Such notice shall be wailed prior to or at the same time as any
notice of a stockholders meeting to be held for
2
<PAGE>
the purpose of voting on such Corporate Transaction or as any request for
consent in lieu of such meeting. If no such notice or consent is required, the
notice of such proposed Corporate Transaction shall be mailed no later than 20
days before the anticipated date of closing of the Corporate Transaction. The
right of each holder of Series A Preferred Stock under this Section may be
exercised by delivering to the Corporation, prior to the consummation of such
Corporate Transaction, a notice specifying the number of shares of Series A
Preferred Stock to be redeemed.
(b) At any time on or after the date of consummation of such Corporate
Transaction, each holder of record of shares of Series A Preferred Stock to be
redeemed on such date shall be entitled to receive the redemption price upon
actual delivery to the Corporation or its agents of the certificate or
certificates representing the shares to be redeemed. On any such date, all
rights in respect of the shares of Series A Preferred Stock to be redeemed,
except the right to receive the redemption price shall cease and terminate
(unless default shall be made by the Corporation in the payment of the
applicable redemption price, in which event such rights shall be exercisable
until such default is cured), and such shares shall no longer be deemed to be
outstanding, whether or not the certificate or certificates representing such
share have been received by the Corporation.
(c) If the Corporation has insufficient funds legally available to redeem
any shares of Series A Preferred Stock required to be redeemed in connection
with any Corporate Transaction, those funds legally available for such purpose
shall be used to redeem the number of such shares which may be redeemed. The
holders of shares of Series A Preferred Stock shall participate in any such
partial redemption pro rata according to the number of such shares then held by
them. At any time and from time to time thereafter when additional funds become
legally available for the redemption of Series A Preferred Stock, such funds
shall be used promptly to redeem the balance of the shares of Series A Preferred
Stock to be redeemed.
(d) "Corporate Transaction" means (i) any consolidation or merger of the
Corporation, other than any merger or consolidation resulting in the holders of
the capital stock of the Corporation entitled to vote for the election of
directors holding a majority of the capital stock of the surviving or resulting
entity entitled to vote for the election of directors, (ii) any person or entity
that is not a stockholder of the Corporation as of the Original Issuance Date
becoming the holder of a majority of the capital stock of the Corporation
entitled to vote for the election of directors, or (iii) any sale or other
disposition by the Corporation of all or substantially all of its assets.
3
<PAGE>
4. Voting Rights.
(a) In addition to the rights provided by law or in the Corporation's
By-laws, each share of Series A Preferred Stock shall entitle the holder thereof
to such number of votes as shall equal the number of whole and fractional shares
of Common Stock into which such share of Series A Preferred Stock is then
convertible pursuant to Section 5. Except as provided in paragraphs (b) and (c)
below, the holders of Series A Preferred Stock shall be entitle to vote on all
matters as to which holders of Canon Stock shall be entitled to vote, in the
same manner and with the same effect as such holders of Common Stock, voting
together with the holders of Common Stock as one class; provided, however, that
until such time as the Corporation reports the first time any net income, as
determined in accordance with generally accepted accounting principles
consistently applied, for any fiscal quarter, the holders of Series A Preferred
Stock shall not be entitled to more than 19.9% of the aggregate voting power of
such class.
(b) The Corporation shall not, without the affirmative consent or approval
of the holders of a majority of the shares of Series A Preferred Stock then
outstanding, voting separately as a class:
(i) authorize any class or series of capital stock ranking senior to
the Series A Preferred Stock;
(ii) until the consummation of any Qualified Capital Financing,
authorize any class or series of capital stock ranking pari passu with the
Series A Preferred Stock;
(iii) in any other manner alter or change the powers, preferences, or
rights, or qualifications, limitations or restrictions thereof, of the
shares of [ILLEGIBLE];
(iv) in any other manner amend the Certificate of Incorporation or
By-laws of the Corporation, except that the number of shares of Common
Stock that the Corporation is authorized to issue may, without separate
class vote, be increased or decreased from time to time by the affirmative
vote of the holders of a majority of the capital stock of the Corporation
entitled to vote thereon;
(v) sell or otherwise dispose all or substantially all assets of the
Corporation;
(vi) merge or consolidate with any person or entity;
4
<PAGE>
(vii) enter into any transaction that would result in any person or
entity that is not a stockholder of the Corporation as of the Original
Issuance Date becoming the holder of a majority of the capital stock of the
Corporation entitled to vote for the election of directors;
(viii) directly or indirectly pay or declare any dividend or make any
distribution upon, or redeem, retire, repurchase or otherwise acquire, any
shares of capital stock of the Corporation, other than (i) shares of Series
A Preferred Stock or (ii) in accordance with Sections 3.2 and 3.4 of the
Stockholders' Agreement dated September 15, 1995 (the "Stockholders'
Agreement"), among the Corporation and its stockholders named therein;
(ix) sell, transfer, or grant any lien or encumbrance on any
intellectual property right of the Corporation, other than licenses granted
in the ordinary course of business of the Corporation; or
(x) approve or authorize any Liquidation or any recapitalization or
reorganization of the Corporation.
(c) Upon the occurrence of any Event of Default (as defined in the
Convertible Secured Note dated September 19, 1995 (the "Note"), issued by the
Corporation under the Securities Purchase Agreement dated September 15, 1995
(the "Securities Purchase Agreement"), between the Corporation and the investor
named therein, regardless of whether any amount is outstanding under the Note)
and until such Event of Default has been cured or waived, (i) the number of
members of the Board of Directors of the Corporation (the "Board") shall be
increased to the number necessary to accomplish the purpose of the following
clause (ii), and (ii) the holders of a majority of all shares of Series A
Preferred Stock then outstanding shall be entitled, as a class and to the
exclusion of the holders of all other shares of capital stock of the
Corporation, to nominate for election and elect such number of members of the
Board, and each successor of each such member, that, together with the number of
members nominated in accordance with Section 2(b) (i) of the Stockholders'
Agreement, constitutes a majority of all matters of the Board. Each member of
the Board nominated and elected under this paragraph may be removed at any time
by, and only by, the holders of a majority of all shares of Series A Preferred
Stock then outstanding. The Corporation shall promptly notify each holder of
Series A Preferred Stock of the occurrence of any vacancy in any seat of the
Board for which such holders are entitled to elect a successor.
5. Optional Conversion.
(a) Upon the terms set forth in this Section, each holder of shares of
Series A Preferred Stock shall have the
5
<PAGE>
right, at such holder's option, at any time and from time to time, to convert
any of such shares into the number of full paid and nonassessable shares of
Common Stock equal to the quotient obtained by dividing (i) the product of $1
and the number of shares of Series A Preferred Stock being converted, by (ii)
the Conversion Price (as defined below), as last adjusted and then in effect, by
surrender of the certificates representing the shares of Series A Preferred
Stock to be converted. The conversion price per share at which shares of Common
Stock shall be issuable upon conversion of shares of Series A Preferred Stock
(the "Conversion Price") shall be $1, subject to adjustment as set forth in
paragraph (d) below.
(b) The holder of any shares of Series A Preferred Stock may exercise the
conversion right pursuant to paragraph (a) above by delivering to the
Corporation the certificate or certificates for the shares to be converted, duly
endorsed or assigned in blank or to the Corporation (if required by it),
accompanied by written notice stating that the holder elects to convert such
shares and stating the name or names (with address) in which the certificate or
certificates for the shares of Common Stock are to be issued. Conversion shall
be deemed to have been effected on the date when such delivery is made (the
"Conversion Date"). As promptly as practicable thereafter, the Corporation shall
issue and deliver to or upon the written order of such holder, to the place
designated by such holder, a certificate or certificates for the number of full
shares of Common Stock to which such holder is entitled, and a cash amount in
respect of any fractional interest in a share of Common Stock as provided in
paragraph (c) below. The person in whose name the certificate or certificates
for Common Stock are to be issued shall be deemed to have become a stockholder
of record on the applicable Conversion Date unless the transfer books of the
Corporation are closed on that date, in which event such person shall be deemed
to have become a stockholder of record on the next succeeding date on which the
transfer books are open, but the Conversion Price shall be that in effect on the
Conversion Date. Upon conversion of only a portion of the number of shares
covered by a certificate representing shares of Series A Preferred Stock
surrendered for conversion, the Corporation shall issue and deliver to or upon
the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Series A Preferred Stock representing the unconverted
portion of the certificate so surrendered.
(c) No fractional shares of Common Stock or scrip shall be issued upon
conversion of shares of Series A Preferred Stock. The number of full shares of
Common Stock issuable upon conversion of Series A Preferred Stock shall be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock to be converted. Instead of any fractional shares of Common Stock which
would otherwise be issuable upon conversion
6
<PAGE>
of any shares of Series A Preferred Stock, the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal to the
product of (i) the price of one share of Common Stock as determined in good
faith by the Board and (ii) such fractional interest. The holders of fractional
interests shall not be entitled to any rights as stockholders of the Corporation
in respect of such fractional interests.
(d) The Conversion Price shall be subject to adjustment from time to time
as follows:
(i) If the Corporation shall, at any time or from time to time after
the Original Issuance Date and before the earlier to occur of (1) the
consummation of any Qualified Capital Financing and (2) the first
anniversary of the Original Issuance Date, issue any shares of Common Stock
other than Excluded Stock (as defined in clause (iv) below) without
consideration or for a consideration per share less than the Conversion
Price in effect immediately prior to the issuance of such Common Stock,
then the Conversion Price in effect immediately prior to each such issuance
shall forthwith be lowered to a price equal to such consideration par
share.
(ii) If the Corporation shall at any time or from time to time after
the earlier to occur of (1) the consummation of any Qualified Capital
Financing and (2) the first anniversary of the Original Issuance Date issue
any shares of Common Stock other than Excluded Stock without consideration
or for a consideration per share less than the Conversion Price in effect
immediately prior to the issuance of such Common Stock, then the Conversion
Price in effect immediately prior to each such issuance shall forthwith be
lowered to a price equal to the quotient obtained by dividing:
(A) an amount equal to the sum of (x) the total number of shares
of Common Stock outstanding (including any shares of Common Stock
deemed to have been issued pursuant to subdivision (C) of clause (iii)
below) immediately prior to such issuance, multiplied by the
Conversion Price in effect immediately prior to such issuance, and (y)
the consideration received by the Corporation upon such issuance; by
(B) the total number of shares of Common Stock outstanding
(including any shares of Common Stock deemed to have been issued
pursuant to subdivision (C) of clause (iii) below) immediately after
the issuance of such Common Stock.
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(iii) For the purposes of any adjustment of the Conversion Price
pursuant to clause (i) or (ii) above, the following provisions shall be
applicable:
(A) In the case of the issuance of Common Stock for cash in a
public offering or private placement, the consideration shall be
deemed to be the amount of cash paid therefor after deducting
therefrom any discounts, commissions or placement fees payable by the
Corporation to any underwriter or placement agent in connection with
the issuance and sale thereof.
(B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Corporation,
irrespective of any accounting treatment.
(C) In the case of the issuance of options to purchase or rights
to subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities:
(1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights
to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the
manner provided in subdivisions (A) and (B) above), if any,
received by the Corporation upon the issuance of such options or
rights plus the minimum purchase price provided in such options
or rights for the Common Stock covered thereby;
(2) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible
or exchangeable securities and
8
<PAGE>
subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities, options, or rights were
issued and for a consideration equal to the consideration
received by the Corporation for any such securities and related
options or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the
conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be
determined in the manner provided in subdivisions (A) and (3)
above);
(3) on any change in the number of shares or exercise price
of Common Stock deliverable upon exercise of any such options or
rights or conversions of or exchange for such securities, other
than a change resulting from the antidilution provisions thereof,
the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment made
upon the issuance of such options, rights or securities not
converted prior to such change or options or rights related to
such securities not converted prior to such change been made
upon the basis of such change; and
(4) on the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible
or exchangeable securities, the Conversion Price shall forthwith
be readjusted to such Conversion Price as would have obtained had
the adjustment made upon the issuance of such options, rights,
securities or options or rights related to such securities been
made upon the basis of the issuance of only the number of shares
of Common Stock actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such
9
<PAGE>
securities, or upon the exercise of the options or rights related
to such securities and subsequent conversion or exchange thereof.
(iv) "Excluded Stock" means (1) 750,000 shares of Common Stock, and
options therefor, reserved in accordance with Section 8.13 of the
Securities Purchase Agreement; (2) shares of Cannon Stock issued upon
conversion of shares of Series A Preferred Stock; (3) shares of Preferred
Stock or Common Stock issued upon conversion of the Note; (4) shares of
Preferred Stock issued upon exercise of the Warrant dated September 19,
1995 (the "Warrant"), issued by the Corporation under the Securities
Purchase Agreement; (5) shares of Common Stock issued upon conversion of
the shares of Preferred Stock issued upon the conversion of the Note and
exercise of the Warrant; (6) shares of Common Stock issued by the
Corporation as a stock dividend or upon any subdivision, split-up or
combination of shares of Common Stock; and (7) securities that were
declared to be "Excluded Stock" for purposes of this Section by the holders
of a majority of the shares of Series A Preferred Stock.
(v) If, at any time after the Original Issuance Date, the number of
shares of Common Stock outstanding is increased by a stock dividend payable
in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, following the record date for the determination of
holders of Common Stock entitled to receive such stock dividend,
subdivision or split-up, the Conversion Price shall be appropriately
decreased so that the number of shares of Common Stock issuable on
conversion of each share of Series A Preferred Stock shall be increased in
proportion to such increase in outstanding shares.
(vi) If, at any time after the Original Issuance Date, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date for
such combination, the Conversion Price shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each
share of Series A Preferred Stock shall be decreased in proportion to such
decrease in outstanding shares.
(vii) In the event of any capital reorganization of the Corporation,
any reclassification of the stock of the Corporation (other than a change
in par value or front par value to no par value or from no par value to par
value or as a result of a stock dividend or subdivision, split up or
combination of shares), or any consolidation or merger
10
<PAGE>
of the Corporation, each share of Series A Preferred Stock shall after such
reorganization, reclassification, consolidation, or merger be convertible
into the kind and number of shares of stock or other securities or
property of the Corporation or of the corporation resulting from such
consolidation or surviving such merger to which the holder of the number of
shares of Common Stock deliverable (immediately prior to the time of such
reorganization, reclassification, consolidation or merger) upon conversion
of such share of Series A Preferred Stock would have been entitled upon
such reorganization, reclassification, consolidation or merger. The
provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations or mergers.
(viii) All calculations under this paragraph shall be made to the
nearest one hundredth (1/100) of a cent or the nearest one tenth (1/10) of
a share, as the case may be.
(ix) In any case in which the provisions of this paragraph (d) shall
require that an adjustment shall become effective immediately after a
record date of an event, the Corporation may defer until the occurrence of
such event (i) issuing to the holder of any share of Series A Preferred
Stock converted after such record date and before the occurrence of such
event the shares of capital stock issuable upon such conversion by reason
of the adjustment required by such event in addition to the shares of
capital stock issuable upon such conversion before giving effect to such
adjustments, and (ii) paying to such holder any amount in cash in lieu of a
fractional share of capital stock pursuant to paragraph (c) above;
provided, however, that the Corporation shall deliver to such holder an
appropriate instrument evidencing such holder's right to receive such
additional shares and such cash.
(e) Whenever the Conversion Price shall be adjusted as provided in
paragraph (d), the Corporation shall make available for inspection during
regular business hours, at its principal executive offices or at such other
place as may be designated by the Corporation, a statement, signed by its chief
executive officer, showing in detail the facts requiring such adjustment and the
Conversion Price that shall be in effect after such adjustment. The Corporation
shall also cause a copy of such statement to be sent by first class certified
mail, return receipt requested and postage prepaid, to each holder of Series A
Preferred Stock at such holder's address appearing on the Corporation's records.
Where appropriate, such copy may be given in advance and may be included as part
of any notice required to be mailed under the provisions of paragraph (f) below.
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<PAGE>
(f) If the Corporation shall propose to take any action of the types
described in clauses (v), (vi) or (vii) of paragraph (d) above, the Corporation
shall give notice to each holder of shares of Series A Preferred Stock, in the
manner set forth in paragraph (e) above, which notice shall specify the record
date, if any, with respect to any such action and the data on which such action
is to take place. Such notice shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
(to the extent such effect may be known at the date of such notice) on the
Conversion Price and the number, kind or class of shares or other securities or
property which shall be deliverable or purchasable upon the occurrence of such
action or deliverable upon conversion of shares of Series A Preferred Stock. In
the case of any action. which would require the fixing of a record date, such
notice shall be given at least 20 days prior to the date so fixed, and in case
of all other action, such notice shall be given at least 30 days prior to the
taking of such proposed action. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any such action.
(g) The Corporation shall reserve, and at all times from and after the date
of Original Issuance Date keep reserved, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Series A Preferred Stock, sufficient
shares of Common Stock to provide for the conversion of all outstanding shares
of Series A Preferred Stock.
(h) At any time the Corporation makes or fixes a record date for the
determination of holders of Canon Stock entitled to receive a dividend or other
distribution payable in securities of the Corporation other than shares of
Common Stock, provision shall be made so that each holder of shares of Series A
Preferred Stock shall receive upon conversion thereof, in addition to the shares
of Common Stock receivable thereupon, the number of securities of the
Corporation which it would have received had its shares of Series A Preferred
Stock been converted into shares of Common Stock on the date of such event and
had such holder thereafter, during the period from the date of such event to and
including the date of conversion, retained such securities receivable by it
pursuant to this paragraph during such period, subject to the sum of all other
adjustments called for during such period under this Section with respect to the
rights of such holder of shares of Series A Preferred Stock.
6. Mandatory Conversion.
(a) Upon the consummation of the first underwritten public offering for
the account of the Corporation of Common Stock pursuant to a
registration statement filed under the Securities Act of 1933 at an offering
price per share of Common
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<PAGE>
Stock to the public of not less than the Threshold Amount and with aggregate
proceeds (net of underwriting discounts and commissions) to the Corporation of
not less than $10,000,000 (a "Qualified Public Offering"), each share of Series
A Preferred stock then outstanding shall, by virtue of and simultaneously with
such Qualified Public Offering, be deemed automatically converted into the
number of fully paid and nonassessable shares of Common Stock equal to the
quotient obtained by dividing (i) $1 by (ii) the Conversion Price, as last
adjusted and then in effect. "Threshold Amount" means the quotient obtained by
dividing (A) $75,000,000 by (B) the number of shares of Common Stock outstanding
immediately after such public offering.
(b) As promptly as practicable after the date of consummation of any
Qualified Public Offering and the delivery to the Corporation of the certificate
or certificates for the shares of Series A Preferred Stock which have been
convened, duly endorsed or assigned in blank to the Corporation (if required by
it), the Corporation shall issue and deliver to or upon the written order of
each holder of Series A Preferred Stock, to the place designated by such holder,
a certificate or certificates for the number of full shares of Common Stock to
which such holder is entitled, and a cash amount in respect of any fractional
interest in a share of Common Stock as provided in paragraph (c) below. The
person in whose name the certificate or certificates for Common Stock are to be
issued shall be deemed to have become a stockholder of record on the date of
such Qualified Public Offering and on such date the shares of Series A Preferred
Stock shall cease to be outstanding, whether or not the certificates
representing such shares have been received by the Corporation.
(c) The provisions set forth in Section 5(c) shall apply to the conversion
of Series A Preferred Stock pursuant to this Section in the same manner as they
apply to the conversion of Series A Preferred Stock pursuant to Section 5.
THIRD
The Corporation has not received any payment for any of its stock. This
Amendment was duly adopted by the Board of Directors of the Corporation, acting
by unanimous written consent in lieu of meeting effective as of this date,
pursuant to Section 243. of the General Corporation Law of the State of
Delaware.
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<PAGE>
IN WITNESS WHEREOF, this Certificate of Amendment has been signed by an
authorized officer of this Corporation this 19 day of September, 1995.
i VILLAGE INC.
By: /s/ CANDICE CARPENTER
------------------------------------
Name: Candice Carpenter
Title: CEO
Attest:
/s/ AMY RYBERG 9/19/95
- ----------------------------
Name: Amy Ryberg
Title: Secretary
14
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
i VILLAGE INC.
FIRST
The name of the corporation is i VILLAGE INC. (the "Corporation").
SECOND
Article Fourth of the Certificate of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
FOURTH: The Corporation shall be authorized to issue 40,000,000 shares of
all classes, consisting of (i) 25,000,000 shares of common stock, $.0005 par
value (the "Cannon Stock"), and (ii) 15,000,000 shares of preferred stock,
$.0005 par value.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the preferred stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issuance of the stares thereof, to determine and fix such voting powers,
full or limited, or no voting powers, and such designations, preferences and
relative participating, optional or other special rights, and qualifications
limitations or restrictions thereof, including, without limitation thereof,
dividend rights, conversion rights, voting rights, redemption privileges and
liquidation preferences, as shall be stated and expressed in such resolution or
resolutions, all to the full extent now or hereafter permitted by the General
Corporation Law. Of such preferred stock, 1,000,000 shares shall be designated
as "Series A Preferred Stock", 5,669,846 shares shall be designated as "Series B
Preferred Stock and 300,000 shares shall be designated as "Series B-1. Preferred
Stock." (For convenience of reference, the shares of Series A Preferred Stock,
Series B Preferred Stock and Series B-1. Preferred Stock are sometimes
hereinafter collectively referred to as the "Preferred Stock".) The Series A
Preferred Stock, Series B Preferred Stock and Series B-1 Preferred stock shall
have the following designations, powers,
<PAGE>
preferences and other rights, and qualifications, limitations and restrictions:
1. Dividends. The holders of Preferred Stock shall be entitled to share in
any dividends declared and paid upon or set aside for the Common Stock of the
Corporation, pro rata in accordance with the number of shares of Common Stock
into which such shares of Preferred Stock are then convertible pursuant to
Section 5.
2. Liquidation.
(a) Upon a Liquidation (as defined below), after payment or provision for
payment of the debts and other liabilities of the Corporation and all amounts
which the holders of any class of capital stock ranking senior to the Preferred
Stock shall be entitled to receive upon such Liquidation, the holders of Series
A Preferred Stock, the holders of Series B Preferred Stock and the holders of
Series B-1 Preferred Stock shall be entitled to receive, on a pari passu basis
in accordance with their respective Preference Amounts, out of the remaining
assets of the Corporation available for distribution to its stockholders, with
respect to each share of Series A Preferred Stock an amount (the "Series A
Preference Amount") equal to the sum of (i) $1. and (ii) all declared but unpaid
dividends payable with respect to such share under Section 1, and with respect
to each share of Series B Preferred Stock and each share of Series B-1 Preferred
Stock an amount (the "Series B Preference Amount"; and the Series A Preference
Amount and Series B Preference Amount being sometimes hereinafter collectively
referred to as the "Preference Amount") equal to the sum of (1) $2.50 and (ii)
all declared but unpaid dividends payable with respect to such Share under
Section 1, in each case, before any distribution shall be made to the holders of
the Common Stock or any other class of capital stock of the Corporation ranking
junior to the Preferred Stock. If upon any Liquidation the assets of the
Corporation available for distribution to its stockholders shall be insufficient
to pay the holders of Preferred Stock the full respective Preference Amounts to
which they shall be entitled, respectively, the holders of Preferred Stock shall
share ratably in any distribution of assets based on the respective amounts
which would be payable to them on or with respect to the shares of Preferred
Stock held by them upon such distribution pursuant to this Section 2 if all
amounts payable on or with respect to such shares were paid in full.
(b) Upon any Liquidation, the holders of Series A Preferred Stock shall,
after any distribution to such holders of the full amount to which they shall be
entitled under paragraph (a) above, not share in the distribution of the
remaining assets of the Corporation.
2
<PAGE>
(c) For purposes of this Section 2, a Corporate Transaction (as defined
below) shall be treated as a Liquidation and shall entitle the holders of
Preferred Stock to receive, upon the consummation of such Corporate Transaction,
consideration in the same form as is to be provided in such Corporate
Transaction (whether cash, securities, other property or any combination
thereof), having a value (as determined in accordance with the next sentence)
equivalent to the amounts to which such holders of Preferred Stock would
otherwise have been entitled pursuant to Section 2(a) assuming such Corporate
Transaction had constituted a Liquidation within the meaning of said Section 2
(a). In the event that any distribution pursuant to the preceding sentence shall
be payable in a form other than cash, the value thereof shall be its fair market
value as determined in good faith by the Board of Directors of the Company.
(d) As used herein, the following terms shall have the following
respective meanings:
(i) "Corporate Transaction" means (i) any consolidation or merger of
the Corporation, other than any merger or consolidation resulting in the
holders of the capital stock of the Corporation entitled to vote for the
election of directors holding a majority of the capital stock of the
surviving or resulting entity entitled to vote for the election of
directors, (ii) any person or entity (including any affiliates thereof)
becoming the holder of a majority of the capital stock of the Corporation
entitled to vote for the election of directors, or (iii) any sale or other
disposition by the Corporation of all or substantially all of its assets.
(ii) "Liquidation" means any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, other than any
dissolution, liquidation or winding up in connection with any
reincorporation of the Corporation in another jurisdiction.
3. Voting Rights.
(a) In addition to the rights provided by law or in the Corporation's
By-laws, each share of Series A Preferred Stock and Series B Preferred Stock
shall entitle the holder thereof to such number of votes as shall equal the
nearest whole number of shares of Common Stock into which such share of Series A
Preferred Stock and Series B Preferred Stock is then convertible pursuant to
Section 4. Except as provided in paragraphs (b) and (c] below or as otherwise
provided by law, the holders of Series A Preferred Stock and Series B Preferred
Stock shall be entitled to vote on all matters as to which holders of Common
Stock shall be entitled to vote, in the same manner and with the same effect as
such holders of Common Stock,
3
<PAGE>
voting together with the holders of Common Stock as one class. Except as
otherwise required by law, all shares of Series B-1 Preferred Stock shall be
non-voting, and the holders thereof shall not be entitled to vote on any
matters.
(b) The Corporation shall not, without the affirmative consent or approval
of each of (i) the holders of a majority of the shares of Series A Preferred
Stock then outstanding and (ii) the holders of at least 60% of the shares of
Series B Preferred Stock then outstanding, each voting separately as a class
(such vote, in the case of clauses (A), (B), (C) and (D) below, being required
only of the series so affected):
(A) authorize, create, designate or establish any class or series of
capital stock ranking senior to such series of Preferred Stock or
reclassify any shares of Common Stock into shares having any preference or
priority as to dividends or assets superior to any such preference or
priority of such series of Preferred Stock;
(B) in any other manner alter or change the powers, preferences, or
rights, or qualifications, limitations or restrictions thereof, of the
shares of such series of Preferred Stock as to affect them adversely;
(C) in any other manner amend the Certificate of Incorporation of the
Corporation so as to materially adversely affect the powers, preferences or
rights, or qualifications, limitations or restrictions thereof, of the
shares of such series of Preferred Stock, except (1) to authorize, create,
designate or establish any class or series of capital stock ranking, with
respect to voting rights or rights to dividends or assets, pari passu with
or junior to such series of Preferred Stock and (2) that the number of
shares of Common Stock that the Corporation is authorized to issue may,
without separate class vote, be increased or decreased from time to time by
the affirmative vote of the holders of a majority of the capital stock of
the Corporation entitled to vote thereon;
(D) amend the By-laws of the Corporation in any manner that would
materially adversely affect the powers, preferences or rights, or
qualifications, limitations or restrictions thereof, of the shares of such
series of Preferred Stock;
4
<PAGE>
(E) consummate any Corporate Transaction;
(F) directly or indirectly pay or declare any dividend or make any
distribution upon, or redeem, retire, repurchase or otherwise acquire, any
shares of capital stock of the Corporation, other than (i) shares of
Preferred Stock or (ii) in accordance with Sections 3.2 and 3.4 of the
Amended and Restated Stockholders' Agreement dated as of the Original
Issuance Date, among the Corporation and its stockholders named therein;
(G) sell, transfer, or grant any lien or encumbrance on any
intellectual property right of the Corporation, other than licenses granted
in the ordinary course of business of the Corporation; or
(H) approve or authorize any Liquidation or any recapitalization or
reorganization of the Corporation.
4. Optional Conversion.
(a) Upon the terms set forth in this Section, each holder of shares of
Preferred Stock shall have the right, (x) in the case of Series A Preferred
Stock and Series B Preferred Stock, at such holder's option, at any time and
from time to time, and (y) in the case of Series B-1 Preferred Stock, if and
only to the extent permitted under the provisions of this Section 4(a), to
convert any of such shares into the number of fully paid and nonassessable
shares of Common Stock equal to the quotient obtained by dividing (i) (A) in the
case of the Series A Preferred Stock, the product of $1 and the number of shares
of Series A Preferred Stock being converted, and (B) in the case of the Series B
Preferred Stock and Series B-1 Preferred Stock, the product of $2.50 and the
number of shares of Series B Preferred Stock or Series B-1 Preferred Stock (as
the case may be) being converted, by (ii] the applicable Conversion Price (as
defined below) therefor, as last adjusted and then in effect, and in addition,
in the case of the Series B-1 Preferred Stock (in lieu of converting into Common
Stock), into an equal number of shares of Series B Preferred Stock, by surrender
of the certificates representing the shares of Preferred Stock to be converted.
The conversion price per share at which shares of Common Stock shall be issuable
upon conversion of shares of Preferred Stock shall initially be $1 for the
Series A Preferred Stock and $2.50 for the Series B Preferred Stock and the
Series B-1 Preferred Stock (as to each, the "Conversion Price"), subject to
adjustment as set forth in paragraph (d) below. Each holder of shares of Series
B-1 Preferred Stock shall have the right, at such time as such holder and its
affiliates would hold, in the aggregate,
5
<PAGE>
voting capital stock of the Corporation representing less than nineteen and
nine-tenths (19.9%) percent of the then outstanding voting capital stock of the
Corporation (assuming solely for the purpose of such calculation that shares of
Series B-1 Preferred Stock then held by such holder or any affiliate thereof
constituting in the aggregate at least twenty-five (25%) percent of the number
of shares of Series B-1. Preferred Stock held by such holder on the Original
Issuance Date (as defined below) (the "Minimum Number of Shares") would entitle
such holder to such number of votes as shall equal the nearest whole number of
shares of Common Stock into which said shares of Series B-1 Preferred Stock
would then be convertible but for the provisions of this Section 4 (a)), to
convert up to that number of such holder's shares of Series B-1 Preferred Stock
(but in no event representing less than the Minimum Number of Shares), that,
after giving effect to such conversion, would result in such holder and its
affiliates holding, in the aggregate, voting capital stock of the Corporation
representing less than nineteen and nine-tenths (19.9%) percent of the then
outstanding voting capital stock of the Corporation into, at the option of the
holder thereof, either (a) an equal number of fully paid and nonassessable
shares of Series B Preferred Stock or (ii) that number of shares of Common Stock
as is determined in accordance with the foregoing provisions of this Section
4(a). Shares of Series B-1 Preferred Stock shall be converted into shares of
Series B Preferred Stock or Common Stock (as requested by the holder thereof),
as aforesaid, within five business days of written notice from such holder(s) of
Series B-1 Preferred Stock to the Corporation requesting that the specified
number of such holder's shares of Series B-1 Preferred Stock be converted into
shares of Series B Preferred Stock or Common Stock (as requested by the holder
thereof), and otherwise in accordance with Section 4(b). As used herein, the
term "Original Issuance Date" shall mean the date of original issuance of the
first share of Series B Preferred Stock.
(b) The holder of any shares of Preferred Stock may exercise the conversion
right pursuant to paragraph (a) above by delivering to the Corporation the
certificate or certificates for the shares to be converted, duly endorsed or
assigned in blank or to the Corporation (if required by it), accompanied by
written notice stating that the holder elects to convert such shares and stating
the name or names (with address) in which the certificate or certificates for
the shares of Common Stock are to be issued. Conversion shall be deemed to have
been effected on the date when such delivery is made (the "Conversion Date"). As
promptly as practicable thereafter, the Corporation shall issue and deliver to
or upon the written order of such holder, to the place designated by such
holder, a certificate or certificates for the number of full shares of Common
Stock (in the case of Series A Preferred Stock and Series B Preferred Stock) or
Series B Preferred Stock (in the case of Series B-1
6
<PAGE>
Preferred Stock) to which such holder is entitled, and a cash amount in respect
of any fractional interest in a share of Common Stock (in the case of Series A
Preferred Stock and Series B Preferred Stock) or Series B Preferred Stock (in
the case of Series B-1 Preferred Stock) as provided in paragraph (c) below. The
person in whose name the certificate or certificates for Common Stock (in the
case of Series A Preferred Stock and Series B Preferred Stock) or Series B
Preferred Stock (in the case of Series B-1 Preferred Stock) are to be issued
shall be deemed to have become a stockholder of record on the applicable
Conversion Date unless the transfer books of the Corporation are closed on that
date, in which event such person shall be deemed to have become a stockholder of
record on the next succeeding date on which the transfer books are open, but the
Conversion Price shall be that in effect on the Conversion Date. Upon conversion
of only a portion of the number of shares covered by a certificate representing
shares of Preferred Stock surrendered for conversion, the Corporation shall
issue and deliver to or upon the written order of the holder of the certificate
so surrendered for conversion, at the expense of the Corporation, a new
certificate covering the number of shares of Preferred Stock representing the
unconverted portion of the certificate so surrendered.
(c) No fractional shares of Common Stock (in the case of Series A Preferred
Stock or Series B Preferred Stock) or Series B Preferred Stock (in the case of
Series B-1 Preferred Stock) or scrip shall be issued upon conversion of shares
of Preferred Stock. The number of full shares of Common Stock issuable upon
conversion of Preferred Stock shall be computed on the basis of the aggregate
number of shares of Preferred Stock to be converted. Instead of any fractional
shares of Common Stock (in the case of Series A Preferred Stock or Series B
Preferred Stock) or Series B Preferred Stock (in the case of Series B-1
Preferred Stock) which would otherwise be issuable upon conversion of any shares
of Preferred Stock, the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to the product of (i) the price of
one share of Common Stock (in the case of Series A Preferred Stock or Series B
Preferred Stock) or Series B Preferred Stock (in the case of Series B-1
Preferred Stock) as determined in good faith by the Board and (ii) such
fractional interest. The holders of fractional interests shall not be entitled
to any rights as stockholders of the Corporation in respect of such fractional
interests.
(d) The Conversion Price applicable to the Series A Preferred Stock, the
Series B Preferred Stock and/or the Series B-1 Preferred Stock (as the case may
be) shall be subject to adjustment from rime to time as follows:
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<PAGE>
(i) If the Corporation shall at any time or from time to time after
the Original Issuance Date issue any shares of Common Stock (including
shares of Common Stock deemed to be issued pursuant to subdivision (C) of
clause (ii) below) other than Excluded Stock (as defined in clause (iii)
below) without consideration or for a consideration per share less than the
Conversion Price applicable to such series of Preferred Stock in effect
immediately prior to the issuance of such Common Stock, then the applicable
Conversion Price in effect immediately prior to each such issuance shall
forthwith be lowered to a price equal to the quotient obtained by dividing:
(A) an amount equal to the sum of (x) the total number of shares
of Common Stock outstanding (including any shares of Common Stock
deemed to have been issued pursuant to subdivision (C) of clause (ii)
below) immediately prior to such issuance, multiplied by the
applicable Conversion Price in effect immediately prior to such
issuance, and (y) the consideration received by the Corporation upon
such issuance; by
(B) the total number of shares of Common Stock outstanding
(including any shares of Common Stock deemed to have been issued
pursuant to subdivision (C) of clause (ii) below) immediately after
the issuance of such Common Stock.
(ii) For the purposes of any adjustment of the Conversion Price
pursuant to clause (i) above, the following provisions shall be applicable:
(A) In the case of the issuance of Common Stock for cash in a
public offering or private placement, the consideration shall be
deemed to be the amount of cash paid therefor after deducting
therefrom any discounts, commissions or placement fees payable by the
Corporation to any underwriter or placement agent in connection with
the issuance and sale thereof.
(B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Corporation,
irrespective of any accounting treatment.
8
<PAGE>
(C) The issuance after the Original Issuance Date of options to
purchase or rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable
securities shall be deemed to be an issuance of Common Stock for
purposes of clause (i) above. In the case of any such issuance of
options to purchase or rights to subscribe for Common Stock,
securities by their terms convertible into or exchangeable for Common
Stock, or options to purchase or rights to subscribe for such
convertible or exchangeable securities:
(1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights
to subscribe for Cannon Stock shall be deemed to have been issued
at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the
manner provided in subdivisions (A) and (B) above), if any,
received by the Corporation upon the issuance of such options or
rights plus the minimum purchase price provided in such options
or rights for the Common Stock covered thereby;
(2) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such
securities, options, or rights were issued and for a
consideration equal to the consideration received by the
Corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if any, to
be received by the Corporation upon the conversion or exchange of
such securities or the
9
<PAGE>
exercise of any related options or rights (the consideration in
each case to be determined in the manner provided in subdivisions
(A) and (B) above);
(3) on any change in the number of shares or exercise price
of Common Stock deliverable upon exercise of any such options or
rights or conversions of or exchange for such securities, other
than a change resulting from the antidilution provisions thereof,
the applicable Conversion Price shall forthwith be readjusted to
such Conversion Price as would have obtained had the adjustment
made upon the issuance of such options, rights or securities not
converted prior to such change or options or rights related to
such securities not converted prior to such change been made upon
the basis of such change; and
(4) on the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible
or exchangeable securities, the applicable Conversion Price shall
forthwith be readjusted to such Conversion Price as would have
obtained had the adjustment made upon the issuance of such
options, rights, securities or options or rights related to such
securities been made upon the basis of the issuance of only the
number of shares of Common Stock actually issued upon the
exercise of such options or rights, upon the conversion or
exchange of such securities, or upon the exercise of the options
or rights related to such securities and subsequent conversion or
exchange thereof.
(iii) "Excluded Stock" means (A) up to 1,550,000 shares (as
constituted on the Original Issuance Date) of Common Stock, and options
therefor, issued or granted from time to time to employees, directors and
officers of and consultants to the Corporation pursuant to agreements,
plans or arrangements approved by the Board of Directors;
10
<PAGE>
(B) shares of Series B Preferred Stock issued upon exercise or exchange of
stock subscription warrants dated September 19, 1995 and the Original
Issuance Date to purchase shares of Series B Preferred Stock; (C) shares of
Common Stock issued upon conversion of shares of Preferred Stock; (D)
shares of Common Stock issued by the Corporation as a stock dividend or
upon any subdivision, split-up or combination of shares of Common Stock;
(B) shares of Series B Preferred Stock issued upon conversion of shares of
Series B-1 Preferred Stock; and (F) securities that were declared to be
"Excluded Stock" for purposes of this Section by the holders of at least
60% of the shares of Preferred Stock.
(iv) If, at any time after the Original Issuance Date, the number of
shares of Common Stock outstanding is increased by a stock dividend payable
in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, following the record date for the determination of
holders of Common Stock entitled to receive such stock dividend,
subdivision or split-up, the Conversion Price shall be appropriately
decreased so that the number of shares of Common Stock issuable on
conversion of each share of Preferred Stock shall be increased in
proportion to such increase in outstanding shares.
(v) If, at any time after the Original Issuance Date, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date for
such combination, the Conversion Price shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each
share of Preferred Stock shall be decreased in proportion to such decrease
in outstanding shares.
(vi) In the event of any capital reorganization of the Corporation,
any reclassification of the stock of the Corporation (other than a change
in par value or from par value to no par value or from no par value to par
value or as a result of a stock dividend or subdivision, split-up or
combination of shares), or any consolidation or merger at the Corporation
(other than a consolidation or merger in which the Corporation is the
continuing corporation and which does not result in any change in the
Common Stock), each share of Preferred Stock shall after such
reorganization, reclassification, consolidation or merger (unless, in the
case of a consolidation or merger, payment shall have been made to the
holders of Preferred Stock of the full amount to which they shall have been
entitled pursuant to Section 2(c) of this Article Fourth) be convertible
into the kind and number of shares of stock or other securities or property
of the Corporation or of the
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<PAGE>
corporation resulting from such consolidation or surviving such merger to
which the holder of the number of shares of Common Stock deliverable
(immediately prior to the time of such reorganization, reclassification,
consolidation or merger) upon conversion of such share of Preferred Stock
would have been entitled upon such reorganization, reclassification,
consolidation or merger. The provisions of this clause shall similarly
apply to successive reorganizations, reclassifications, consolidations or
mergers.
(vii) All calculations under this paragraph shall be made to the
nearest one hundredth (1/100) of a cent or the nearest one tenth (1/10) of
a share, as the case may be.
(viii) In any case in which the provisions of this paragraph (d) shall
require that an adjustment shall become effective immediately after a
record date of an event, the Corporation may defer until the occurrence of
such event (i) issuing to the holder of any share of Preferred Stock
converted after such record date and before the occurrence of such event
the shares of capital stock issuable upon such conversion by reason of the
adjustment required by such event in addition to the shares of capital
stock issuable upon such conversion before giving effect to such
adjustments, and (ii) paying to such holder any amount in cash in lieu of a
fractional share of capital stock pursuant to paragraph (c) above;
provided, however, that the Corporation shall deliver to such holder an
appropriate instrument evidencing such holder's right to receive such
additional shares and such cash.
(e) Whenever the Conversion Price shall be adjusted as provided in
paragraph (d), the Corporation shall make available for inspection during
regular business hours, at its principal executive offices or at such other
place as may be designated by the Corporation, a statement, signed by its chief
executive officer, showing in detail the facts requiring such adjustment and the
Conversion Price that shall be in effect after such adjustment. The Corporation
shall also cause a copy of such statement to be sent by first class certified
mail, return receipt requested and postage prepaid, to each holder of Preferred
Stock as to which the Conversion Price shall be so adjusted at such holder's
address appearing on the Corporation's records. Where appropriate, such copy may
be given in advance and may be included as part of any notice required to be
mailed under the provisions of paragraph (f) below.
(f) If the Corporation shall propose to take any action of the types
described in clauses (iv), (v) or (vi) of paragraph (d) above, the Corporation
shall give notice to each
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<PAGE>
holder of shares of Preferred Stock, in the manner set forth in paragraph (e)
above, which notice shall specify the record date, if any, with respect to any
such action and the date on which such action is to take place. Such notice
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Conversion Price and the number,
kind or class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or deliverable
upon conversion of shares of Preferred Stock. In the case of any action which
would require the fixing of a record date, such notice shall be given at least
20 days prior to the date so fixed, and in case of all other action, such notice
shall be given at least 30 days prior to the taking of such proposed action.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any such action.
(g) The Corporation shall reserve, and at all times from and after the date
of Original Issuance Date keep reserved, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Preferred Stock, sufficient shares
of Common Stock to provide for the conversion of all outstanding shares of
Preferred Stock.
(h) At any time the Corporation makes or fixes a record date for the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in securities of the Corporation other than shares of
Common Stock, provision shall be made so that each holder of shares of Preferred
Stock shall receive upon conversion thereof, in addition to the shares of Common
Stock receivable thereupon, the number of securities of the Corporation which it
would have received had its shares of Preferred Stock been converted into shares
of Cannon Stock on the date of such event and had such holder thereafter, during
the period from the date of such event to and including the date of conversion,
retained such securities receivable by it pursuant to this paragraph during such
period, subject to the sum of all other adjustments called for during such
period under this Section 4 with respect to the rights of such holder of shares
of Preferred Stock.
5. Mandatory Conversion.
(a) Upon the consummation of the first underwritten public offering for the
account of the Corporation of Common Stock pursuant to a registration statement
filed under the Securities Act of 1933, as amended, at an offering price par
share of Common Stock to the public that would reflect a post-offering market
valuation of the Company (based on all then outstanding shares of capital stock
and assuming the exercise of
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<PAGE>
all then outstanding options therefor) of at least $75,000,000 and with
aggregate proceeds (net of underwriting discounts and commissions) to the
Corporation of not less than $10,000,000 (a "Qualified Public Offering"), each
share of Preferred Stock then outstanding shall, by virtue of and simultaneously
with such Qualified Public Offering, be deemed automatically converted into the
number of fully paid and nonassessable shares of Common Stock equal to the
quotient obtained by dividing (i) (A) in the case of the Series A Preferred
Stock $1 and (B) in the case of the Series B Preferred Stock and the Series B-1
Preferred Stock $2.50, by (ii) the applicable Conversion Price, as last adjusted
and then in effect.
(b) As promptly as practicable after the date of consummation of any
Qualified Public Offering and the delivery to the Corporation of the certificate
or certificates for the shares of Preferred Stock which have been converted,
duly endorsed or assigned in blank to the Corporation (if required by it), the
Corporation shall issue and deliver to or upon the written order of each holder
of Preferred Stock, to the place designated by such holder, a certificate or
certificates for the number of full shares of Common Stock to which such holder
is entitled, and a cash amount in respect of any fractional interest in a share
of Common Stock as provided in paragraph (c) below. The person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed to
have become a stockholder of record on the date of such Qualified Public
Offering and on such date the shares of Preferred Stock shall cease to be
outstanding, whether or not the certificates representing such shares have been
received by the Corporation.
(c) The provisions set forth in Sections 4(b) and (c) shall apply to the
conversion of Preferred Stock pursuant to this Section in the same manner as
they apply to the conversion of Preferred Stock pursuant to Section 4.
THIRD
This Amendment was duly adopted by the Board of Directors of the
Corporation, acting by unanimous written consent in lieu of meeting effective as
of this date, pursuant to Section 242 of the General Corporation Law of the
State of Delaware and by the stockholders of the Corporation, acting by written
consent in lieu of a meeting effective as of this date pursuant to Section 228
of the General Corporation Law of the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, this Certificate of Amendment has been signed by an
authorized officer of this Corporation this 6 day of May, 1996
i VILLAGE INC.
By: /s/ CANDICE CARPENTER
------------------------------------
Name: Candice Carpenter
Title: Chairman & CEO
Attest:
/s/ BETH POLISH
- ----------------------------
Name: Beth Polish
Title: CFO, Senior Vice President-Corporate Development
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
i VILLAGE INC.
FIRST
The name of the corporation is i VILLAGE INC. (the "Corporation").
SECOND
Article Fourth of the Certificate of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
FOURTH: The Corporation shall be authorized to issue 60,000,000 shares of
all classes, consisting of (i) 35,000,000 shares of common stock, $.0005 par
value (the "Common Stock), and (ii) 25,000,000 shares of preferred stock, $.0005
par value.
Authority is hereby expressly granted to the Board of Directors, subject to
the provisions of Section 3 hereof, from time to time to issue the preferred
stock in one or more series, and in connection with the creation of any such
series, by resolution or resolutions providing for the issuance of the shares
thereof, to determine and fix such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative participating, optional
or other special rights, and qualifications limitations or restrictions thereof,
including, without limitation thereof, dividend rights, conversion rights,
voting rights, redemption privileges and liquidation preferences, as shall be
stated and expressed in such resolution or resolutions, all to the full extent
now or hereafter permitted by the General Corporation Law. Of such preferred
stock, 1,000,000 shares shall be designated as "Series A Preferred Stock",
5,629,846 shares shall be designated as "Series B Preferred Stock", 300,000
shares shall be designated as "Series B-1 Preferred Stock" and 11,338,384 shares
shall be designated as "Series C Preferred Stock". (For convenience of
reference, the shares of Series A Preferred Stock, Series B Preferred Stock,
Series B-1 Preferred Stock and Series C Preferred Stock are sometimes
hereinafter collectively referred to as the "Preferred Stock".) The Series A
Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock and Series
<PAGE>
C Preferred Stock shall have the following designations, powers, preferences and
other rights, and qualifications, limitations and restrictions:
1. Dividends. The holders of Preferred Stock shall be entitled to share in
any dividends declared and paid upon or set aside for the Common Stock of the
Corporation, pro rata in accordance with the number of shares of Common Stock
into which such shares of Preferred Stock are then convertible pursuant to
Section 5.
2. Liquidation.
(a) Upon a Liquidation (as defined below), after payment or provision for
payment of the debts and other liabilities of the Corporation and all amounts
which the holders of any class of capital stock ranking senior to the Preferred
Stock shall be entitled to receive upon such Liquidation,
(i) the holders of Series C Preferred Stock shall be entitled to
receive in accordance with their Series C Preference Amount (as hereinafter
defined), out of the remaining assets of the Corporation available for
distribution to its stockholders with respect to each share of Series C
Preferred Stock, an amount (the "Series C Preference Amount") equal to the
sum of (A) $1.954 and (B) all declared but unpaid dividends payable with
respect to such share under Section 1, before any distribution shall be
made to the holders of the Series A Preferred Stock, the Series B Preferred
Stock, the Series B-1 Preferred Stock, the Common Stock or any other class
of capital stock of the Corporation ranking junior to the Series C
Preferred Stock. If upon any Liquidation the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay
the holders of Series C Preferred Stock the full respective Series C
Preference Amounts to which they shall be entitled, respectively, the
holders of Series C Preferred Stock shall share ratably in any distribution
of assets based on the respective amounts which would be payable to them on
or with respect to the shares of Series C Preferred Stock held by them upon
such distribution pursuant to this Section 2 as if all amounts payable on
or with respect to such shares were paid in full.
(ii) After distribution to the holders of Series C Preferred Stock of
the full Series C Preference Amount set forth in section 2(a)(i), the
holders of Series A Preferred Stock, the holders of Series B Preferred
Stock and the holders of Series B-1 Preferred Stock shall be entitled to
receive, on a pari passu basis in accordance with their respective
Preference Amounts, out of the remaining assets of the Corporation
available for distribution to its stockholders, with respect to each share
of Series A Preferred Stock an amount (the "Series A
2
<PAGE>
Preference Amount") equal to the sum of (A) $1 and (B) all declared but
unpaid dividends payable with respect to such share under Section 1, and
with respect to each share of Series B Preferred Stock and each share of
Series B-1 Preferred Stock an amount (the "Series B Preference Amount"; and
the Series A Preference Amount, Series B Preference Amount and the Series C
Preference Amount being sometimes hereinafter collectively referred to as
the "Preference Amount") equal to the sum of (A) $2.267 and (B) all
declared but unpaid dividends payable with respect to such Share under
Section 1, in each case, before any distribution shall be made to the
holders of the Common Stock or any other class of capital stock of the
Corporation ranking junior to the Preferred Stock. If upon any Liquidation
the assets of the Corporation available for distribution to its
stockholders shall be insufficient to pay the holders of Series A Preferred
Stock, Series B Preferred Stock and Series B-1 Preferred Stock the full
respective Preference Amounts to which they shall be entitled,
respectively, the holders of Series A Preferred Stock, Series B Preferred
Stock and Series B-1 Preferred Stock shall share ratably in any
distribution of assets based on the respective amounts which would be
payable to them on or with respect to the shares of Series A Preferred
Stock, Series B Preferred Stock and Series B-1 Preferred Stock held by them
upon such distribution pursuant to this Section 2 as if all amounts payable
on or with respect to such shares were paid in full.
(b) Upon any Liquidation, the holders of Preferred Stock shall, after any
distribution to such holders of the full amount to which they shall be entitled
under paragraph (a) above, not share in the distribution of the remaining assets
of the Corporation.
(c) For purposes of this Section 2, a Corporate Transaction (as defined
below) shall be treated as a Liquidation and shall entitle the holders of
Preferred Stock to receive, upon the consummation of such Corporate Transaction,
consideration in the same form as is to be provided in such Corporate
Transaction (whether cash, securities, other property or any combination
thereof), having a value (as determined in accordance with the next sentence)
equivalent to the amounts to which such holders of Preferred Stock would
otherwise have been entitled pursuant to Section 2(a) assuming such Corporate
Transaction had constituted a Liquidation within the meaning of said Section
2(a); provided, however, that in the case of each share of Series C Preferred
Stock, an additional amount that, when added to the amount of declared but
unpaid dividends (if any) then payable with respect to such share of Series C
Preferred Stock, will constitute an amount representing a 10% (calculated daily
and compounded annually) internal rate of return (computed in accordance with
generally accepted financial practice) with respect to the Series C Preference
Amount of such
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<PAGE>
share calculated for the period commencing with the date of the original
issuance thereof and ending on the date of such Liquidation and in connection
with such calculation, the Corporation shall provide each holder of Series C
Preferred Stock with the information set forth in Section 4(f) within the time
period specified therein. In the event that any distribution pursuant to the
preceding sentence shall be payable in a form other than cash, the value thereof
shall be its fair market value as determined in good faith by the Board of
Directors of the Company; provided, however, that if the holders of 60% of the
then outstanding Preferred Stock shall dispute in writing such determination
within ten (10) business days of such determination, the Corporation shall
promptly engage a nationally-recognized independent investment banking firm or
independent competent appraisers, jointly selected by the Corporation and the
holders of at least 60% of the then outstanding Preferred Stock, to determined
the value of the non-cash assets and property to be distributed to the holders
of Preferred Stock pursuant to this Section 2, whose determination shall be
conclusive (the "Fair Market Value").
(d) As used herein, the following terms shall have the following respective
meanings!
(i) "Corporate Transaction" means (A) any consolidation or merger of
the Corporation, other than any merger or consolidation resulting in the
holders of the capital stock of the Corporation entitled to vote for the
election of directors holding a majority of the capital stock of the
surviving or resulting entity entitled to vote for the election of
directors, (B) any person or entity (including any affiliates thereof)
becoming the holder of a majority of the capital stock of the Corporation
entitled to vote for the election of directors, or (C) any sale or other
disposition by the Corporation of all or substantially all of its assets.
(ii) "Liquidation" means any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the corporation, other than any
dissolution, liquidation or winding up in connection with any
reincorporation of the Corporation in another jurisdiction.
3. Voting Rights.
(a) In addition to the rights provided by law or in the Corporation's
By-laws, each share of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock shall entitle the holder thereof to such number of
votes as shall equal the nearest whole number of shares of Common Stock into
which such share of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock is then convertible pursuant to Section 4. Except as
provided in paragraphs (b) and
4
<PAGE>
(c) below or as otherwise provided by law, the holders of Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock shall be entitled
to vote on all matters as to which holders of Common Stock shall be entitled to
vote, in the same manner and with the same effect as such holders of Common
Stock, voting together with the holders of Common Stock as one class. Except as
otherwise required by law, all shares of Series B-1 Preferred Stock shall be
non-voting, and the holders thereof shall not be entitled to vote on any
matters.
(b) The Corporation shall not, without the affirmative consent or approval
of each of (i) the holders of a majority of the shares of Series A Preferred
Stock then outstanding (with respect to clauses (A), (B), (C) and (D) below),
voting as a separate class, (ii) the holders of at least 60% of the shares of
Series B Preferred Stock then outstanding (with respect to clauses (A), (B), (C)
and (D) below), voting as a separate class and (iii) the holders of at least a
majority of the shares of Series A Preferred Stock and Series B Preferred Stock
then outstanding, voting together as a class (with respect to clauses (E) and
(F) below):
(A) authorize, create, designate or establish any class or series of
capital stock ranking senior to such series of Preferred Stock or
reclassify any shares of Common Stock into shares having any preference or
priority as to dividends or assets superior to any such preference or
priority of such series of Preferred Stock;
(B) in any other manner alter or change the powers, preferences, or
rights, or qualifications, limitations or restrictions thereof, of the
shares of such series of Preferred Stock as to affect them adversely;
(C) in any other manner amend the Certificate of Incorporation of the
Corporation so as to materially adversely affect the powers, preferences or
rights, or qualifications, limitations or restrictions thereof, of the
shares of such series of Preferred Stock, except (1) to authorize, create,
designate or establish any class or series of capital stock ranking, with
respect to voting rights or rights to dividends or assets, pari passu with
or junior to such series of Preferred Stock and (2) that the number of
shares of Common Stock that the Corporation is authorized to issue may,
without separate class vote, be increased or decreased from time to time by
the affirmative vote of the holders of a majority of the capital stock of
the Corporation entitled to vote thereon;
5
<PAGE>
(D) amend the By-laws of the Corporation in any manner that would
materially adversely affect the powers, preferences or rights, or
qualifications, limitations or restrictions thereof, of the shares of such
series of Preferred Stock;
(E) consummate any Corporate Transaction; or
(F) approve or authorize any Liquidation or any recapitalization or
reorganization of the Corporation.
(c) The Corporation shall not, without the affirmative consent or approval
of each of (i) the holders of at least 66 2/3% of the shares of Series C
Preferred Stock (with respect to clauses (A), (B), (C) and (D)) and (ii) the
holders of at least 60% of the shares of Series C Preferred Stock (with respect
to clauses (E), (F), (G) and (H)), voting separately as a class:
(A) authorize, create, designate or establish any class or series of
capital stock ranking senior to or pari passu with Series C Preferred Stock
or reclassify any shares of Common Stock into shares pari passu with or
having any preference or priority as to dividends or assets pari passu with
or superior to any such preference or priority of Series C Preferred Stock;
(B) in any other manner alter or change the powers, preferences, or
rights, or qualifications, limitations or restrictions thereof, of the
shares of Series C Preferred Stock as to affect them adversely;
(C) in any other manner amend the Certificate of Incorporation of the
Corporation so as to adversely affect the powers, preferences or rights, or
qualifications, limitations or restrictions thereof, of the shares of
Series C Preferred Stock, except to authorize, create, designate or
establish any class or series of capital stock ranking, with respect to
voting rights or rights to dividends or assets, junior to Series C
Preferred Stock;
(D) amend the By-laws of the Corporation in any manner that would
adversely affect the powers, preferences or rights, or qualifications,
limitations or restrictions thereof, of the shares of Series C Preferred
Stock;
6
<PAGE>
(E) consummate any Corporate Transaction;
(F) approve or authorize any Liquidation or any recapitalization or
reorganization of the Corporation;
(G) incur or guaranty any indebtedness for money borrowed, having a
maturity of twelve months or greater, in the excess of $5,000,000 in the
aggregate at any time outstanding; or
(H) increase or decrease the authorized number of shares of Series C
Preferred Stock, except as contemplated by Section 7.13 of the Series C
Agreement (as hereinafter defined).
(d) The Corporation shall not, without the affirmative consent or approval
of the holders of 66 2/3% of the shares of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock then outstanding, voting together
as a class:
(A) directly or indirectly pay or declare any dividend or make any
distribution upon, or redeem, retire, repurchase or otherwise acquire, any
shares of capital stock of the Corporation, other than in accordance with
Sections 3.2 and 3.4 of the Amended and Restated Stockholders' Agreement
dated as of the Original Issuance Date, among the Corporation and its
stockholders named therein;
(B) increase or decrease the authorized number of shares of Preferred
Stock or Common Stock; or
(C) sell, transfer, or grant any lien or encumbrance on any material
intellectual property right of the Corporation, other than licenses granted
in the ordinary course of business of the Corporation.
4. Optional Conversion.
(a) Upon the terms set forth in this Section, each holder of shares of
Preferred Stock shall have the right, (x) in the case of Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock, at such holder's
option, at any time and from time to time, and (y) in the case of Series B-1
Preferred Stock, if and only to the extent permitted under the provisions of
this Section 4(A), to convert any of such shares into the number of fully paid
and nonassessable shares of Common Stock equal to the quotient obtained by
dividing (i)(A) in the
7
<PAGE>
case of the Series A Preferred Stock, the product of $1 and the number of shares
of Series A Preferred Stock being converted, (B) in the case of the Series B
Preferred Stock and Series B-1 Preferred Stock, the product of $2.267 and the
number of shares of Series B Preferred Stock or Series B-1 Preferred Stock (as
the case may be) being converted, and (C) in the case of the Series C Preferred
Stock, the product of $1.954 and the number of shares of Series C Preferred
Stock being converted, by (ii) the applicable Conversion Price (as defined
below) therefor, as last adjusted and then in effect, and in addition, in the
case of the Series B-1 Preferred Stock (in lieu of converting into Common
Stock), into an equal number of shares of Series B Preferred Stock, by surrender
of the certificates representing the shares of Preferred Stock to be converted.
The conversion price per share at which shares of Common Stock shall be issuable
upon conversion of shares of Preferred Stock shall initially be $1 for the
Series A Preferred Stock, $2.267 for the Series B Preferred Stock and the Series
B-1 Preferred Stock and $1.954 for the Series C Preferred Stock (as to each, the
"Conversion Price"), subject to adjustment as set forth in paragraph (d) below.
Each holder of shares of Series B-1. Preferred Stock shall have the right, at
such time as such holder and its affiliates would hold, in the aggregate, voting
capital stock of the Corporation representing less than nineteen and nine-tenths
(19.9%) percent of the then outstanding voting capital stock of the Corporation
(assuming solely for the purpose of such calculation that shares of Series B-1
Preferred Stock then held by such holder or any affiliate thereof constituting
in the aggregate at least twenty-five (25%) percent of the number of shares of
Series B-1 Preferred Stock held by such holder on May 6, 1996 (the "Minimum
Number of Shares") would entitle such holder to such number of votes as shall
equal the nearest whole number of shares of Common Stock into which said shares
of Series B-1 Preferred Stock would then be convertible but for the provisions
of this Section 4(a), to convert up to that number of such holder's shares of
Series B-1 Preferred Stock (but in no event representing less than the Minimum
Number of Shares), that, after giving effect to such conversion, would result in
such holder and its affiliates holding, in the aggregate, voting capital stock
of the Corporation representing less than nineteen and nine-tenths (19.9%)
percent of the then outstanding voting capital stock of the Corporation into, at
the option of the holder thereof, either (a) an equal number of fully paid and
nonassessable shares of Series B Preferred Stock or (ii) that number of shares
of Common Stock as is determined in accordance with the foregoing provisions of
this Section 4(a). Shares of Series B-1 Preferred Stock shall be converted into
shares of Series B Preferred Stock or Common Stock (as requested by the holder
thereof), as aforesaid, within five business days of written notice from such
holder(s) of Series B-1 Preferred Stock to the Corporation requesting that the
specified number of such
8
<PAGE>
holder's shares of Series B-1 Preferred Stock be converted into shares of Series
B Preferred Stock or Common Stock (as requested by the holder thereof), and
otherwise in accordance with Section 4(b). As used herein, the term "Original
Issuance Date" shall mean the date of original issuance of the first share of
Series C Preferred Stock.
(b) The holder of any shares of Preferred Stock may exercise the conversion
right pursuant to paragraph (a) above by delivering to the Corporation the
certificate or certificates for the shares to be converted, duly endorsed or
assigned in blank or to the Corporation (if required by it), accompanied by
written notice stating that the holder elects to convert such shares and stating
the name or names (with address) in which the certificate or certificates for
the shares of Common Stock are to be issued. Conversion shall be deemed to have
been effected on the date when such delivery is made (the "Conversion Date"). As
promptly as practicable thereafter, the Corporation shall issue and deliver to
or upon the written order of such holder, to the place designated by such
holder, a certificate or certificates for the number of full shares of Common
Stock (in the case of Series A Preferred Stock and Series B Preferred Stock) or
Series B Preferred Stock (in the case of Series B-1 Preferred Stock) to which
such holder is entitled, and a cash amount in respect of any fractional interest
in a share of Common Stock (in the case of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock) or Series B Preferred Stock (in
the case of Series B-1 Preferred Stock) as provided in paragraph (c) below. The
person in whose name the certificate or certificates for Common Stock (in the
case of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock) or Series B Preferred Stock (in the case of Series B-1
Preferred Stock) are to be issued shall be deemed to have become a stockholder
of record on the applicable Conversion Date unless the transfer books of the
Corporation are closed on that date, in which event such person shall be deemed
to have become a stockholder of record on the next succeeding date on which the
transfer books are open, but the Conversion Price shall be that in effect on the
Conversion Date. Upon conversion of only a portion of the number of shares
covered by a certificate representing shares of Preferred Stock surrendered for
conversion, the Corporation shall issue and deliver to or upon the written order
of the holder of the certificate so surrendered for conversion, at the expense
of the Corporation, a new certificate covering the number of shares of Preferred
Stock representing the unconverted portion of the certificate so surrendered.
(c) No fractional shares of common Stock (in the case of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock), Series B Preferred
Stock (in the case of Series B-1 Preferred Stock) or scrip shall be issued upon
9
<PAGE>
conversion of shares of Preferred Stock. The number of full shares of Common
Stock issuable upon conversion of Preferred Stock shall be computed on the basis
of the aggregate number of shares of Preferred Stock to be converted. Instead of
any fractional shares of Common Stock (in the case of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred), Series B Preferred Stock (in
the case of Series B-1 Preferred Stock) which would otherwise be issuable upon
conversion of any shares of Preferred Stock, the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal to the
product of (i) the price of one share of Common Stock (in the case of Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock) Series B
Preferred Stock (in the case of Series B-1 Preferred Stock) as determined in
good faith by the Board and (ii) such fractional interest. The holders of
fractional interests shall not be entitled to any rights as stockholders of the
Corporation in respect of such fractional interests.
(d) The Conversion Price applicable to the Series A Preferred Stock, the
Series B Preferred Stock, the Series B-1 Preferred Stock and/or the Series C
Preferred Stock (as the case may be) shall be subject to adjustment from time to
time as follows:
(i) If the Corporation shall at any time or from time to time after
the Original Issuance Date issue any shares of Common Stock (including
shares of Common Stock deemed to be issued pursuant to subdivision (C) of
clause (ii) below) other than Excluded Stock (as defined in clause (iii)
below) without consideration or for a consideration per share less than the
Conversion Price applicable to such series of Preferred Stock in effect
immediately prior to the issuance of such Common Stock, then the applicable
Conversion Price in effect immediately prior to each such issuance shall
forthwith be lowered to a price equal to the quotient obtained by dividing:
(A) an amount equal to the sum of (x) the total number of shares
of Common Stock outstanding (including any shares of common Stock
deemed to have been issued pursuant to subdivision (C) of clause (ii)
below) immediately prior to such issuance, multiplied by the
applicable Conversion Price in effect immediately prior to such
issuance, and (y) the consideration received by the Corporation upon
such issuance; by
(B) the total number of shares of Common Stock outstanding
(including any shares of Common Stock deemed to have been issued
pursuant to
10
<PAGE>
subdivision (C) of clause (ii) below) immediately after the issuance
of such Common Stock.
(ii) For the purposes of any adjustment of the Conversion Price
pursuant to clause (i) above, the following provisions shall be applicable:
(A) In the case of the issuance of Common Stock for cash in a
public offering or private placement, the consideration shall be
deemed to be the amount of cash paid therefor after deducting
therefrom any discounts, commissions or placement fees payable by the
Corporation to any underwriter or placement agent in connection with
the issuance and sale thereof.
(B) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the Fair Market Value thereof
(such Fair Market Value being determined as provided in the definition
thereof but with reference to such consideration), irrespective of any
accounting treatment.
(C) The issuance after the Original Issuance Date of options to
purchase or rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable
securities shall be deemed to be an issuance of Common Stock for
purposes of clause (i) above. In the case of any such issuance of
options to purchase or rights to subscribe for Common Stock,
securities by their terms convertible into or exchangeable for Common
Stock, or options to purchase or rights to subscribe for such
convertible or exchangeable securities:
(1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights
to subscribe for Common Stock shall be deemed to have been issued
at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the
manner provided in subdivisions (A) and (B) above), if any,
received by the Corporation upon the issuance of such
11
<PAGE>
options or rights plus the minimum purchase price provided in
such options or rights for the Common Stock covered thereby:
(2) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such
securities, options, or rights were issued and for a
consideration equal to the consideration received by the
Corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if any, to
be received by the Corporation upon the conversion or exchange of
such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner
provided in subdivisions (A) and (B) above);
(3) on any change in the number of shares or exercise price
of Common Stock deliverable upon exercise of any such options or
rights or conversions of or exchange for such securities, other
than a change resulting from the antidilution provisions thereof,
the applicable Conversion Price shall forthwith be readjusted to
such Conversion Price as would have obtained had the adjustment
made upon the issuance of such options, rights or securities not
converted prior to such change or options or rights related to
such securities not converted prior to such change been made upon
the basis of such change; and
(4) on the expiration of any such options or rights, the
termination of any such rights to convert or
12
<PAGE>
exchange or the expiration of any options or rights related to
such convertible or exchangeable securities, the applicable
Conversion Price shall forthwith be readjusted to such Conversion
Price as would have obtained had the adjustment made upon the
issuance of such options, rights, securities or options or rights
related to such securities been made upon the basis of the
issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the
conversion or exchange of such securities, or upon the exercise
of the options or rights related to such securities and
subsequent conversion or exchange thereof.
(iii) "Excluded Stock" means (A) shares of Common Stock, and options
therefor, issued or granted from time to time to employees, directors and
officers of and consultants to the Corporation pursuant to agreements,
plans or arrangements approved by the Board of Directors; (B) shares of
Series B Preferred Stock issued upon exercise or exchange of stock
subscription warrants dated September 19, 1995 and May 6, 1996 to purchase
shares of Series B Preferred Stock; (C) shares of Common Stock issued upon
conversion of shares of Preferred Stock; (D) shares of Common Stock issued
by the Corporation as a stock dividend or upon any subdivision, split-up or
combination of shares of Common Stock; (E) shares of Series B Preferred
Stock issued upon conversion of shares of Series B-1 Preferred Stock; (G)
shares of Common Stock issued upon exercise or exchange of stock
subscription warrants dated the Original Issuance Date, issued to Bear,
Stearns & Co. Inc. to purchase shares of Common Stock; (H) shares of Series
C Preferred Stock issued upon exercise or exchange of stock subscription
warrants dated February 27, 1997 and April 2, 1997 to purchase shares of
Series C Preferred Stock; (F) the issuance of Adjustment Shares (as defined
in the Series C Agreement) pursuant to Section 7.13 of the Series C
Preferred Stock Purchase Agreement dated Original Issuance Date (the
"Series C Agreement"), among the Corporation and the other parties thereto;
(I) securities that were declared to be "Excluded Stock" for purposes of
this Section by the holders of at least 60% of (1) the shares of Series A
Preferred Stock and Series B Preferred Stock if an adjustment of the
Conversion Price of the Series A Preferred Stock and/or Series B
Preferred Stock would otherwise result pursuant to Section 4(d) (i)
with
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<PAGE>
respect to Series A Preferred Stock and/or Series B Preferred Stock and (2)
the shares of Series C Preferred stock if an adjustment of the Conversion
Price of the Series C Preferred Stock would otherwise result pursuant to
section 4(6) (i) with respect to Series C Preferred Stock.
(iv) If, at any time after the Original Issuance Date, the number of
shares of Common Stock outstanding is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares
of Common Stock, then, following the record date for the determination of
holders of Common Stock entitled to receive such stock dividend,
subdivision or split-up, the Conversion Price shall be appropriately
decreased so that the number of shares of Common Stock issuable on
conversion of each share of Preferred Stock shall be increased in
proportion to such increase in outstanding shares.
(v) If, at any time after the Original Issuance Date, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date for
such combination, the Conversion Price shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each
share of Preferred Stock shall be decreased in proportion to such decrease
in outstanding shares.
(vi) In the event of any capital reorganization of the Corporation,
any reclassification of the stock of the Corporation (other than a change
in par value or from par value to no par value or from no par value to par
value or as a result of a stock dividend or subdivision, split-up or
combination of shares), or any consolidation or merger of the Corporation
(other than a consolidation or merger in which the Corporation is the
continuing corporation and which does not result in any change in the
Common Stock), each share of Preferred Stock shall after such
reorganization, reclassification, consolidation or merger (unless, in the
case of a consolidation or merger, payment shall have been made to the
holders of Preferred Stock of the full amount to which they shall have been
entitled pursuant to Section 2(c) of this Article Fourth) be convertible
into the kind and number of shares of stock or other securities or property
of the Corporation or of the corporation resulting from such consolidation
or surviving such merger to which the holder of the number of shares of
Common Stock deliverable (immediately prior to the time of such
reorganization, reclassification, consolidation or merger) upon conversion
of such share of Preferred Stock would have been entitled upon such
reorganization, reclassification, consolidation or merger. The provisions
14
<PAGE>
of this clause shall similarly apply to successive reorganizations,
reclassifications, consolidations or mergers.
(vii) All calculations under this paragraph shall be made to the
nearest one hundredth (1/100) of a cent or the nearest one tenth (1/10) of
a share, as the case may be.
(viii) In any case in which the provisions of this paragraph (d) shall
require that an adjustment shall become effective immediately after a
record date of an event, the Corporation may defer until the occurrence of
such event (i) issuing to the holder of any share of Preferred Stock
converted after such record date and before the occurrence of such event
the shares of capital stock issuable upon such conversion by reason of the
adjustment required by such event in addition to the share of capital
stock issuable upon such conversion before giving effect to such
adjustments, and (ii) paying to such holder any amount in cash in lieu of a
fractional share of capital stock pursuant to paragraph (c) above;
provided, however, that the Corporation shall deliver to such holder an
appropriate instrument evidencing such holder's right to receive such
additional shares and such cash.
(e) Whenever the Conversion Price shall be adjusted as provided in
paragraph (d), the Corporation shall make available for inspection during
regular business hours, at its principal executive offices or at such other
place as may be designated by the Corporation, a statement, signed by its chief
executive officer, showing in detail the facts requiring such adjustment and the
Conversion Price that shall be in effect after such adjustment. The Corporation
shall also cause a copy of such statement to be sent by first class certified
mail, return receipt requested and postage prepaid, to each bolder of Preferred
Stock as to which the Conversion Price shall be so adjusted at such holder's
address appearing on the Corporation's records. Where appropriate, such copy may
be given in advance and may be included as part of any notice required to be
mailed under the provisions of paragraph (f) below.
(f) If the Corporation shall propose to take any action of the types
described in clauses (iv), (v) or (vi) of paragraph (d) above, the Corporation
shall give notice to each holder of shares of Preferred Stock, in the manner set
forth in paragraph (e) above, which notice shall specify the record date, if
any, with respect to any such action and the date on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price
15
<PAGE>
and the number, kind or class of shares or other securities or property which
shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of shares of Preferred Stock. In the case of any
action which would require the fixing of a record date, such notice shall be
given at least 20 days prior to the date so fixed, and in case of all other
action, such notice shall be given at least 30 days prior to the taking of such
proposed action. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of any such action.
(g) The Corporation shall reserve, and at all times from and after the date
of Original Issuance Date keep reserved, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Preferred Stock, sufficient shares of
Common Stock to provide for the conversion of all outstanding shares of
Preferred Stock.
(h) At any time the Corporation makes or fixes a record date for the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in securities of the Corporation other than shares of
Common Stock, provision shall be made so that each holder of shares of Preferred
Stock shall receive upon conversion thereof, in addition to the shares of Common
Stock receivable thereupon, the number of securities of the Corporation which it
would have received had its shares of Preferred Stock been converted into shares
of Common Stock on the date of such event and had such holder thereafter, during
the period from the date of such event to and including the date of conversion,
retained such securities receivable by it pursuant to this paragraph during such
period, subject to the sum of all other adjustments called for during such
period under this Section 4 with respect to the rights of such holder of shares
of Preferred Stock.
5. Mandatory Conversion.
(a) Upon the consummation of the first underwritten public offering for the
account of the Corporation of Common Stock pursuant to a registration statement
filed under the Securities Act of 1933, as amended, at an offering price per
share of Common Stock to the public that would reflect a pre-offering market
valuation of the Company (based on all then outstanding shares of capital stock
and assuming the exercise of all then outstanding options therefor) of at least
$100,000,000 and with aggregate proceeds (net of underwriting discounts and
commissions) to the Corporation of not less thin $20,000,000 (a "Qualified
Public Offering"), each share of Preferred Stock then outstanding shall, by
virtue of and simultaneously with such Qualified Public Offering, be deemed
automatically converted into the number of fully paid and nonassessable shares
of Common
16
<PAGE>
Stock equal to the quotient obtained by dividing (i) (A) in the case of the
Series A Preferred Stock $1, (B) in the case of the Series B Preferred Stock and
the Series B-1 Preferred Stock $2.267 and (C) in the case of the Series C
Preferred Stock $1.354 by (ii) the applicable Conversion Price, as last adjusted
and then in effect.
(b) As promptly as practicable after the date of consummation of any
Qualified Public Offering and the delivery to the corporation of the certificate
or certificates for the shares of Preferred Stock which have been converted,
duly endorsed or assigned in blank to the Corporation (if required by it), the
Corporation shall issue and deliver to or upon the written order of each holder
of Preferred Stock, to the place designated by such holder, a certificate or
certificates for the number of full shares of Common Stock to which such holder
is entitled, and a cash amount in respect of any fractional interest in a share
of Common Stock as provided in paragraph (c) below. The person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed to
have become a stockholder of record on the date of such Qualified Public
Offering and on such date the shares of Preferred Stock shall cease to be
outstanding, whether or not the certificates representing such shares have been
received by the Corporation.
(c) The provisions set forth in Sections 4(b) and (c) shall apply to the
conversion of Preferred Stock pursuant to this Section in the same manner as
they apply to the conversion of Preferred Stock pursuant to Section 4.
THIRD
This Amendment was duly adopted by the Board of Directors of the
Corporation, acting by unanimous written consent in lieu of meeting effective as
of this date, pursuant to Section 242 of the General Corporation Law of the
State of Delaware and by the stockholders of the Corporation, acting by written
consent in lieu of a meeting effective as of this date pursuant to Section 228
of the General Corporation Law of the State of Delaware.
17
<PAGE>
IN WITNESS WHEREOF, this Certificate of Amendment has been signed by an
authorized officer of this Corporation this 28 day of May, 1997
i VILLAGE INC.
By: /s/ CANDICE CARPENTER
------------------------------------
Name: Candice Carpenter
Title: CEO
Attest:
/s/ STEVEN ELKES
- ----------------------------
Name: Steven Elkes
Title: VP Finance
18
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
i VILLAGE INC.
i VILLAGE INC., a Delaware corporation (the "Corporation"), hereby
certifies as follows:
1. The current name of the Corporation is "i VILLAGE INC."
2. Effective immediately, Article FOURTH of the Certificate of Incorporation of
the Corporation, as amended, is hereby amended as follows:
(a) The number of shares designated by the Certificate of Incorporation as
"Series C Preferred Stock" is hereby amended by deleting the reference
"11,332,384 shares designated as 'Series C Preferred Stock'" and inserting in
lieu thereof a reference to "13,528,762 shares designated as 'Series C Preferred
Stock'".
(b) Each reference to the dollar amount "$2.267" is deleted and the dollar
amount "$2.50" is inserted in lieu thereof.
3. This Amendment was duly adopted by the Board of Directors of the Corporation,
acting by unanimous written consent in lieu of a meeting effective as of this
date, pursuant to Section 242 of the General Corporation Law of the State of
Delaware and by the stockholders of the Corporation, acting by written consent
in lieu of a meeting effective as of this date pursuant to Section 228 of the
General Corporation Law of the State of Delaware and Article Fourth Section 3 of
the Certificate of Incorporation of the Corporation.
*****
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment of Certificate of Incorporation to be signed as of the 18th day of
December, 1997, by its President, who hereby affirms and acknowledges, under
penalty of perjury, that this Certificate is the act and deed of the Corporation
and that the facts stated herein are true.
i VILLAGE, INC.
By: /s/ CANDICE CARPENTER
------------------------------------
Name: Candice Carpenter
Title: Chairman & CEO
ATTEST:
By: /s/ STEVEN ELKES
--------------------------
Name: Steven Elkes
Title: Vice President, Finance & Operations
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
i VILLAGE INC.
i VILLAGE INC., a Delaware corporation (the "Corporation"), hereby
certifies as follows:
1. The current name of the Corporation is "i VILLAGE INC."
2. Effective immediately, Article FOURTH, Section 5(a) of the Certificate of
Incorporation of the Corporation shall be amended and restated as follows:
"Upon the consummation of the first underwritten public offering for the
account of the Corporation of Common Stock pursuant to a registration
statement filed under the Securities Act of 1933, as amended, at an
offering price per share of Common Stock to the public that would reflect a
price per share of Common Stock (subject to equitable adjustment for stock
splits, stock dividends, stock combinations, recapitalizations and like
occurrences) of not less than $3.45 and with aggregate proceeds (net of
underwriting discounts and commissions) to the Corporation of not less than
$20,000,000 (a "Qualified Public Offering"), each share of Preferred Stock
then outstanding shall, by virtue of and simultaneously with such Qualified
Public Offering, be deemed automatically converted into the number of fully
paid and nonassessable shares of Common Stock equal to the quotient
obtained by dividing (i) (A) in the case of the Series A Preferred Stock
$1.00, (B) in the case of the Series B Preferred Stock and the Series B-1
Preferred Stock $2.50, (C) in the case of the Series C Preferred Stock
$1.954 and (D) in the case of the Series D Preferred Stock $2.50 by (ii)
the applicable Conversion Price, as last adjusted and then in effect"
3. This Amendment was duly adopted by the Board of Directors of the Corporation,
acting by unanimous written consent in lieu of a meeting effective as of this
date, pursuant to Section 242 of the General Corporation Law of the State of
Delaware and by the stockholders of the Corporation, acting by written consent
in lieu of a meeting effective as of this date pursuant to Section 228 of the
General Corporation Law of the State of Delaware and Article Fourth Section 3 of
the Certificate of Incorporation of the Corporation.
*****
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment of Certificate of Incorporation to be signed as of the 31st day of
August, 1998, by its Vice-President, who hereby affirms and acknowledges, under
penalty of perjury, that this Certificate is the act and deed of the Corporation
and that the facts stated herein are true.
i VILLAGE, INC.
By: /s/ STEVEN ELKES
-----------------------------
Name: Steven Elkes
Title: Vice-President
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
i VILLAGE INC.
FIRST
The name of the corporation is i VILLAGE INC. (the "Corporation").
SECOND
Article Fourth of the Certificate of Incorporation of the Corporation is
hereby amended to read in its entirety as follows:
FOURTH: The Corporation shall be authorized to issue 80,000,000 shares of
all classes, consisting of (i) 45,000,000 shares of common stock, $.0005 par
value (the "Common Stock), and (ii) 35,000,000 shares of preferred stock, $.0005
par value.
Authority is hereby expressly granted to the Board of Directors, subject to
the provisions of Section 3 hereof, from time to time to issue the preferred
stock in one or more series, and in connection with the creation of any such
series, by resolution or resolutions providing for the issuance of the shares
thereof, to determine and fix such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative participating, optional
or other special rights, and qualifications limitations or restrictions thereof,
including, without limitation thereof, dividend rights, conversion rights,
voting rights, redemption privileges and liquidation preferences, as shall be
stated and expressed in such resolution or resolutions, all to the full extent
now or hereafter permitted by the General Corporation Law. Of such preferred
stock, 1,000,000 shares shall be designated as "Series A Preferred Stock",
5,629,846 shares shall be designated as "Series B Preferred Stock", 300,000
shares shall be designated as "Series B-1 Preferred Stock", 13,528,762 shares
shall be designated as "Series C Preferred Stock" and 8,000,000 shares shall be
designated as "Series D Preferred Stock." (For convenience of reference, the
shares of Series A Preferred Stock, Series B Preferred Stock, Series B-1
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock are
sometimes hereinafter collectively referred to as the "Preferred Stock".) The
Series A Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock shall have the following
designations, powers, preferences and other rights, and qualifications,
limitations and restrictions:
1. Dividends. The holders of Preferred Stock shall be entitled to share in any
dividends declared and paid upon or set aside for the Common Stock of the
Corporation, pro rata in accordance with the number of shares of Common Stock
into which such shares of Preferred Stock are then convertible pursuant to
Section 5.
<PAGE>
2. Liquidation.
(a) Upon a Liquidation (as defined below), after payment or provision for
payment of the debts and other liabilities of the Corporation and all amounts
which the holders of any class of capital stock ranking senior to the Preferred
Stock shall be entitled to receive upon such Liquidation,
(i) the holders of Series C Preferred Stock and Series D Preferred
Stock shall be entitled to receive, on a pari-passu basis in accordance
with their respective Preference Amounts (as defined below), out of the
remaining assets of the Corporation available for distribution to its
stockholders with respect to each share of Series C Preferred Stock, an
amount (the "Series C Preference Amount") equal to the sum of (A) $1.954
and (B) all declared but unpaid dividends payable with respect to such
share under Section 1 and with respect to each share of Series D Preferred
Stock, an amount (the "Series D Preference Amount") equal to the sum of (A)
$2.50 and (B) all declared but unpaid dividends payable with respect to
such share under Section 1, before any distribution shall be made to the
holders of the Series A Preferred Stock, the Series B Preferred Stock, the
Series B-1 Preferred Stock, the Common Stock or any other class of capital
stock of the Corporation ranking junior to the Series C Preferred Stock and
Series D Preferred Stock. If upon any Liquidation the assets of the
Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of Series C Preferred Stock and Series D
Preferred Stock the full respective Series C Preference Amounts and Series
D Preference Amounts to which they shall be entitled, respectively, the
holders of Series C Preferred Stock and Series D Preferred Stock shall
share ratably in any distribution of assets based on the respective amounts
which would be payable to them on or with respect to the shares of Series C
Preferred Stock and Series D Preferred Stock held by them upon such
distribution pursuant to this Section 2 as if all amounts payable on or
with respect to such shares were paid in full.
(ii) After distribution to the holders of Series C Preferred Stock and
Series D Preferred Stock of the full Series C Preference Amount and Series
D Preference Amount set forth in Section 2(a)(i), the holders of Series A
Preferred Stock, the holders of Series B Preferred Stock and the holders of
Series B-1 Preferred Stock shall be entitled to receive, on a pari passu
basis in accordance with their respective Preference Amounts, out of the
remaining assets of the Corporation available for distribution to its
stockholders, with respect to each share of Series A Preferred Stock an
amount (the "Series A Preference Amount") equal to the sum of (A) $1 and
(B) all declared but unpaid dividends payable with respect to such share
under Section 1, and with respect to each share of Series B Preferred Stock
and each share of Series B-1 Preferred Stock an amount (the "Series B
Preference Amount"; and the Series A Preference Amount, Series B Preference
Amount, the Series C Preference Amount and the Series D Preference Amount
being sometimes hereinafter collectively referred to as the "Preference
Amount") equal to the sum of (A) $2.50 and (B) all declared but unpaid
dividends payable with respect to such Share under Section 1, in each case,
before any distribution shall be made to the holders of the Common Stock or
any other class of capital stock of the Corporation ranking junior to the
Preferred Stock. If upon any Liquidation the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay
the holders of Series A Preferred Stock, Series B Preferred Stock and
Series B-1 Preferred Stock the full respective Preference Amounts to which
they shall be entitled, respectively, the holders of Series A Preferred
Stock,
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Series B Preferred Stock and Series B-1 Preferred Stock shall share ratably
in any distribution of assets based on the respective amounts which would
be payable to them on or with respect to the shares of Series A Preferred
Stock, Series B Preferred Stock and Series B-1 Preferred Stock held by them
upon such distribution pursuant to this Section 2 as if all amounts payable
on or with respect to such shares were paid in full.
(b) Upon any Liquidation, the holders of Preferred Stock shall, after any
distribution to such holders of the full amount to which they shall be entitled
under paragraph (a) above, not share in the distribution of the remaining assets
of the Corporation, except to the extent that such holders also hold Common
Stock of the Corporation.
(c) For purposes of this Section 2, a Corporate Transaction (as defined
below) shall be treated as a Liquidation and shall entitle the holders of
Preferred Stock to receive, upon the consummation of such Corporate Transaction,
consideration in the same form as is to be provided in such Corporate
Transaction (whether cash, securities, other property or any combination
thereof), having a value (as determined in accordance with the next sentence)
equivalent to the amounts to which such holders of Preferred Stock would
otherwise have been entitled pursuant to Section 2(a) assuming such Corporate
Transaction had constituted a Liquidation within the meaning of said Section
2(a); provided, however, that in the case of each share of Series C Preferred
Stock and Series D Preferred Stock, an additional amount that, when added to the
amount of declared but unpaid dividends (if any) then payable with respect to
such share of Series C Preferred Stock or Series D Preferred Stock, as the case
may be, will constitute an amount representing a 10% (calculated daily and
compounded annually) internal rate of return (computed in accordance with
generally accepted financial practice) with respect to the Series C Preference
Amount or Series D Preference Amount, as the case may be, of such share
calculated for the period commencing with the date of the original issuance
thereof and ending on the date of such Liquidation and in connection with such
calculation, the Corporation shall provide each holder of Series C Preferred
Stock and Series D Preferred Stock with the information set forth in Section
4(f) within the time period specified therein. In the event that any
distribution pursuant to the preceding sentence shall be payable in a form other
than cash, the value thereof shall be its fair market value as determined in
good faith by the Board of Directors of the Company; provided, however, that if
the holders of 60% of the then outstanding Preferred Stock shall dispute in
writing such determination within ten (10) business days of such determination,
the Corporation shall promptly engage a nationally-recognized independent
investment banking firm or independent competent appraisers, jointly selected by
the Corporation and the holders of at least 60% of the then outstanding
Preferred Stock, to determined the value of the non-cash assets and property to
be distributed to the holders of Preferred Stock pursuant to this Section 2,
whose determination shall be conclusive (the "Fair Market Value").
(d) As used herein, the following terms shall have the following respective
meanings:
(i) "Corporate Transaction" means (A) any consolidation or merger of
the Corporation, other than any merger or consolidation resulting in the
holders of the capital stock of the Corporation entitled to vote for the
election of directors holding a majority of the capital stock of the
surviving or resulting entity entitled to vote for the election of
directors, (B) any person or entity (including any affiliates thereof)
becoming the holder of a majority of the
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<PAGE>
capital stock of the Corporation entitled to vote for the election of
directors, or (C) any sale or other disposition by the Corporation of all
or substantially all of its assets.
(ii) "Liquidation" means any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, other than any
dissolution, liquidation or winding up in connection with any
reincorporation of the Corporation in another jurisdiction.
3. Voting Rights.
(a) In addition to the rights provided by law or in the Corporation's
By-laws, each share of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock shall entitle the holder
thereof to such number of votes as shall equal the nearest whole number of
shares of Common Stock into which such share of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock is then
convertible pursuant to Section 4. Except as provided in paragraphs (b) and (c)
below or as otherwise provided by law, the holders of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
shall be entitled to vote on all matters as to which holders of Common Stock
shall be entitled to vote, in the same manner and with the same effect as such
holders of Common Stock, voting together with the holders of Common Stock as one
class. Except as otherwise required by law, all shares of Series B-1 Preferred
Stock shall be non-voting, and the holders thereof shall not be entitled to vote
on any matters.
(b) The Corporation shall not, without the affirmative consent or approval
of each of (i) the holders of a majority of the shares of Series A Preferred
Stock then outstanding (with respect to clauses (1), (2), (3) and (4) below),
voting as a separate class, (ii) the holders of at least 60% of the shares of
Series B Preferred Stock then outstanding (with respect to clauses (1), (2), (3)
and (4) below), voting as a separate class, (iii) the holders of at least a
majority of the shares of Series A Preferred Stock and Series B Preferred Stock
then outstanding, voting together as a class (with respect to clauses (5) and
(6) below), and (iv) the holders of at least 66 2/3% (by voting power) of the
shares of Series D Preferred Stock then outstanding voting as a separate class
(with respect to clauses (2), (3), (4) and (7) below:
(1) authorize, create, designate or establish any class or series of
capital stock ranking senior to such series of Preferred Stock or
reclassify any shares of Common Stock into shares having any preference or
priority as to dividends or assets superior to any such preference or
priority of such series of Preferred Stock;
(2) in any other manner alter or change the powers, preferences, or
rights, or qualifications, limitations or restrictions thereof, of the
shares of such series of Preferred Stock as to affect them adversely;
(3) in any other manner amend the Certificate of Incorporation of the
Corporation so as to materially adversely affect the powers, preferences or
rights, or qualifications, limitations or restrictions thereof, of the
shares of such series of Preferred Stock, except (1) to authorize, create,
designate or establish any class or series of capital stock ranking, with
respect to voting rights or rights to dividends or assets, pari passu with
or junior to such series of Preferred Stock and (2) that the number of
shares of Common Stock that the
4
<PAGE>
Corporation is authorized to issue may, without separate class vote, be
increased or decreased from time to time by the affirmative vote of the
holders of a majority of the capital stock of the Corporation entitled to
vote thereon;
(4) amend the By-laws of the Corporation in any manner that would
materially adversely affect the powers, preferences or rights, or
qualifications, limitations or restrictions thereof, of the shares of such
series of Preferred Stock;
(5) consummate any Corporate Transaction; or
(6) approve or authorize any Liquidation or any recapitalization or
reorganization of the Corporation.
(7) notwithstanding clause (3) above, authorize, create, designate or
establish any class or series of capital stock ranking, with respect to
voting rights or rights to dividends or assets, senior to or pari passu
with the Series D Preferred Stock.
(c) The Corporation shall not, without the affirmative consent or approval
of each of (i) the holders of at least 66 2/3% of the shares of Series C
Preferred Stock (with respect to clauses (1), (2), (3) and (4)), voting
separately as a class, (ii) the holders of at least 66 2/3% of the shares of
Series C Preferred Stock and Series D Preferred Stock (with respect to clauses
(5), (6), (7)), voting together as a class and (iii) the holders of least 60% of
the shares of Series C Preferred Stock (with respect to clause (8)), voting
separately as a class:
(1) authorize, create, designate or establish any class or series of
capital stock ranking senior to or pari passu with Series C Preferred Stock
or reclassify any shares of Common Stock into shares pari passu with or
having any preference or priority as to dividends or assets pari passu with
or superior to any such preference or priority of Series C Preferred Stock;
(2) in any other manner alter or change the powers, preferences, or
rights, or qualifications, limitations or restrictions thereof, of the
shares of Series C Preferred Stock as to affect them adversely;
(3) in any other manner amend the Certificate of Incorporation of the
Corporation so as to materially adversely affect the powers, preferences or
rights, or qualifications, limitations or restrictions thereof, of the
shares of Series C Preferred Stock, except to authorize, create, designate
or establish any class or series of capital stock ranking, with respect to
voting rights or rights to dividends or assets, junior to Series C
Preferred Stock;
(4) amend the By-laws of the Corporation in any manner that would
adversely affect the powers, preferences or rights, or qualifications,
limitations or restrictions thereof, of the shares of Series C Preferred
Stock;
(5) consummate any Corporate Transaction;
(6) approve or authorize any Liquidation or any recapitalization or
reorganization of the Corporation;
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<PAGE>
(7) incur or guaranty any indebtedness for money borrowed, having a
maturity of twelve months or greater, in the excess of $5,000,000 in the
aggregate at any time outstanding; or
(8) increase or decrease the authorized number of shares of Series C
Preferred Stock, except as contemplated by Section 7.13 of the Series C
Agreement (as hereinafter defined).
(d) The Corporation shall not, without the affirmative consent or approval
of the holders of 66 2/3% of the shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock then
outstanding, voting together as a class:
(1) directly or indirectly pay or declare any dividend or make any
distribution upon, or redeem, retire, repurchase or otherwise acquire, any
shares of capital stock of the Corporation, other than in accordance with
Sections 3.2 and 3.4 of the Third Amended and Restated Stockholders'
Agreement dated as of the Original Issuance Date, among the Corporation and
its stockholders named therein;
(2) increase or decrease the authorized number of shares of Preferred
Stock or Common Stock; or
(3) sell, transfer, or grant any lien or encumbrance on any material
intellectual property right of the Corporation, other than licenses granted
in the ordinary course of business of the Corporation.
4. Optional Conversion.
(a) Upon the terms set forth in this Section, each holder of shares of
Preferred Stock shall have the right, (x) in the case of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock at such holder's option, at any time and from time to time, and (y) in the
case of Series B-1 Preferred Stock, if and only to the extent permitted under
the provisions of this Section 4(a), to convert any of such shares into the
number of fully paid and nonassessable shares of Common Stock equal to the
quotient obtained by dividing (i) (A) in the case of the Series A Preferred
Stock, the product of $1.00 and the number of shares of Series A Preferred Stock
being converted, (B) in the case of the Series B Preferred Stock and Series B-1
Preferred Stock, the product of $2.50 and the number of shares of Series B
Preferred Stock or Series B-1 Preferred Stock (as the case may be) being
converted, and (C) in the case of the Series C Preferred Stock, the product of
$1.954 and the number of shares of Series C Preferred Stock being converted,
(D) in the case of the Series D Preferred Stock, the product of $2.50 and the
number of shares of Series D Preferred Stock being converted, by (ii) the
applicable Conversion Price (as defined below) therefor, as last adjusted and
then in effect, and in addition, in the case of the Series B-1 Preferred Stock
(in lieu of converting into Common Stock), into an equal number of shares of
Series B Preferred Stock, by surrender of the certificates representing the
shares of Preferred Stock to be converted. The conversion price per share at
which shares of Common Stock shall be issuable upon conversion of shares of
Preferred Stock shall initially be $1.00 for the Series A Preferred Stock, $2.50
for the Series B Preferred Stock and the Series B-1 Preferred Stock, $ 1.954 for
the Series C Preferred Stock and $2.50 for
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<PAGE>
the Series D Preferred Stock (as to each, the "Conversion Price"), subject to
adjustment as set forth in paragraph (d) below. Each holder of shares of Series
B-1 Preferred Stock shall have the right, at such time as such holder and its
affiliates would hold, in the aggregate, voting capital stock of the Corporation
representing less than nineteen and nine-tenths (19.9%) percent of the then
outstanding voting capital stock of the Corporation (assuming solely for the
purpose of such calculation that shares of Series B-1 Preferred Stock then held
by such holder or any affiliate thereof constituting in the aggregate at least
twenty-five (25%) percent of the number of shares of Series B-1 Preferred Stock
held by such holder on May 6, 1996 (the "Minimum Number of Shares") would
entitle such holder to such number of votes as shall equal the nearest whole
number of shares of Common Stock into which said shares of Series B-1 Preferred
Stock would then be convertible but for the provisions of this Section 4(a)), to
convert up to that number of such holder's shares of Series B-1 Preferred Stock
(but in no event representing less than the Minimum Number of Shares), that,
after giving effect to such conversion, would result in such holder and its
affiliates holding, in the aggregate, voting capital stock of the Corporation
representing less than nineteen and nine-tenths (19.9%) percent of the then
outstanding voting capital stock of the Corporation into, at the option of the
holder thereof, either (a) an equal number of fully paid and nonassessable
shares of Series B Preferred Stock or (ii) that number of shares of Common Stock
as is determined in accordance with the foregoing provisions of this Section
4(a). Shares of Series B-1 Preferred Stock shall be converted into shares of
Series B Preferred Stock or Common Stock (as requested by the holder thereof),
as aforesaid, within five business days of written notice from such holder(s) of
Series B-1 Preferred Stock to the Corporation requesting that the specified
number of such holder's shares of Series B-1 Preferred Stock be converted into
shares of Series B Preferred Stock or Common Stock (as requested by the holder
thereof), and otherwise in accordance with Section 4(b). As used herein, the
term "Original Issuance Date" shall mean the date of original issuance of the
first share of Series D Preferred Stock.
(b) The holder of any shares of Preferred Stock may exercise the conversion
right pursuant to paragraph (a) above by delivering to the Corporation the
certificate or certificates for the shares to be converted, duly endorsed or
assigned in blank or to the Corporation (if required by it), accompanied by
written notice stating that the holder elects to convert such shares and stating
the name or names (with address) in which the certificate or certificates for
the shares of Common Stock are to be issued. Conversion shall be deemed to have
been effected on the date when such delivery is made (the "Conversion Date"). As
promptly as practicable thereafter, the Corporation shall issue and deliver to
or upon the written order of such holder, to the place designated by such
holder, a certificate or certificates for the number of full shares of Common
Stock (in the case of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock and Series D Preferred Stock) or Series B Preferred Stock (in
the case of Series B-1 Preferred Stock) to which such holder is entitled, and a
cash amount in respect of any fractional interest in a share of Common Stock (in
the case of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock) or Series B Preferred Stock (in
the case of Series B-1 Preferred Stock) as provided in paragraph (c) below. The
person in whose name the certificate or certificates for Common Stock (in the
case of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock) or Series B Preferred Stock (in the case of
Series B-1 Preferred Stock) are to be issued shall be deemed to have become a
stockholder of record on the applicable Conversion Date unless the transfer
books of the Corporation are closed on that date, in which
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<PAGE>
event such person shall be deemed to have become a stockholder of record on the
next succeeding date on which the transfer books are open, but the Conversion
Price shall be that in effect on the Conversion Date. Upon conversion of only a
portion of the number of shares covered by a certificate representing shares of
Preferred Stock surrendered for conversion, the Corporation shall issue and
deliver to or upon the written order of the holder of the certificate so
surrendered for conversion, at the expense of the Corporation, a new certificate
covering the number of shares of Preferred Stock representing the unconverted
portion of the certificate so surrendered.
(c) No fractional shares of Common Stock (in the case of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock or Series D
Preferred Stock), Series B Preferred Stock (in the case of Series B-1 Preferred
Stock) or scrip shall be issued upon conversion of shares of Preferred Stock.
The number of full shares of Common Stock issuable upon conversion of Preferred
Stock shall be computed on the basis of the aggregate number of shares of
Preferred Stock to be converted. Instead of any fractional shares of Common
Stock (in the case of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock or Series D Preferred Stock), Series B Preferred Stock (in the
case of Series B-1 Preferred Stock) which would otherwise be issuable upon
conversion of any shares of Preferred Stock, the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal to the
product of (i) the price of one share of Common Stock (in the case of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock), Series B Preferred Stock (in the case of Series B-1 Preferred
Stock) as determined in good faith by the Board of Directors and (ii) such
fractional interest. The holders of fractional interests shall not be entitled
to any rights as stockholders of the Corporation in respect of such fractional
interests.
(d) The Conversion Price applicable to the Series A Preferred Stock, the
Series B Preferred Stock, the Series B-1 Preferred Stock, the Series C Preferred
Stock and/or the Series D Preferred Stock (as the case may be) shall be subject
to adjustment from time to time as follows:
(i) If the Corporation shall at any time or from time to time after
the Original Issuance Date issue any shares of Common Stock (including
shares of Common Stock deemed to be issued pursuant to subdivision (3) of
clause (ii) below) other than Excluded Stock (as defined in clause (iii)
below) without consideration or for a consideration per share less than the
Conversion Price applicable to such series of Preferred Stock in effect
immediately prior to the issuance of such Common Stock, then the applicable
Conversion Price in effect immediately prior to each such issuance shall
forthwith be lowered to a price equal to the quotient obtained by dividing:
(1) an amount equal to the sum of (x) the total number of shares
of Common Stock outstanding (including any shares of Common Stock
deemed to have been issued pursuant to subdivision (3) of clause (ii)
below) immediately prior to such issuance, multiplied by the
applicable Conversion Price in effect immediately prior to such
issuance, and (y) the consideration received by the Corporation upon
such issuance; by
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(2) the total number of shares of Common Stock outstanding
(including any shares of Common Stock deemed to have been issued
pursuant to subdivision (3) of clause (ii) below) immediately after
the issuance of such Common Stock.
(ii) For the purposes of any adjustment of the Conversion Price
pursuant to clause (i) above, the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash in a
public offering or private placement, the consideration shall be
deemed to be the amount of cash paid therefor after deducting
therefrom any discounts, commissions or placement fees payable by the
Corporation to any underwriter or placement agent in connection with
the issuance and sale thereof.
(2) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the Fair Market Value thereof
(such Fair Market Value being determined as provided in the definition
thereof but with reference to such consideration), irrespective of any
accounting treatment.
(3) The issuance after the Original Issuance Date of options to
purchase or rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable
securities shall be deemed to be an issuance of Common Stock for
purposes of clause (i) above. In the case of any such issuance of
options to purchase or rights to subscribe for Common Stock,
securities by their terms convertible into or exchangeable for Common
Stock, or options to purchase or rights to subscribe for such
convertible or exchangeable securities:
a. the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights
to subscribe for Common Stock shall be deemed to have been issued
at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the
manner provided in subdivisions (1) and (2) above), if any,
received by the Corporation upon the issuance of such options or
rights plus the minimum purchase price provided in such options
or rights for the Common Stock covered thereby;
b. the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such
securities, options, or rights were issued and for a
consideration equal to the consideration received by the
Corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if any, to
be received by the Corporation upon the conversion or exchange of
such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner
provided in subdivisions (1) and (2) above);
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<PAGE>
c. on any change in the number of shares or exercise price
of Common Stock deliverable upon exercise of any such options or
rights or conversions of or exchange for such securities, other
than a change resulting from the antidilution provisions thereof,
the applicable Conversion Price shall forthwith be readjusted to
such Conversion Price as would have obtained had the adjustment
made upon the issuance of such options, rights or securities not
converted prior to such change or options or rights related to
such securities not converted prior to such change been made upon
the basis of such change; and
d. on the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible
or exchangeable securities, the applicable Conversion Price shall
forthwith be readjusted to such Conversion Price as would have
obtained had the adjustment made upon the issuance of such
options, rights, securities or options or rights related to such
securities been made upon the basis of the issuance of only the
number of shares of Common Stock actually issued upon the
exercise of such options or rights, upon the conversion or
exchange of such securities, or upon the exercise of the options
or rights related to such securities and subsequent conversion or
exchange thereof
(iii) "Excluded Stock" means (A) shares of Common Stock, and options
therefor, issued or granted from time to time to employees, directors and
officers of and consultants to the Corporation pursuant to agreements,
plans or arrangements approved by the Board of Directors; (B) shares of
Series B Preferred Stock issued upon exercise or exchange of stock
subscription warrants dated September 19, 1995 and May 6, 1996 to purchase
shares of Series B Preferred Stock; (C) shares of Common Stock issued upon
conversion of shares of Preferred Stock; (D) shares of Common Stock issued
by the Corporation as a stock dividend or upon any subdivision, split-up or
combination of shares of Common Stock; (E) shares of Series B Preferred
Stock issued upon conversion of shares of Series B-1 Preferred Stock; (F)
shares of Common Stock issued upon exercise or exchange of stock
subscription warrants dated May 28, 1997, issued to Bear, Stearns & Co.
Inc. to purchase shares of Common Stock; (G) shares of Series C Preferred
Stock issued upon exercise or exchange of stock subscription warrants dated
February 27, 1997 and April 2, 1997 to purchase shares of Series C
Preferred Stock; (H) shares of Common Stock issued to Tenet Healthcare
Corporation ("Tenet") pursuant to the Common Stock Purchase Agreement dated
as of February __, 1998, between the Company and Tenet and (I) securities
that were declared to be "Excluded Stock" for purposes of this Section by
the holders of at least 60% of (1) the shares of Series A Preferred Stock
and Series B Preferred Stock if an adjustment of the Conversion Price of
the Series A Preferred Stock and/or Series B Preferred Stock would
otherwise result pursuant to Section 4(d)(i) with respect to Series A
Preferred Stock and/or Series B Preferred Stock, (2) the shares of Series C
Preferred Stock if an adjustment of the Conversion Price of the Series C
Preferred Stock would otherwise result pursuant to Section 4(d)(i) with
respect to Series C Preferred Stock and (3) the shares of Series D
Preferred Stock if an adjustment of the Conversion Price of the Series D
Preferred Stock would otherwise result pursuant to Section 4(d)(i) with
respect to Series D Preferred Stock.
(iv) If, at any time after the Original Issuance Date, the number of
shares of Common Stock outstanding is increased by a stock dividend payable
in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, following the record date for the determination of
holders of Common Stock entitled to receive such stock
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<PAGE>
dividend, subdivision or split-up, the Conversion Price shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of Preferred Stock shall be increased
in proportion to such increase in outstanding shares.
(v) If, at any time after the Original Issuance Date, the number of
shares of Common Stock outstanding is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date for
such combination, the Conversion Price shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each
share of Preferred Stock shall be decreased in proportion to such decrease
in outstanding shares.
(vi) In the event of any capital reorganization of the Corporation,
any reclassification of the stock of the Corporation (other than a change
in par value or from par value to no par value or from no par value to par
value or as a result of a stock dividend or subdivision, split-up or
combination of shares), or any consolidation or merger of the Corporation
(other than a consolidation or merger in which the Corporation is the
continuing corporation and which does not result in any change in the
Common Stock), each share of Preferred Stock shall after such
reorganization, reclassification, consolidation or merger (unless, in the
case of a consolidation or merger, payment shall have been made to the
holders of Preferred Stock of the full amount to which they shall have been
entitled pursuant to Section 2(c) of this Article Fourth) be convertible
into the kind and number of shares of stock or other securities or property
of the Corporation or of the corporation resulting from such consolidation
or surviving such merger to which the holder of the number of shares of
Common Stock deliverable (immediately prior to the time of such
reorganization, reclassification, consolidation or merger) upon conversion
of such share of Preferred Stock would have been entitled upon such
reorganization, reclassification, consolidation or merger. The provisions
of this clause shall similarly apply to successive reorganizations,
reclassifications, consolidations or mergers.
(vii) All calculations under this paragraph shall be made to the
nearest one hundredth (1/100) of a cent or the nearest one tenth (1/10) of
a share, as the case may be.
(viii) In any case in which the provisions of this paragraph (d) shall
require that an adjustment shall become effective immediately after a
record date of an event, the Corporation may defer until the occurrence of
such event (i) issuing to the holder of any share of Preferred Stock
converted after such record date and before the occurrence of such event
the shares of capital stock issuable upon such conversion by reason of the
adjustment required by such event in addition to the shares of capital
stock issuable upon such conversion before giving effect to such
adjustments, and (ii) paying to such holder any amount in cash in lieu of a
fractional share of capital stock pursuant to paragraph (c) above;
provided, however, that the Corporation shall deliver to such holder an
appropriate instrument evidencing such holder's right to receive such
additional shares and such cash.
(e) Whenever the Conversion Price shall be adjusted as provided in
paragraph (d), the Corporation shall make available for inspection during
regular business hours, at its principal executive offices or at such other
place as may be designated by the Corporation, a statement, signed by its chief
executive officer, showing in detail the facts requiring such adjustment and the
Conversion Price that shall be in effect after such adjustment. The
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<PAGE>
Corporation shall also cause a copy of such statement to be sent by first class
certified mail, return receipt requested and postage prepaid, to each holder of
Preferred Stock as to which the Conversion Price shall be so adjusted at such
holder's address appearing on the Corporation's records. Where appropriate, such
copy may be given in advance and may be included as part of any notice required
to be mailed under the provisions of paragraph (f) below.
(f) If the Corporation shall propose to take any action of the types
described in clauses (iv), (v) or (vi) of paragraph (d) above, the Corporation
shall give notice to each holder of shares of Preferred Stock, in the manner set
forth in paragraph (e) above, which notice shall specify the record date, if
any, with respect to any such action and the date on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of shares of Preferred Stock. In the case of any
action which would require the fixing of a record date, such notice shall be
given at least 20 days prior to the date so fixed, and in case of all other
action, such notice shall be given at least 30 days prior to the taking of such
proposed action. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of any such action.
(g) The Corporation shall reserve, and at all times from and after the date
of Original Issuance Date keep reserved, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of Preferred Stock, sufficient shares of
Common Stock to provide for the conversion of all outstanding shares of
Preferred Stock.
(h) At any time the Corporation makes or fixes a record date for the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in securities of the Corporation other than shares of
Common Stock, provision shall be made so that each holder of shares of Preferred
Stock shall receive upon conversion thereof, in addition to the shares of Common
Stock receivable thereupon, the number of securities of the Corporation which it
would have received had its shares of Preferred Stock been converted into shares
of Common Stock on the date of such event and had such holder thereafter, during
the period from the date of such event to and including the date of conversion,
retained such securities receivable by it pursuant to this paragraph during such
period, subject to the sum of all other adjustments called for during such
period under this Section 4 with respect to the rights of such holder of shares
of Preferred Stock.
5. Mandatory Conversion.
(a) Upon the consummation of the first underwritten public offering for the
account of the Corporation of Common Stock pursuant to a registration statement
filed under the Securities Act of 1933, as amended, at an offering price per
share of Common Stock to the public that would reflect a pre-offering market
valuation of the Company (based on all then outstanding shares of capital stock
and assuming the exercise of all then outstanding options therefor) of at least
$100,000,000 and with aggregate proceeds (net of underwriting discounts and
commissions) to the Corporation of not less than $20,000,000 (a "Qualified
Public
12
<PAGE>
Offering"), each share of Preferred Stock then outstanding shall, by virtue of
and simultaneously with such Qualified Public Offering, be deemed automatically
converted into the number of fully paid and nonassessable shares of Common Stock
equal to the quotient obtained by dividing (i) (A) in the case of the Series A
Preferred Stock $1.00, (B) in the case of the Series B Preferred Stock and the
Series B-1 Preferred Stock $2.50, (C) in the case of the Series C Preferred
Stock $ 1.954 and (D) in the case of the Series D Preferred Stock $2.50 by (ii)
the applicable Conversion Price, as last adjusted and then in effect.
(b) As promptly as practicable after the date of consummation of any
Qualified Public Offering and the delivery to the Corporation of the certificate
or certificates for the shares of Preferred Stock which have been converted,
duly endorsed or assigned in blank to the Corporation (if required by it), the
Corporation shall issue and deliver to or upon the written order of each holder
of Preferred Stock, to the place designated by such holder, a certificate or
certificates for the number of full shares of Common Stock to which such holder
is entitled, and a cash amount in respect of any fractional interest in a share
of Common Stock as provided in paragraph (c) below. The person in whose name the
certificate or certificates for Common Stock are to be issued shall be deemed to
have become a stockholder of record on the date of such Qualified Public
Offering and on such date the shares of Preferred Stock shall cease to be
outstanding, whether or not the certificates representing such shares have been
received by the Corporation.
(c) The provisions set forth in Sections 4(b) and (c) shall apply to the
conversion of Preferred Stock pursuant to this Section in the same manner as
they apply to the conversion of Preferred Stock pursuant to Section 4.
THIRD
This Amendment was duly adopted by the Board of Directors of the
Corporation, acting by unanimous written consent in lieu of meeting effective as
of this date, pursuant to Section 242 of the General Corporation Law of the
State of Delaware and by the stockholders of the Corporation, acting by written
consent in lieu of a meeting effective as of this date pursuant to Section 228
of the General Corporation Law of the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, this Certificate of Amendment has been signed by an
authorized officer of this Corporation this 23rd day of February, 1998.
iVILLAGE INC.
By: /s/ Steve Elkes
----------------------------------
Name: Steve Elkes
Title: Vice President
Attest:
/s/ Steve Lake
- -------------------------------
Name: Steve Lake
Title: Vice President
14
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
i VILLAGE INC.
i VILLAGE INC., a Delaware corporation (the
"Corporation"), hereby certifies as follows:
1. The current name of the Corporation is "i VILLAGE INC."
2. Effective immediately, Article FOURTH, Section 5(a) of the Certificate of
Incorporation of the Corporation shall be amended and restated as follows:
"Upon the consummation of the first underwritten public
offering for the account of the Corporation of Common
Stock pursuant to a registration statement filed under the
Securities Act of 1933, as amended, at an offering price
per share of Common Stock to the public that would reflect
a price per share of Common Stock (subject to equitable
adjustment for stock splits, stock dividends, stock
combinations, recapitalizations and like occurrences) of
not less than $3.45 and with aggregate proceeds (net of
underwriting discounts and commissions) to the Corporation
of not less than $20,000,000 (a "Qualified Public
Offering"), each share of Preferred Stock then outstanding
shall, by virtue of and simultaneously with such Qualified
Public Offering, be deemed automatically converted into
the number of fully paid and nonassessable shares of
Common Stock equal to the quotient obtained by dividing
(i) (A) in the case of the Series A Preferred Stock $1.00,
(B) in the case of the Series B Preferred Stock and the
Series B-1 Preferred Stock $2.50, (C) in the case of the
Series C Preferred Stock $1.954 and (D) in the case of the
Series D Preferred Stock $2.50 by (ii) the applicable
Conversion Price, as last adjusted and then in effect."
3. This Amendment was duly adopted by the Board of Directors of the
Corporation, acting by unanimous written consent in lieu of a meeting
effective as of this date, pursuant to Section 242 of the General
Corporation Law of the State of Delaware and by the stockholders of the
Corporation, acting by written consent in lieu of a meeting effective as of
this date pursuant to Section 228 of the General Corporation Law of the
State of Delaware and Article Fourth Section 3 of the Certificate of
Incorporation of the Corporation.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment of Certificate of Incorporation to be signed as of
the 31st day of August, 1998, by its Vice-President, who hereby affirms and
acknowledges, under penalty of perjury, that this Certificate is the act and
deed of the Corporation and that the facts stated herein are true.
i VILLAGE, INC.
By: /s/ Steven Elkes
-------------------------
Name: Steven Elkes
Title: Vice-President
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
i VILLAGE INC.
FIRST
The name of the corporation is i VILLAGE INC. (the
"Corporation").
SECOND
Article Fourth of the Certificate of Incorporation of the
Corporation is hereby amended to read in its entirety as follows:
FOURTH: The Corporation shall be authorized to issue
120,000,000 shares of all classes, consisting of (i) 65,000,000 shares of
common stock, $.0005 par value (the "Common Stock"), and (ii) 55,000,000
shares of preferred stock, $.0005 par value. Authority is hereby expressly
granted to the Board of Directors, subject to the provisions of Section 3
hereof, from time to time to issue the preferred stock in one or more series,
and in connection with the creation of any such series, by resolution or
resolutions providing for the issuance of the shares thereof, to determine and
fix such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative participating, optional or other
special rights, and qualifications limitations or restrictions thereof,
including, without limitation thereof, dividend rights, conversion rights,
voting rights, redemption privileges and liquidation preferences, as shall be
stated and expressed in such resolution or resolutions, all to the full extent
now or hereafter permitted by the General Corporation Law. Of such preferred
stock, 1,000,000 shares shall be designated as "Series A Preferred Stock",
5,629,846 shares shall be designated as "Series B Preferred Stock", 300,000
shares shall be designated as "Series B-1 Preferred Stock", 13,528,762 shares
shall be designated as "Series C Preferred Stock", 13,000,000 shares shall be
designated as "Series D Preferred Stock and 18,953,616 shares shall be
designated "Series E Preferred Stock". (For convenience of reference, the
shares of Series A Preferred Stock, Series B Preferred Stock, Series B-1
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series
E Preferred Stock are sometimes hereinafter collectively referred to as the
"Preferred Stock".) The Series A Preferred Stock, Series B Preferred Stock,
Series B-1 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock shall have the following designations, powers,
preferences and other rights, and qualifications, limitations and
restrictions:
1. Dividends. The holders of Preferred Stock shall be entitled to share in
any dividends declared and paid upon or set aside for the Common Stock of the
Corporation, pro rata in accordance with the number of shares of Common Stock
into which such shares of Preferred Stock are then convertible pursuant to
Section 4.
<PAGE>
2. Liquidation.
(a) Upon a Liquidation (as defined below), after payment or
provision for payment of the debts and other liabilities of the Corporation
and all amounts which the holders of any class of capital stock ranking senior
to the Preferred Stock shall be entitled to receive upon such Liquidation,
(i) the holders of Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock shall be entitled to receive, on
a pari-passu basis in accordance with their respective Preference Amounts (as
defined below), out of the remaining assets of the Corporation available for
distribution to its stockholders with respect to each share of Series C
Preferred Stock, an amount (the "Series C Preference Amount") equal to the sum
of (A) $1.954 and (B) all declared but unpaid dividends payable with respect
to such share under Section 1, with respect to each share of Series D
Preferred Stock, an amount (the "Series D Preference Amount") equal to the sum
of (A) $2.50 and (B) all declared but unpaid dividends payable with respect to
such share under Section 1, and with respect to each share of Series E
Preferred Stock, an amount (the "Series E Preference Amount") equal to the sum
of (A) $2.85 and (B) all declared but unpaid dividends payable with respect to
such share under Section 1, before any distribution shall be made to the
holders of the Series A Preferred Stock, the Series B Preferred Stock, the
Series B-1 Preferred Stock, the Common Stock or any other class of capital
stock of the Corporation ranking junior to the Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock. If upon any Liquidation
the assets of the Corporation available for distribution to its stockholders
shall be insufficient to pay the holders of Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock the full respective Series C
Preference Amounts, Series D Preference Amounts and Series E Preference
Amounts to which they shall be entitled, respectively, the holders of Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock shall
share ratably in any distribution of assets based on the respective amounts
which would be payable to them on or with respect to the shares of Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock held by
them upon such distribution pursuant to this Section 2 as if all amounts
payable on or with respect to such shares were paid in full.
(ii) After distribution to the holders of Series C Preferred
Stock, Series D Preferred Stock and Series E Preferred Stock of the full
Series C Preference Amount, Series D Preference Amount and Series E Preference
Amount set forth in Section 2(a)(i), the holders of Series A Preferred Stock,
the holders of Series B Preferred Stock and the holders of Series B-1
Preferred Stock shall be entitled to receive, on a pari passu basis in
accordance with their respective Preference Amounts, out of the remaining
assets of the Corporation available for distribution to its stockholders, with
respect to each share of Series A Preferred Stock an amount (the "Series A
Preference Amount") equal to the sum of (A) $1.00 and (B) all declared but
unpaid dividends payable with respect to such share under Section 1, and with
respect to each share of Series B Preferred Stock and each share of Series B-1
Preferred Stock an amount (the "Series B Preference Amount") equal to the sum
of (A) $2.50 and (B) all declared but unpaid dividends payable with respect to
such share under Section 1, in each case, before any distribution shall be
made to the holders of the Common Stock or any other class of capital stock of
the Corporation ranking junior to the Preferred Stock. If upon any Liquidation
the assets of the Corporation available for distribution to its stockholders
shall be insufficient to pay the
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<PAGE>
holders of Series A Preferred Stock, Series B Preferred Stock and Series B-1
Preferred Stock the full respective Preference Amounts to which they shall be
entitled, respectively, the holders of Series A Preferred Stock, Series B
Preferred Stock and Series B-1 Preferred Stock shall share ratably in any
distribution of assets based on the respective amounts which would be payable
to them on or with respect to the shares of Series A Preferred Stock, Series B
Preferred Stock and Series B-1 Preferred Stock held by them upon such
distribution pursuant to this Section 2 as if all amounts payable on or with
respect to such shares were paid in full. The Series A Preference Amount,
Series B Preference Amount, Series C Preference Amount, Series D Preference
Amount and Series E Preference Amount sometimes hereinafter shall be
collectively referred to as the "Preference Amount" and each such Preference
Amount shall be subject to equitable adjustment to reflect stock splits, stock
dividends, stock combinations, recapitalizations and like occurrences.
(b) Upon any Liquidation, the holders of Series A Preferred Stock,
Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock shall, after any distribution to such holders of
the full amount to which they shall be entitled under paragraph (a) above, not
share in the distribution of the remaining assets of the Corporation, except
to the extent that such holders also hold Common Stock of the Corporation.
After distribution of the Preference Amount, the remaining assets of the
Corporation available for distribution, if any, to the stockholders of the
Corporation shall be distributed to the holders of shares of Common Stock and
Series E Preferred Stock, pro rata based on the respective number of shares of
Common Stock then owned or then issuable upon conversion of the Series E
Preferred Stock then owned by such stockholders, provided, however, that the
aggregate distribution per share of Series E Preferred Stock pursuant to
Section 2(a)(i) and 2(b) shall not exceed $5.70 (subject to equitable
adjustment to reflect stock splits, stock dividends, stock combinations,
recapitalizations and like occurrences).
(c) For purposes of this Section 2, a Corporate Transaction (as
defined below) shall be treated as a Liquidation and shall entitle the holders
of Preferred Stock to receive, upon the consummation of such Corporate
Transaction, consideration in the same form as is to be provided in such
Corporate Transaction (whether cash, securities, other property or any
combination thereof), having a value (as determined in accordance with the
next sentence) equivalent to the sum of (i) the amounts to which such holders
of Preferred Stock would otherwise have been entitled pursuant to Section 2(a)
and Section 2(b) assuming such Corporate Transaction had constituted a
Liquidation within the meaning of this Section 2 and (ii) that in the case of
each share of Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock, an additional amount that, when added to the amount of
declared but unpaid dividends (if any) then payable with respect to such share
of Series C Preferred Stock, Series D Preferred Stock or Series E Preferred
Stock, as the case may be, will constitute an amount representing a 10%
(calculated daily and compounded annually) internal rate of return (computed
in accordance with generally accepted financial practice) with respect to the
Series C Preference Amount, Series D Preference Amount or Series E Preference
Amount, as the case may be, of such share calculated for the period commencing
with the date of the original issuance thereof and ending on the date of such
Corporate Transaction and in connection with such calculation, the Corporation
shall provide each holder of Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock with the information set forth in Section
4(f) within the time period specified therein. In the event that any
distribution pursuant to this Section 2(c) shall be payable
3
<PAGE>
in a form other than cash, the value thereof shall be its fair market value as
determined in good faith by the Board of Directors of the Company; provided,
however, that if the holders of 60% of the then outstanding Preferred Stock
shall dispute in writing such determination within ten (10) business days of
such determination, the Corporation shall promptly engage a
nationally-recognized independent investment banking firm or independent
competent appraisers, jointly selected by the Corporation and the holders of
at least 60% of the then outstanding Preferred Stock, to determined the value
of the non-cash assets and property to be distributed to the holders of
Preferred Stock pursuant to this Section 2, whose determination shall be
conclusive (the "Fair Market Value").
(d) As used herein, the following terms shall have the following
respective meanings:
(i) "Corporate Transaction" means (A) any consolidation or
merger of the Corporation, other than any merger or consolidation resulting in
the holders of the capital stock of the Corporation entitled to vote for the
election of directors holding a majority of the capital stock of the surviving
or resulting entity entitled to vote for the election of directors, (B) any
person or entity (including any affiliates thereof) becoming the holder of a
majority of the capital stock of the Corporation entitled to vote for the
election of directors, or (C) any sale or other disposition by the Corporation
of all or substantially all of its assets.
(ii) "Liquidation" means any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation,
other than any dissolution, liquidation or winding up in connection with any
reincorporation of the Corporation in another jurisdiction.
3. Voting Rights.
(a) In addition to the rights provided by law and in the
Corporation's By-laws, each share of Preferred Stock (except for shares of
Series B-1 Preferred Stock) shall entitle the holder thereof to such number of
votes as shall equal the nearest whole number of shares of Common Stock into
which such share of Preferred Stock is then convertible pursuant to Section 4.
Except as provided in paragraphs (b) and (c) below or as otherwise provided by
law, the holders of Preferred Stock (except for Series B-1 Preferred Stock)
shall be entitled to vote on all matters as to which holders of Common Stock
shall be entitled to vote, in the same manner and with the same effect as such
holders of Common Stock, voting together with the holders of Common Stock as
one class. Except as otherwise required by law, all shares of Series B-1
Preferred Stock shall be non-voting, and the holders thereof shall not be
entitled to vote on any matters.
(b) The Corporation shall not, without the affirmative consent or
approval of each of (i) the holders of a majority of the shares of Series A
Preferred Stock then outstanding (with respect to clauses (1), (2), (3) and
(4) below), voting as a separate class, (ii) the holders of at least 60% of
the shares of Series B Preferred Stock then outstanding (with respect to
clauses (1), (2), (3) and (4) below), voting as a separate class, (iii) the
holders of at least a majority of the shares of Series A Preferred Stock and
Series B Preferred Stock then outstanding, voting together as a class (with
respect to clauses (5) and (6) below), (iv) the holders of at least 66(Beta)%
(by voting power) of the shares of Series D Preferred Stock then outstanding
voting as a separate
4
<PAGE>
class (with respect to clauses (2), (3), (4) and (7) below) and (v) the
holders of at least 66(Beta)% (by voting power) of the shares of Series E
Preferred Stock then outstanding voting as a separate class (with respect to
clauses (2), (3), (4) and (8) below):
(1) authorize, create, designate or establish any class or
series of capital stock ranking senior to such series of Preferred Stock or
reclassify any shares of Common Stock into shares having any preference or
priority as to dividends or assets superior to any such preference or priority
of such series of Preferred Stock;
(2) in any other manner alter or change the powers,
preferences, or rights, or qualifications, limitations or restrictions
thereof, of the shares of such series of Preferred Stock as to affect them
adversely;
(3) in any other manner amend the Certificate of Incorporation
of the Corporation so as to materially adversely affect the powers,
preferences or rights, or qualifications, limitations or restrictions thereof,
of the shares of such series of Preferred Stock, except (1) to authorize,
create, designate or establish any class or series of capital stock ranking,
with respect to voting rights or rights to dividends or assets, pari passu
with or junior to such series of Preferred Stock and (2) that the number of
shares of Common Stock that the Corporation is authorized to issue may,
without separate class vote, be increased or decreased from time to time by
the affirmative vote of the holders of a majority of the capital stock of the
Corporation entitled to vote thereon;
(4) amend the By-laws of the Corporation in any manner that
would materially adversely affect the powers, preferences or rights, or
qualifications, limitations or restrictions thereof, of the shares of such
series of Preferred Stock;
(5) consummate any Corporate Transaction; or
(6) approve or authorize any Liquidation or any
recapitalization or reorganization of the Corporation.
(7) notwithstanding clause (3) above, authorize, create,
designate or establish any class or series of capital stock ranking, with
respect to voting rights or rights to dividends or assets, senior to or pari
passu with the Series D Preferred Stock.
(8) notwithstanding clause (3) above, authorize, create,
designate or establish any class or series of capital stock ranking, with
respect to voting rights or rights to dividends or assets, senior to or pari
passu with the Series E Preferred Stock.
(c) The Corporation shall not, without the affirmative consent or
approval of each of (i) the holders of at least 66(Beta)% of the shares of
Series C Preferred Stock (with respect to clauses (1), (2), (3) and (4)
below), voting separately as a class, (ii) the holders of at least 66(Beta)%
of the shares of Series C Preferred Stock, Series D Preferred Stock and Series
E Preferred Stock (with respect to clauses (5), (6), (7) below), voting
together as a class and (iii) the holders of least 60% of the shares of Series
C Preferred Stock (with respect to clause (8) below), voting separately as a
class:
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(1) authorize, create, designate or establish any class or
series of capital stock ranking senior to or pari passu with Series C
Preferred Stock or reclassify any shares of Common Stock into shares pari
passu with or having any preference or priority as to dividends or assets pari
passu with or superior to any such preference or priority of Series C
Preferred Stock;
(2) in any other manner alter or change the powers,
preferences, or rights, or qualifications, limitations or restrictions
thereof, of the shares of Series C Preferred Stock as to affect them
adversely;
(3) in any other manner amend the Certificate of Incorporation
of the Corporation so as to adversely affect the powers, preferences or
rights, or qualifications, limitations or restrictions thereof, of the shares
of Series C Preferred Stock, except to authorize, create, designate or
establish any class or series of capital stock ranking, with respect to voting
rights or rights to dividends or assets, junior to Series C Preferred Stock;
(4) amend the By-laws of the Corporation in any manner that
would adversely affect the powers, preferences or rights, or qualifications,
limitations or restrictions thereof, of the shares of Series C Preferred
Stock;
(5) consummate any Corporate Transaction;
(6) approve or authorize any Liquidation or any
recapitalization or reorganization of the Corporation;
(7) incur or guaranty any indebtedness for money borrowed,
having a maturity of twelve months or greater, in the excess of $5,000,000 in
the aggregate at any time outstanding; or
(8) increase or decrease the authorized number of shares of
Series C Preferred Stock, except as contemplated by Section 7.13 of the Series
C Preferred Stock Purchase Agreement dated as of May 28, 1997 among the
Corporation and the other parties identified therein.
(d) The Corporation shall not, without the affirmative consent or
approval of the holders of 66(Beta)% of the shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock then outstanding, voting together as a
class:
(1) directly or indirectly pay or declare any dividend or make
any distribution upon, or redeem, retire, repurchase or otherwise acquire, any
shares of capital stock of the Corporation, other than (i) pursuant to any
stock vesting or similar agreement with an officer, director or employee of
the Company or (ii) in accordance with Sections 3.2 and 3.4 of the Fourth
Amended and Restated Stockholders' Agreement dated as of the Original Issuance
Date (as defined in Section 4(a)), among the Corporation and its stockholders
named therein;
(2) increase or decrease the authorized number of shares of
Preferred Stock or Common Stock; or
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(3) sell, transfer, or grant any lien or encumbrance on any
material intellectual property right of the Corporation, other than licenses
granted in the ordinary course of business of the Corporation.
4. Optional Conversion.
(a) Upon the terms set forth in this Section 4, each holder of
shares of Preferred Stock shall have the right, (x) in the case of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock at such holder's option, at any
time and from time to time, and (y) in the case of Series B-1 Preferred Stock,
if and only to the extent permitted under the provisions of this Section 4(a),
to convert any of such shares into the number of fully paid and nonassessable
shares of Common Stock equal to the quotient obtained by dividing (i) (A) in
the case of the Series A Preferred Stock, the product of $1.00 and the number
of shares of Series A Preferred Stock being converted, (B) in the case of the
Series B Preferred Stock and Series B-1 Preferred Stock, the product of $2.50
and the number of shares of Series B Preferred Stock or Series B-1 Preferred
Stock (as the case may be) being converted, (C) in the case of the Series C
Preferred Stock, the product of $1.954 and the number of shares of Series C
Preferred Stock being converted, (D) in the case of the Series D Preferred
Stock, the product of $2.50 and the number of shares of Series D Preferred
Stock being converted and (E) in the case of Series E Preferred Stock, the
product of $2.85 and the number of shares of Series E Preferred Stock being
converted, by (ii) the applicable Conversion Price (as defined below)
therefor, as last adjusted and then in effect, and in addition, in the case of
the Series B-1 Preferred Stock (in lieu of converting into Common Stock), into
an equal number of shares of Series B Preferred Stock, by surrender of the
certificates representing the shares of Preferred Stock to be converted. The
conversion price per share at which shares of Common Stock shall be issuable
upon conversion of shares of Preferred Stock shall initially be $1.00 for the
Series A Preferred Stock, $2.24 for the Series B Preferred Stock and the
Series B-1 Preferred Stock, $1.954 for the Series C Preferred Stock, $2.50 for
the Series D Preferred Stock and $2.85 for the Series E Preferred Stock (as to
each such series of Preferred Stock, the "Conversion Price"), subject to
adjustment as set forth in paragraph (d) below. Each holder of shares of
Series B-1 Preferred Stock shall have the right, at such time as such holder
and its affiliates would hold, in the aggregate, voting capital stock of the
Corporation representing less than nineteen and nine-tenths (19.9%) percent of
the then outstanding voting capital stock of the Corporation (assuming solely
for the purpose of such calculation that shares of Series B-1 Preferred Stock
then held by such holder or any affiliate thereof constituting in the
aggregate at least twenty-five (25%) percent of the number of shares of Series
B-1 Preferred Stock held by such holder on May 6, 1996 (the "Minimum Number of
Shares") would entitle such holder to such number of votes as shall equal the
nearest whole number of shares of Common Stock into which said shares of
Series B-1 Preferred Stock would then be convertible but for the provisions of
this Section 4(a)), to convert up to that number of such holder's shares of
Series B-1 Preferred Stock (but in no event representing less than the Minimum
Number of Shares), that, after giving effect to such conversion, would result
in such holder and its affiliates holding, in the aggregate, voting capital
stock of the Corporation representing less than nineteen and nine-tenths
(19.9%) percent of the then outstanding voting capital stock of the
Corporation into, at the option of the holder thereof, either (a) an equal
number of fully paid and
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nonassessable shares of Series B Preferred Stock or (ii) that number of shares
of Common Stock as is determined in accordance with the foregoing provisions
of this Section 4(a). Shares of Series B-1 Preferred Stock shall be converted
into shares of Series B Preferred Stock or Common Stock (as requested by the
holder thereof), as aforesaid, within five business days of written notice
from such holder(s) of Series B-1 Preferred Stock to the Corporation
requesting that the specified number of such holder's shares of Series B-1
Preferred Stock be converted into shares of Series B Preferred Stock or Common
Stock (as requested by the holder thereof), and otherwise in accordance with
Section 4(b). As used herein, the term "Original Issuance Date" shall mean the
date of original issuance of the first share of Series E Preferred Stock.
(b) The holder of any shares of Preferred Stock may exercise the
conversion right pursuant to paragraph (a) above by delivering to the
Corporation the certificate or certificates for the shares to be converted,
duly endorsed or assigned in blank or to the Corporation (if required by it),
accompanied by written notice stating that the holder elects to convert such
shares and stating the name or names (with address) in which the certificate
or certificates for the shares of Common Stock are to be issued. Conversion
shall be deemed to have been effected on the date when such delivery is made
(the "Conversion Date"). As promptly as practicable thereafter, the
Corporation shall issue and deliver to or upon the written order of such
holder, to the place designated by such holder, a certificate or certificates
for the number of full shares of Common Stock (in the case of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock) or Series B Preferred Stock (in
the case of Series B-1 Preferred Stock) to which such holder is entitled, and
a cash amount in respect of any fractional interest in a share of Common Stock
(in the case of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock) or
Series B Preferred Stock (in the case of Series B-1 Preferred Stock) as
provided in paragraph (c) below. The person in whose name the certificate or
certificates for Common Stock (in the case of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock) or Series B Preferred Stock (in the case of Series
B-1 Preferred Stock) are to be issued shall be deemed to have become a
stockholder of record on the applicable Conversion Date unless the transfer
books of the Corporation are closed on that date, in which event such person
shall be deemed to have become a stockholder of record on the next succeeding
date on which the transfer books are open, but the Conversion Price shall be
that in effect on the Conversion Date. Upon conversion of only a portion of
the number of shares covered by a certificate representing shares of Preferred
Stock surrendered for conversion, the Corporation shall issue and deliver to
or upon the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Preferred Stock representing the unconverted portion of
the certificate so surrendered.
(c) No fractional shares of Common Stock (in the case of Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, Series
D Preferred Stock or Series E Preferred Stock), Series B Preferred Stock (in
the case of Series B-1 Preferred Stock) or scrip shall be issued upon
conversion of shares of Preferred Stock. The number of full shares of Common
Stock issuable upon conversion of Preferred Stock shall be computed on the
basis of the aggregate number of shares of Preferred Stock to be converted.
Instead of any fractional shares of Common Stock (in the case of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock), Series B
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Preferred Stock (in the case of Series B-1 Preferred Stock) which would
otherwise be issuable upon conversion of any shares of Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional interest
in an amount equal to the product of (i) the price of one share of Common
Stock (in the case of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock or Series E Preferred
Stock), Series B Preferred Stock (in the case of Series B-1 Preferred Stock)
as determined in good faith by the Board of Directors and (ii) such fractional
interest. The holders of fractional interests shall not be entitled to any
rights as stockholders of the Corporation in respect of such fractional
interests.
(d) The Conversion Price applicable to the Series A Preferred
Stock, the Series B Preferred Stock, the Series B-1 Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock and/or the Series E
Preferred Stock (as the case may be) shall be subject to adjustment from time
to time as follows:
(i) If the Corporation shall at any time or from time to
time after the Original Issuance Date issue any shares of Common Stock
(including shares of Common Stock deemed to be issued pursuant to subdivision
(3) of clause (ii) below) other than Excluded Stock (as defined in clause
(iii) below) without consideration or for a consideration per share less than
the Conversion Price applicable to such series of Preferred Stock in effect
immediately prior to the issuance of such Common Stock, then the applicable
Conversion Price in effect immediately prior to each such issuance shall
forthwith be lowered to a price equal to the quotient obtained by dividing:
(1) an amount equal to the sum of (x) the total number of
shares of Common Stock outstanding (including any shares of Common Stock
deemed to have been issued pursuant to subdivision (3) of clause (ii) below)
immediately prior to such issuance, multiplied by the applicable Conversion
Price in effect immediately prior to such issuance, and (y) the consideration
received by the Corporation upon such issuance; by
(2) the total number of shares of Common Stock outstanding
(including any shares of Common Stock deemed to have been issued pursuant to
subdivision (3) of clause (ii) below) immediately after the issuance of such
Common Stock.
(ii) For the purposes of any adjustment of the Conversion
Price pursuant to clause (i) above, the following provisions shall be
applicable:
(1) In the case of the issuance of Common Stock for cash
in a public offering or private placement, the consideration shall be deemed
to be the amount of cash paid therefor after deducting therefrom any
discounts, commissions or placement fees payable by the Corporation to any
underwriter or placement agent in connection with the issuance and sale
thereof.
(2) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the Fair Market Value thereof (such Fair
Market Value being determined as provided in the definition thereof but with
reference to such consideration), irrespective of any accounting treatment.
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<PAGE>
(3) The issuance after the Original Issuance Date of
options to purchase or rights to subscribe for Common Stock, securities by
their terms convertible into or exchangeable for Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable
securities shall be deemed to be an issuance of Common Stock for purposes of
clause (i) above. In the case of any such issuance of options to purchase or
rights to subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock, or options to purchase or rights to
subscribe for such convertible or exchangeable securities:
a. the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time
such options or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in subdivisions (1) and (2)
above), if any, received by the Corporation upon the issuance of such options
or rights plus the minimum purchase price provided in such options or rights
for the Common Stock covered thereby;
b. the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities or upon the exercise of options to purchase or
rights to subscribe for such convertible or exchangeable securities and
subsequent conversion or exchange thereof shall be deemed to have been issued
at the time such securities, options, or rights were issued and for a
consideration equal to the consideration received by the Corporation for any
such securities and related options or rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon the conversion
or exchange of such securities or the exercise of any related options or
rights (the consideration in each case to be determined in the manner provided
in subdivisions (1) and (2) above);
c. on any change in the number of shares or exercise
price of Common Stock deliverable upon exercise of any such options or rights
or conversions of or exchange for such securities, other than a change
resulting from the antidilution provisions thereof, the applicable Conversion
Price shall forthwith be readjusted to such Conversion Price as would have
been obtained had the adjustment made upon the issuance of such options,
rights or securities not converted prior to such change or options or rights
related to such securities not converted prior to such change been made upon
the basis of such change; and
d. on the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the applicable Conversion Price shall forthwith be readjusted to such
Conversion Price as would have been obtained had the adjustment made upon the
issuance of such options, rights, securities or options or rights related to
such securities been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such securities, or upon the
exercise of the options or rights related to such securities and subsequent
conversion or exchange thereof.
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(iii) "Excluded Stock" means (A) shares of Common Stock, and
options therefor, issued or granted from time to time to employees, directors
and officers of and consultants to the Corporation pursuant to agreements,
plans or arrangements approved by the Board of Directors; (B) shares of Series
B Preferred Stock issued upon exercise or exchange of stock subscription
warrants dated September 19, 1995 and May 6, 1996 to purchase shares of Series
B Preferred Stock; (C) shares of Common Stock issued upon conversion of shares
of Preferred Stock; (D) shares of Common Stock issued by the Corporation as a
stock dividend or upon any subdivision, split-up or combination of shares of
Common Stock; (E) shares of Series B Preferred Stock issued upon conversion of
shares of Series B-1 Preferred Stock; (F) shares of Common Stock issued upon
exercise or exchange of stock subscription warrants dated May 28, 1997, issued
to Bear, Stearns & Co. Inc. to purchase shares of Common Stock; (G) shares of
Series C Preferred Stock issued upon exercise or exchange of stock
subscription warrants dated February 27, 1997 and April 2, 1997 to purchase
shares of Series C Preferred Stock; (H) shares of Common Stock issued to Tenet
Healthcare Corporation ("Tenet") pursuant to the Common Stock Purchase
Agreement dated as of February 24, 1998 (the "Tenet Agreement"), between the
Corporation and Tenet; (I) Additional Shares (as such term is defined in the
Tenet Agreement), (J) shares of Common Stock issued in connection with the
acquisition of Health ResponseAbility Systems, Inc. on May 29, 1997; (K)
shares of capital stock of the Company issued to one or more broadcast
networks or their affiliates in exchange for in-kind consideration (which may
include, by way of example, but not in limitation thereof, promotion,
marketing and advertising time); (L) shares of capital stock of the
Corporation issued as consideration in connection with the acquisition by the
Corporation of all or substantially all of the assets or all capital stock of
any person or entity and (M) securities that were declared to be "Excluded
Stock" for purposes of this Section by the holders of at least 60% of (1) the
shares of Series A Preferred Stock and Series B Preferred Stock if an
adjustment to the Conversion Price of the Series A Preferred Stock and/or
Series B Preferred Stock would otherwise result pursuant to Section 4(d)(i)
with respect to Series A Preferred Stock and/or Series B Preferred Stock, (2)
the shares of Series C Preferred Stock if an adjustment to the Conversion
Price of the Series C Preferred Stock would otherwise result pursuant to
Section 4(d)(i) with respect to Series C Preferred Stock, (3) the shares of
Series D Preferred Stock if an adjustment to the Conversion Price of the
Series D Preferred Stock would otherwise result pursuant to Section 4(d)(i)
with respect to Series D Preferred Stock and (4) the shares of Series E
Preferred Stock if an adjustment to the Conversion Price of the Series E
Preferred Stock would otherwise result pursuant to Section 4(d)(i) with
respect to Series E Preferred Stock.
(iv) If, at any time after the Original Issuance Date, the
number of shares of Common Stock outstanding is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, following the record date for the determination of holders
of Common Stock entitled to receive such stock dividend, subdivision or
split-up, the Conversion Price shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of each share of
Preferred Stock shall be increased in proportion to such increase in
outstanding shares.
(v) If, at any time after the Original Issuance Date, the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date for
such combination, the Conversion Price shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion
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<PAGE>
of each share of Preferred Stock shall be decreased in proportion to such
decrease in outstanding shares.
(vi) In the event of any capital reorganization of the
Corporation, any reclassification of the stock of the Corporation (other than
a change in par value or from par value to no par value or from no par value
to par value or as a result of a stock dividend or subdivision, split-up or
combination of shares), or any consolidation or merger of the Corporation
(other than a consolidation or merger in which the Corporation is the
continuing corporation and which does not result in any change in the Common
Stock), each share of Preferred Stock shall after such reorganization,
reclassification, consolidation or merger (unless, in the case of a
consolidation or merger, payment shall have been made to the holders of
Preferred Stock of the full amount to which they shall have been entitled
pursuant to Section 2(c) of this Article Fourth) be convertible into the kind
and number of shares of stock or other securities or property of the
Corporation or of the corporation resulting from such consolidation or
surviving such merger to which the holder of the number of shares of Common
Stock deliverable (immediately prior to the time of such reorganization,
reclassification, consolidation or merger) upon conversion of such share of
Preferred Stock would have been entitled upon such reorganization,
reclassification, consolidation or merger. The provisions of this clause shall
similarly apply to successive reorganizations, reclassifications,
consolidations or mergers.
(vii) All calculations under this paragraph shall be made to
the nearest one hundredth (1/100) of a cent or the nearest one tenth (1/10) of
a share, as the case may be.
(viii) In any case in which the provisions of this paragraph
(d) shall require that an adjustment shall become effective immediately after
a record date of an event, the Corporation may defer until the occurrence of
such event (i) issuing to the holder of any share of Preferred Stock converted
after such record date and before the occurrence of such event the shares of
capital stock issuable upon such conversion by reason of the adjustment
required by such event in addition to the shares of capital stock issuable
upon such conversion before giving effect to such adjustments, and (ii) paying
to such holder any amount in cash in lieu of a fractional share of capital
stock pursuant to paragraph (c) above; provided, however, that the Corporation
shall deliver to such holder an appropriate instrument evidencing such
holder's right to receive such additional shares and such cash.
(e) Whenever the Conversion Price shall be adjusted as provided in
paragraph (d), the Corporation shall make available for inspection during
regular business hours, at its principal executive offices or at such other
place as may be designated by the Corporation, a statement, signed by its
chief executive officer, showing in detail the facts requiring such adjustment
and the Conversion Price that shall be in effect after such adjustment. The
Corporation shall also cause a copy of such statement to be sent by first
class certified mail, return receipt requested and postage prepaid, to each
holder of Preferred Stock as to which the Conversion Price shall be so
adjusted at such holder's address appearing on the Corporation's records.
Where appropriate, such copy may be given in advance and may be included as
part of any notice required to be mailed under the provisions of paragraph (f)
below.
(f) If the Corporation shall propose to take any action of the
types described in clauses (iv), (v) or (vi) of paragraph (d) above, the
Corporation shall give notice to each holder
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<PAGE>
of shares of Preferred Stock, in the manner set forth in paragraph (e) above,
which notice shall specify the record date, if any, with respect to any such
action and the date on which such action is to take place. Such notice shall
also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Conversion Price and the number,
kind or class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or deliverable
upon conversion of shares of Preferred Stock. In the case of any action which
would require the fixing of a record date, such notice shall be given at least
20 days prior to the date so fixed, and in case of all other action, such
notice shall be given at least 30 days prior to the taking of such proposed
action. Failure to give such notice, or any defect therein, shall not affect
the legality or validity of any such action.
(g) The Corporation shall reserve, and at all times from and after
the date of Original Issuance Date keep reserved, free from preemptive rights,
out of its authorized but unissued shares of Common Stock, solely for the
purpose of effecting the conversion of the shares of Preferred Stock,
sufficient shares of Common Stock to provide for the conversion of all
outstanding shares of Preferred Stock.
(h) At any time the Corporation makes or fixes a record date for
the determination of holders of Common Stock entitled to receive a dividend or
other distribution payable in securities of the Corporation other than shares
of Common Stock, provision shall be made so that each holder of shares of
Preferred Stock shall receive upon conversion thereof, in addition to the
shares of Common Stock receivable thereupon, the number of securities of the
Corporation which it would have received had its shares of Preferred Stock
been converted into shares of Common Stock on the date of such event and had
such holder thereafter, during the period from the date of such event to and
including the date of conversion, retained such securities receivable by it
pursuant to this paragraph during such period, subject to the sum of all other
adjustments called for during such period under this Section 4 with respect to
the rights of such holder of shares of Preferred Stock.
5. Mandatory Conversion.
(a) Upon the consummation of the first underwritten public
offering for the account of the Corporation of Common Stock pursuant to a
registration statement filed under the Securities Act of 1933, as amended, at
an offering price per share of Common Stock to the public (subject to
equitable adjustment for stock splits, stock dividends, stock combinations,
recapitalizations and like occurrences) of not less than $3.93 and with
aggregate proceeds (net of underwriting discounts and commissions) to the
Corporation of not less than $20,000,000 (a "Qualified Public Offering"), each
share of Preferred Stock then outstanding shall, by virtue of and
simultaneously with such Qualified Public Offering, be deemed automatically
converted into the number of fully paid and nonassessable shares of Common
Stock equal to the quotient obtained by dividing (i) (A) in the case of the
Series A Preferred Stock $1.00, (B) in the case of the Series B Preferred
Stock and the Series B-1 Preferred Stock $2.50, (C) in the case of the Series
C Preferred Stock $1.954, (D) in the case of the Series D Preferred Stock
$2.50 and (E) in the case of the Series E Preferred Stock $2.85 by (ii) the
applicable Conversion Price, as last adjusted and then in effect.
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<PAGE>
(b) As promptly as practicable after the date of consummation of
any Qualified Public Offering and the delivery to the Corporation of the
certificate or certificates for the shares of Preferred Stock which have been
converted, duly endorsed or assigned in blank to the Corporation (if required
by it), the Corporation shall issue and deliver to or upon the written order
of each holder of Preferred Stock, to the place designated by such holder, a
certificate or certificates for the number of full shares of Common Stock to
which such holder is entitled, and a cash amount in respect of any fractional
interest in a share of Common Stock as provided in paragraph (c) below. The
person in whose name the certificate or certificates for Common Stock are to
be issued shall be deemed to have become a stockholder of record on the date
of such Qualified Public Offering and on such date the shares of Preferred
Stock shall cease to be outstanding, whether or not the certificates
representing such shares have been received by the Corporation.
(c) The provisions set forth in Sections 4(b) and (c) shall apply
to the conversion of Preferred Stock pursuant to this Section in the same
manner as they apply to the conversion of Preferred Stock pursuant to Section
4.
THIRD
This Amendment was duly adopted by the Board of Directors of
the Corporation, acting by unanimous written consent in lieu of meeting
effective as of this date, pursuant to Section 242 of the General Corporation
Law of the State of Delaware and by the stockholders of the Corporation,
acting by written consent in lieu of a meeting effective as of this date
pursuant to Section 228 of the General Corporation Law of the State of
Delaware.
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IN WITNESS WHEREOF, this Certificate of Amendment has been
signed by an authorized officer of this Corporation this 3rd day of
December, 1998.
iVILLAGE INC.
By: /s/ Steven Elkes
-----------------------------
Name: Steven Elkes
Title: Vice President
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Exhibit 3.5
BY-LAWS
OF
i Village Inc.
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. - The registered office shall be
established and maintained at c/o United Corporate Services, Inc., 15 East
North Street, Dover, Delaware 19901 and United Corporate Services, Inc. shall
be the registered agent of this corporation in charge thereof.
SECTION 2. OTHER OFFICES. - The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. - Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without
the State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of meeting. In the
event the Board of Directors fails to so determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the corporation in Delaware.
If the date of the annual meeting shall fall upon a legal holiday,
the meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors
and they may transact such other corporate business as shall be stated in the
notice of the meeting.
SECTION 2. OTHER MEETINGS. - Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place,
within or without the State of Delaware, as shall be stated in the notice of
the meeting.
<PAGE>
SECTION 3. VOTING. - Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation and in accordance with the
provisions of these By-Laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such stockholder, but
no proxy shall be voted after three years from its date unless such proxy
provides for a longer period. Upon the demand of any stockholder, the vote for
directors and the vote upon any question before the meeting, shall be by
ballot. All elections for directors shall be decided by plurality vote; all
other questions shall be decided by majority vote except as otherwise provided
by the Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 4. QUORUM. - Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or
by proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the
stockholders. In case a quorum shall not be present at any meeting, a majority
in interest of the stockholders entitled to vote thereat, present in person or
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until the requisite amount of
stock entitled to vote shall be present. At any such adjourned meeting at
which the requisite amount of stock entitled to vote shall be represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed; but only those stockholders entitled to vote at the
meeting as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof. If the adjournment is for more than thirty (30) days, or
if after the adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote the meeting.
SECTION 5. SPECIAL MEETINGS. - Special meetings of the stockholders for
any purpose or purposes may be called by the President or Secretary, or by
resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. - Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than ten nor
more than sixty days before the date of the meeting. No business other than
that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
<PAGE>
SECTION 7. ACTION WITHOUT MEETING. - Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any
annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action
so taken, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. - The number of directors shall be one
(1). The directors shall be elected at the annual meeting of the stockholders
and each director shall be elected to serve until his successor shall be
elected and shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS. - Any director, member of a committee or
other officer may resign at any time. Such resignation shall be made in
writing, and shall take effect at the time specified therein, and if no time
be specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES - If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until
his successor shall be duly chosen.
SECTION 4. REMOVAL. - Any director or directors may be removed either
for or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. - The number of directors may be
increased by amendment of these By-Laws by the affirmative vote of a majority
of the directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a
special meeting called for that purpose, and by like vote the additional
directors may be chosen at such meeting to hold office until the next annual
election and until their successors are elected and qualify.
<PAGE>
SECTION 6. POWERS. - The Board of Directors shall exercise all of the
powers of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation or by these By-Laws conferred upon or
reserved to the stockholders.
SECTION 7. COMITTEES. - The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the directors of the
corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of any member
or such committee or committees, the member or members thereof present at any
such meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or
disqualified member.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power of authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the By-Laws of the corporation; and
unless the resolution, these By-Laws, or the Certificate of Incorporation
expressly so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock.
SECTION 8. MEETINGS. - The newly elected Board of Directors may hold
their first meeting for the purpose of organization and the transaction of
business, if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent,
in writing, of all the directors.
Unless restricted by the incorporation document or elsewhere in these
By-laws, members of the Board of Directors or any committee designated by such
Board may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at such
meeting.
Regular meetings of the Board of Directors may be scheduled by a
resolution adopted by the Board. The Chairman of the Board or the President or
Secretary may call, and if requested by any two directors, must call special
meeting of the Board and give five days' notice by mail, or two days' notice
personally or by telegraph or cable to each director. The Board of Directors
may hold an annual meeting, without notice, immediately after the annual
meeting of shareholders.
<PAGE>
SECTION 9. QUORUM. - A majority of the directors shall constitute a
quorum for the transaction of business. If at any meeting of the board there
shall be less than a quorum present, a majority of those present may adjourn
the meeting from time to time until a quorum is obtained, and no further
notice thereof need be given other than by announcement at the meeting which
shall be so adjourned.
SECTION 10. COMPENSATION. - Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the board a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 11. ACTION WITHOUT MEETING. - Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee therof, may be taken without a meeting, if prior to such action a
written consent thereto is signed by all members of the board, or of such
committee as the case may be, and such written consent is filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be a
President, a Treasurer, and a Secretary, all of whom shall be elected by the
Board of Directors and who shall hold office until their successors are
elected and qualified. In addition, the Board of Directors may elect a
Chairman, one or more Vice-Presidents and such Assistant Secretaries and
Assistant Treasurers as they may deem proper. None of the officers of the
corporation need be directors. The officers shall be elected at the first
meeting of the Board of Directors after each annual meeting. More than two
offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. - The Board of Directors may
appoint such other officers and agents as it may deem advisable, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board of
Directors.
SECTION 3. CHAIRMAN. - The Chairman of the Board of Directors, if one
be elected, shall preside at all meetings of the Board of Directors and he
shall have and perform such other duties as from time to time may be assigned
to him by the Board of Directors.
<PAGE>
SECTION 4. PRESIDENT. - The President shall be the chief executive
officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation. Except
as the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument
requiring it and when so affixed the seal shall be attested by the signature
of the Secretary or the Treasurer or Assistant Secretary or an Assistant
Treasurer.
SECTION 5. VICE-PRESIDENT. - Each Vice-President shall have such
powers and shall perform such duties as shall be assigned to him by the
directors.
SECTION 6. TREASURER. - The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositaries as may be designated by the Board of
Directors.
The Treasurer shall disburse the funds of the corporation,as may be
ordered by the Board of Directors, or the President, taking proper vouchers
for such disbursements. He shall render to the President and Board of
Directors at the regular meetings of the Board of Directors, or whenever they
may request it, an account of all his transactions as Treasurer and of the
financial condition of the corporation. If required by the Board of Directors,
he shall give the corporation a bond for the faithful discharge of his duties
in such amount and with such surety as the board shall prescribe.
SECTION 7. SECRETARY. - The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and directors, and all other
notices required by the law or by these By-Laws, and in case of his absence or
refusal or neglect so to do, any such notice may be given by any person
thereunto directed by the President, or by the directors, or stockholders,
upon whose requisition the meeting is called as provided in these By-Laws. He
shall record all the proceedings of the meetings of the corporation and of the
directors in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him by the directors or the President. He shall
have the custody of the seal of the corporation and shall affix the same to
all instruments requiring it, when authorized by the directors or the
President, and attest the same.
<PAGE>
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. -
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. - A certificate of stock, signed by
the Chairman or Vice-Chairman of the Board of Directors, if they be elected,
President or Vice-President, and the Treasurer or an Assistant Treasurer, or
Secretary or Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by him in the corporation. When such
certificates are countersigned (1) by a transfer agent other than the
corporation or its employee, or, (2) by a registrar other than the corporation
or its employee, the signatures of such officers may be facsimiles.
SECTION 2. LOST CERTIFICATES. - A new certificate of stock may be
issued in the place of any certificate theretofore issued by the corporation,
alleged to have been lost or destroyed, and the directors may, in their
discretion, require the owner of the lost or destroyed certificate, or his
legal representatives, to give the corporation a bond, in such sum as they may
direct, not exceeding double the value of the stock, to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES. - The shares of stock of the
corporation shall be transferrable only upon its books by the holders thereof
in person or by their duly authorized attorneys or legal representatives, and
upon such transfer the old certificate shall be surrendered to the corporation
by the delivery thereof to the person in charge of the stock and transfer
books and ledgers, or to such other person as the directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued.
A record shall be made of each transfer and whenever a transfer shall be made
for collateral security, and not absolutely, it shall be so expressed in the
entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. - In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior
to any other action. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjournment meeting.
<PAGE>
SECTION 5. DIVIDENDS. - Subject to the provisions of the Certificate
of Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 6. SEAL. - The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "Corporate Seal, Delaware, 1995". Said seal may be used by causing it or
a facsimile thereof to be impressed or affixed or reproduced or otherwise.
SECTION 7. FISCAL YEAR. - The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS. - All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the corporation shall be signed by such officer or officers, agent or
agents of the corporation, and in such manner as shall be determined from time
to time by resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. - Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly so stated, and any notice so required shall be deemed to be
sufficient if given by depositing the same in the United States mail, postage,
prepaid, addressed to the person entitled thereto at his address as it appears
on the records of the corporation, and such notice shall be deemed to have
been given on the day of such mailing. Stockholders not entitled to vote shall
not be entitled to receive notice of any meetings except as otherwise provided
by Statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the corporation of these By-Laws, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
<PAGE>
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be made at
any annual meeting of the stockholders or at any special meeting thereof if
notice of the proposed alteration or repeal of By-Law or By-Laws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or
by the affirmative vote of a majority of the Board of Directors, at any
regular meeting of the Board of Directors, or at any special meeting of the
Board of Directors, if notice of the proposed alteration or repeal of By-Law
or By-Laws to be made, be contained in the notice of such special meeting.
ARTICLE VII
INDEMNIFICATION
No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability which may be specifically defined by law or (4) a transaction from
which the director derived an improper personal benefit, it being the
intention of the foregoing provision to eliminate the liability of the
corporation's directors to the corporation or its stockholders to the fullest
extent permitted by law. The corporation shall indemnify to the fullest extent
permitted by law each person that such law grants the corporation the power to
indemnify.
<PAGE>
AMENDMENT NO. 1 TO BY-LAWS OF i VILLAGE INC.
dated
May 6, 1996
In accordance with Article VI of the By-Laws of i Village, the
By-Laws are hereby amended as follows:
(a) The first sentence of Article III Section 1 of
the By-Laws hereby amended and restated in its
entirety so that the first sentence of Article
III Section 1 reads as follows:
"The number of directors who shall constitute
the Board of Directors shall be such number as
the Board of Directors shall from time to time
have designated."
(b) Sections 3 and 4 of Article IV are hereby
amended and restated in their entirety, and a
new Section 3A is hereby added to Article IV, in
each case, as follows:
"SECTION 3 CHIEF EXECUTIVE OFFICER. - The Chief
Executive Officer shall be the chief executive
officer of the corporation and shall, subject to
the direction of the Board of Directors, have
general supervision and control of its business.
Unless otherwise provided by resolution of the
Board of Directors, the Chief Executive Officer
shall preside at all meetings of the
stockholders and, in the absence of the Chairman
of the Board, if any, at meetings of the Board
of Directors. The Chief Executive Officer shall
have general supervision and direction of all of
the officers, employees and agents of the
corporation.
SECTION 3A. CHAIRMAN OF THE BOARD. - The
Chairman of the Board, if any, shall preside at
all meetings of the Board of Directors at which
he or she is present and shall have such
authority and perform such duties as may be
prescribed by these by-laws or from time to time
determined by the Board of Directors. The
Chairman of the Board shall have the power to
sign all stock certificates, contracts or other
instruments of the corporation that are
authorized.
-1-
<PAGE>
SECTION 4. PRESIDENT. - Except for meetings at
which the Chief Executive Officer or Chairman of
the Board, if any, presides, the President
shall, if present, preside at all meetings of
stockholders, and if a director, at all meetings
of the Board of Directors. The President shall,
subject to the control and direction of the
Chief Executive Officer and the Board of
Directors, have and perform such powers and
duties as may be prescribed by these by-laws or
form time to time determined by the Chief
Executive Officer or the Board of Director. The
President shall have the power to sign all stock
certificates, contracts and other instruments of
the corporation that are authorized.
(c) A new Section 12 is hereby added to Article V,
as follows:
"The Corporation shall not, without the
Requisite Board Approval (as hereinafter
defined), enter into any transaction, contract,
agreement or arrangement (other than, or as
expressly contemplated by, the Documents) with
any Investor or affiliate thereof other than any
such transaction, contract, agreement or
arrangement that (a) is contemplated by the then
current Budget approved by the Board of the
Company or (b)(i) is encompassed within any
category of transactions, contracts, agreements
or arrangements and (ii) involves an aggregate
value that, in each case, is expressly
determined by 66-2/3% of the Board as a policy
matter not to require Requisite Board Approval
(a "Subject Transaction"). As used herein, the
term "Requisite Board Approval" shall mean (i)
the approval of at least 66-2/3% of the Board
excluding from such Board determination the
director(s), if any, who have been designated by
such Investor (or its, his or her affiliates)
who or which shall be a party to the applicable
Subject Transaction and (ii) all outside,
"independent" directors on the Board
affirmatively approve the applicable Subject
Transaction. This provision shall cease and
terminate and be of no further force or effect
upon the consummation of a Qualified Public
Offering. All capitalized terms used in this
provision and not otherwise defined herein shall
have the meanings ascribed
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<PAGE>
thereto in the Series B Preferred Stock Purchase
Agreement dated as of May 6, 1996, among the
Corporation and each of the other parties
thereto."
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<PAGE>
VOTING TRUST AGREEMENT
Agreement dated as of September 19, 1995 by and among Candice Carpenter
(the "Trustee"), Nancy Evans (the "Successor Trustee"), certain owners and
holders of the common stock, par value $.0005 per share (the "Common Stock"), of
iVillage Inc., a Delaware corporation (the "Company"), who are (by execution
hereof and deposit of Common Stock made contemporaneously with the delivery
hereof) parties hereto (the "Original Depositors"), and such owners and holders
of shares of Common Stock as may hereafter become parties hereto (the
"Subsequent Depositors") (the Original Depositors and Subsequent Depositors
collectively, the "Stockholders"). (For the purpose of this Agreement, "Shares"
shall mean and include Common Stock and any other securities of the Company
having general voting power for the election of directors.)
1. Deposit of Stock.
(1) The Original Depositors have deposited with the Trustee
certificates, receipt of which is hereby acknowledged, representing the shares
of Common Stock originally issued to them by the Company. The Original
Depositors shall deposit with the Trustee any other certificates for Common
Stock and other Shares which may be subsequently acquired by them during the
term of this Agreement. All such certificates deposited hereunder shall be duly
endorsed to the Trustee, or accompanied by such instruments of transfer as to
enable the Trustee to cause such certificates to be transferred into the name of
the Trustee, as hereinafter provided.
(2) From time to time during the term of this Agreement, any other
stockholder of the Company may become a party to this Agreement by assigning,
transferring and depositing with the Trustee certificates representing his
Common Stock and other Shares and depositing with the Trustee his agreement
adhering to this Agreement. Each such other stockholder who shall so assign,
transfer and deposit such certificates and agreement shall thereby assent and
become a party to this Agreement (defined above as a Subsequent Depositor),
with the same force and effect as if such person had in fact executed this
Agreement. The Subsequent Depositors shall deposit with the Trustee any other
certificates for Common Stock and other Shares which may be subsequently
acquired by them during the term of this Agreement. All such certificates
deposited hereunder shall be duly endorsed to the Trustee, or accompanied by
such instruments of transfer as to enable the Trustee to cause such certificates
to be transferred into the name of the Trustee, as hereinafter provided.
<PAGE>
2. Issuance of Stock to Trustee. The Trustee shall cause all
certificates representing Shares deposited with him to be surrendered to and
cancelled by the Company and a new certificate or certificates therefor to be
issued on the books of the Company to himself, as Trustee, and delivered to
himself, as Trustee. All certificates issued hereunder representing Shares shall
be registered in the name of the Trustee, as Trustee and shall bear legend to
the effect that they are issued pursuant to and subject to this Agreement. The
Trustee shall request the Company to note that fact on the books of the Company.
Thereupon, the Trustee may vote and act with respect to the Shares so issued to
the Trustee in accordance with the terms and conditions of this Agreement. The
Trustee shall cause the Shares to be transferred on the books of the Company as
may be necessary from time to time as a result of any change in the identity of
the Trustee as hereinafter provided.
3. Issuance of Voting Trust Certificates. The Trustee, in exchange for
certificates representing Shares deposited with the Trustee pursuant to
paragraph 1 hereof, shall promptly issue and deliver to each Stockholder
appropriate voting trust certificates ("Voting Trust Certificates"), in the form
attached hereto as Exhibit A, representing, in the aggregate, the number of
shares of Common Stock delivered to the Trustee by such Stockholder. Each
Stockholder shall have the right to receive separate Voting Trust Certificates
in exchange for any particular stock certificate or certificates designated by
such Stockholder.
4. Transfer of Voting Trust Certificates.
(1) The Trustee shall keep or cause to be kept at the offices of the
Company or of its counsel or at such other place as the Trustee shall advise the
Stockholders in writing a record of all Voting Trust Certificates issued by the
Trustee, whether as an original issue in exchange for Shares deposited, or upon
transfer and exchange for Voting Trust Certificates surrendered. The Trustee
shall also fix and determine a place within the State of New York, or any other
state in the continental United States, at which such record books shall be kept
and at which the Voting Trust Certificates may be transferred. The records so
kept or caused to be kept by the Trustee shall conform, as nearly as may be
practicable, to the form of stock ledger or statutory stock books which would be
used by a corporation or a transfer agent under similar circumstances and shall
be available at reasonable hours for inspection by the holders of Voting Trust
Certificates.
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<PAGE>
(2) Each Stockholder's Voting Trust Certificates and the rights
represented thereby shall be freely transferable, subject, however, to any
applicable agreements restricting transfer, by each of the Stockholders by
delivery of the Voting Trust Certificate accompanied either by an assignment in
writing on the back of the certificate in the form of Exhibit B hereto or by a
written power of attorney to sell, assign and transfer such Voting Trust
Certificate on the books of the Trustee, signed by the person appearing as the
registered holder thereof. All Voting Trust Certificates surrendered shall be
cancelled forthwith. The Trustee may, in his discretion, treat the registered
holder of any Voting Trust Certificates as the owner thereof for all purposes
whatsoever and shall not be affected by any notice to the contrary, except that
delivery of Common Stock or any other Shares held by the Trustee upon the
expiration or termination hereof shall not be made without the surrender of the
Voting Trust Certificates representing the same, properly endorsed for
surrender. In connection with and as a condition precedent to the making or
permitting of any transfer of any Voting Trust Certificate, the Trustee may
require payment of a sum sufficient to pay or reimburse him for any transfer tax
or other governmental charge incident thereto. Each transferee of a Voting Trust
Certificate issued hereunder shall, by acceptance thereof, assent to an become a
party to this Agreement, and such acceptance shall have the same force and
effect as if such transferee had in fact executed this Agreement.
(3) If any Voting Trust Certificate shall be come mutilated, lost,
stolen or destroyed, the Trustee, under such conditions with respect to
indemnity and otherwise as he, in his discretion, may prescribe, may provide
for the issuance of a new Voting Trust Certificate in lieu of such lost, stolen
or destroyed Voting Trust Certificate or in exchange for such mutilated Voting
Trust Certificate.
(4) Any holder of Voting Trust Certificates may exchange such Voting
Trust Certificates for Voting Trust Certificates of other denominations
representing the same aggregate number and class of Shares in accordance with
such rules and restrictions as to authorized denominations as may be established
by the Trustee for that purpose
5. Withdrawal by Stockholders.
(1) At any time and from time to time after the consummation of the
first underwritten public offering for the account of the Company pursuant to a
registration statement covering Common Stock filed under the Securities Act of
1933,
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<PAGE>
as amended, at an offering price per share of Common Stock to the public of not
less than the amount obtained by dividing $75,000,000 by the number of shares of
Common Stock outstanding immediately after such public offering and with
aggregate proceeds (net of underwriting discounts and commissions) to the
Company of not less than $10,000,000, a Stockholder may withdraw any or all of
his Shares from this Voting Trust for the sole purpose of selling or otherwise
disposing of such Shares. The Trustee shall, as promptly as possible following
receipt of written notice from a Stockholder of his intention to dispose of any
Shares, accompanied by the surrender of the Voting Trust Certificates
representing the Shares covered by the notice, deliver to such withdrawing
Stockholder such Shares, free of trust and equivalent in amount to the Shares
represented by the Voting Trust Certificates so surrendered.
(2) In the event any of the Shares withdrawn pursuant to preceding
sub-paragraph are not disposed of by the Stockholder within 30 days after
receipt from the Trustee, the Stockholder shall re-deposit such Shares with the
Trustee in the same manner as deposits of Shares are made pursuant to paragraph
1 hereof.
6. Powers and Duties of Trustee,
(1) While this Agreement is in effect, the Trustee, in his sole
discretion, in person or by proxy, shall have the full and unqualified right and
power to vote the Shares, held by him hereunder, to waive notice of meetings, to
take part in or consent to any corporate or stockholders' action of any kind
whatsoever, to enter into agreement for the voting of Shares with stockholders
of the Company, and otherwise to act in respect of any and all such Shares in
the same manner and to the same extent as if he were the absolute owner thereof
in his own right; provided, however, that the Trustee shall have no right or
authority to pledge or otherwise encumber, or to sell, transfer, or otherwise
dispose of any Shares deposited hereunder.
(2) The Trustee may employ counsel and such agents as he may deem
necessary, desirable or convenient, may remove them at pleasure, and may fix the
powers, duties and compensation of such agents and attorneys. The Trustee shall
be reimbursed by the holders of Voting Trust Certificates, pro rata in
proportion to the number of such certificates held by them, for fees and
disbursements paid by the Trustee to such agents and attorneys and for any other
of his ordinary and necessary expenses in carrying out this Agreement upon
submission to such holders of vouchers for such payment.
-4-
<PAGE>
(3) The Trustee shall serve as such without compensation. He may, in
his individual capacity, serve as a director, officer and/or agent of the
Company or any subsidiary of, or company controlled by or affiliated with, the
Company and receive compensation therefor.
(4) The Trustee or any person, firm or corporation in which he may have
an interest or with which he is affiliated or in any way related may, for his or
its own account: purchase and sell securities of the Company or any subsidiary
of, or company controlled by or affiliated with, the Company; purchase any
property (including, without limitation, securities or rights or warrants to
acquire securities of other corporations) owned by the Company or any such other
company; or be interested in any such purchase or sale. No contract or other
transaction between the Company or any such other company; or be interested in
any such purchase or sale. No contract or other transaction between the Company
or any subsidiary of, or company controlled by or affiliated with, the Company
and the Trustee, or any person, firm or corporation in which the Trustee may be
interested or with which he may be affiliated or in any way related, shall be
rendered invalid by the fact of his being a party thereto or being interested in
or affiliated with or related to such person, firm or corporation; and the
Trustee and any such person, firm or corporation are hereby relieved from any
liability by reason of the making of any contract or participating in any
transaction wherein such Trustee, or any such person, firm or corporation, may
be interested.
(5) The Trustee may act in person or by proxy or otherwise through
agents as he in his sole discretion shall determine.
7. Distributions.
(1) The Trustee shall promptly pay over such cash dividends as may be
paid upon the Common Stock or any other Shares held by him hereunder to the then
registered holders of Voting Trust Certificates according to the respective
interests of such holders therein at the time fixed by the Company for the
taking of a record to determine those holders of Shares entitled to receive such
dividends.
(2) If the Trustee is entitled to receive any such cash dividend, he
may give the Company a certified list of the names and addresses of the then
registered holders of Voting Trust Certificates, which list shall contain an
appropriate indication of the number of Common Stock and any other shares
-5-
<PAGE>
of the Company-represented by the Voting Trust Certificates registered in the
name of each holder at the time fixed by the Company for the taking of a record
to determine those holders of its shares entitled to receive such cash
dividends; and the Trustee shall then cause the Company to make such
distribution, on behalf of the Trustee, directly to such registered holders of
the Voting Trust Certificates.
(3) If any dividend is paid upon the Common Stock or any other Shares
held by the Trustee hereunder, in whole or in part, in stock of the Company
having voting powers, the Trustee shall likewise hold, subject to the terms of
this Agreement, the certificates for stock which are received by the Trustee on
account of such dividend, and each Voting Trust Certificate shall thereafter
represent such stock received by the Trustee with respect to those Shares then
represented by such Voting Trust Certificate.
8. Reorganization or Dissolution.
(1) If during the term hereof, the Company shall merge into or
consolidate with another corporation or corporations, or there shall be a
reorganization or recapitalization of the Company or all or substantially all of
the assets of the Company are transferred to another corporation, any stock
received by the Trustee in exchange for or with respect to Common Stock or other
Shares then held by the Trustee hereunder as a result of such merger,
consolidation, recapitalization, reorganization or transfer shall be held by the
Trustee in accordance with the terms hereof. The Trustee may, in his discretion,
issue and deliver Voting Trust Certificates representing such stock to the then
registered holders of Voting Trust Certificates as their interests shall appear,
against surrender by such holders of any Voting Trust Certificates registered in
their name with respect to Common Stock or other Shares which were surrendered
by the Trustee pursuant to the terms of such merger, consolidation,
recapitalization, reorganization or transfer.
(2) In the event of the dissolution or total or partial liquidation of
the Company, whether voluntary or involuntary, the Trustee shall receive the
moneys, securities, rights, or property to which the holders of the shares of
the Company deposited hereunder are entitled, and shall distribute the same
among the registered holders of Voting Trust Certificates in proportion to their
interests, as shown by the books of the Trustee.
-6-
<PAGE>
9. Liability and Indemnification of Trustee.
(1) The Trustee shall not incur any responsibility, as stockholder,
trustee or otherwise, for any mistake, act or omission of any agent or attorney
or by reason of any action of any kind taken or omitted by him in connection
with his duties as Trustee, except for his own willful malfeasance.
(2) Except to the extent herein otherwise specifically provided, the
Stockholders (whether or not they shall then be holders of Voting Trust
Certificates) hereby jointly and severally indemnify and agree to hold harmless
the Trustee for any and all damages, liabilities, losses, costs or expenses
incurred or sustained by the Trustee by reason of his being a registered holder
of any of the Common Stock or any other Shares or other securities of the
Company held by the Trustee or by reason of any action taken or omitted by him
in connection with his duties as Trustee, except for his own willful malfeasance
or gross negligence.
(3) The provisions of this paragraph 8 shall survive the termination of
this Agreement and the resignation or removal or death of any person who shall
have acted as Trustee hereunder.
10. Resignation of Trustee and Appointment of Successor
(1) The Trustee may resign at any time by giving written notice of his
resignation to the then holders of the Voting Trust Certificates issued
hereunder. Unless rescinded, the resignation of the Trustee will take effect ten
(10) days after the date of mailing of such notice.
(2) If the Trustee shall die, resign, or become unable to perform the
duties of Trustee hereunder during the existence of this Voting Trust, then
Nancy Evans shall be his successor as trustee (defined above as the Successor
Trustee). If, upon any such occurrence affecting the Trustee, the Successor
Trustee shall be unable or unwilling to accept the trust hereunder, or if the
Successor Trustee, as Trustee, shall die, resign, or become unable to perform
the duties of Trustee during the existence of this Voting Trust, then this
Voting Trust shall terminate in accordance with paragraph 11 below.
(3) The Successor Trustee, as Trustee, shall have the rights, powers,
duties and obligations that the Trustee hereunder has.
-7-
<PAGE>
11. Termination of Voting Trust Agreement.
(1) This Agreement and the Voting Trust established hereunder shall
terminate in the event neither the Trustee nor the Successor Trustee, as
Trustee, is able or willing to perform the duties of Trustee hereunder, unless
earlier terminated (a) by the Trustee giving written notice to the Stockholders
which shall take effect 10 days after the date of mailing of such notice, or (b)
by written agreement among all the Stockholders.
(2) Upon the termination of this Voting Trust, the Trustee shall cause
to be delivered to each registered holder of Voting Trust Certificates, in
exchange for and upon surrender of the Voting Trust Certificates then
outstanding, the Common Stock and any other Shares represented by the Voting
Trust Certificates so surrendered.
(3) Notwithstanding the termination of this Agreement, the Trustee
shall thereafter have the power to take or cause to be taken such further or
other action as he may deem necessary or desirable to conclude the duties
imposed upon him hereunder.
12. Notices. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by certified mail, return
receipt requested, postage prepaid, to the parties hereto at the following
addresses or to such other address as any party hereto shall hereafter specify
by notice to the other party or parties hereto:
(a) If to a holder of voting Trust Certificates hereunder, to such
holder's address as it appears on the record books of the Trustee.
(b) If to the Trustee, to his at the principal office of the Company
or at such other location as the Trustee may designate by
written notice to all Stockholders.
13. Filing of Voting Trust Agreement. A copy of this Agreement shall be
filed in the principal office of the Company and in the registered office of the
Company in Delaware, and it shall be open to inspection daily during business
hours by any holder of Voting Trust Certificates and any shareholder of the
Company.
-8-
<PAGE>
14. Miscellaneous.
(1) This Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their legal representatives and successors. This
Agreement shall not be assignable by any party.
(2) This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same instrument. It shall not be necessary that every counterpart of
this Agreement be executed by all the parties hereto so long as each counterpart
is executed by the Trustee and by one or more of the other parties hereto and so
long as each of the parties hereto shall sign at least two counterparts, one of
which shall be delivered to the Trustee.
(3) Whenever necessary, the Trustee may issue voting Trust Certificates
for fractional Shares.
(4) The pronouns used herein shall be construed as masculine, feminine
or neuter, and in the singular or plural, as the sense requires.
(5) The invalidity or unenforceability of any term or provision of this
Agreement shall not affect the validity or enforceability of any other term or
provision of this Agreement.
(6) The validity of this Agreement or any part thereof and the
interpretation of all provisions shall be governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Voting Trust
Agreement on the day and year first above written.
/s/ Candice Carpenter
- -------------------------------------------
Candice Carpenter, Trustee
/s/ Nancy Evans
- -------------------------------------------
Nancy Evans, Successor Trustee
/s/ Candice Carpenter
- -------------------------------------------
Candice Carpenter, Original Depositor
/s/ Nancy Evans
- -------------------------------------------
Nancy Evans, Original Depositor
/s/ Robert Levitan
- -------------------------------------------
Robert Levitan, Original Depositor
-9-
<PAGE>
EXHIBIT A
THIS CERTIFICATE IS ISSUED PURSUANT TO, AND THE RIGHTS OF THE HOLDER HEREOF ARE
SUBJECT TO AND LIMITED BY, THE TERMS OF THE VOTING TRUST AGREEMENT REFERRED TO
IN THE TEXT HEREOF
No. _________ __________ Shares
VOTING TRUST CERTIFICATE
iVILLAGE INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS IS TO CERTIFY THAT ___________________________ is entitled, on the
surrender of this Certificate, to receive on August _______, _____, or on the
earlier termination of the Voting Trust Agreement hereinafter referred to, a
certificate or certificates for _______ shares of (Common Stock, $.0005 par
value]* of iVILLAGE INC., a Delaware corporation (the "Company"). This
Certificate is issued pursuant to, and the rights of the holders hereof are
subject to and limited by, the terms of a Voting Trust Agreement dated as of
September __ 1995, by and among Candice Carpenter, as Trustee, Nancy Evans, as
Successor Trustee, and certain Stockholders, and of every agreement adhering to,
amending or supplementing the same, a copy of which Voting Trust Agreement and
any such other agreement is on file in the principal office of the Company and
in the registered office of the Company in the State of Delaware. The Voting
Trust Agreement, unless earlier terminated pursuant to the terms thereof, will
expire in the event neither the Trustee nor the Successor Trustee, as Trustee,
is able or willing to perform the duties of Trustee under the Voting Trust
Agreement.
The holder of this Certificate shall be entitled to the benefits of
said Voting Trust Agreement, including the right to receive the cash or any
other dividends, if any, paid by the Company with respect to the number of
shares represented by this Certificate.
This Certificate shall be transferable only on the books of the
undersigned Trustee or any successor or successors, to be kept by him or his
agent, on surrender hereof
_________________
* Substitute description of other Shares as appropriate.
Exhibit A - Page 1
<PAGE>
by the registered holder in person or by attorney duly authorized in accordance
with the provisions of the Voting Trust Agreement, and, until so transferred,
the Trustee may treat the registered holder as the owner of this Certificate for
all purposes whatsoever, unaffected by any notice to the contrary. As a
condition precedent to the making of any transfer of this Certificate, the
Trustee may require the payment of a sum sufficient to recover the amount of any
taxes or other governmental charge incident thereto.
By accepting this Certificate, the holder hereof consents to and
becomes a party to the Voting Trust Agreement with the same force and effect as
if the Voting Trust Agreement had been signed under seal by the owner hereof,
whether or not it is so signed.
This Certificate is not valid until duly signed by the trustee
IN WITNESS WHEREOF, the Trustee has signed this Certificate
this________ day of ____________________________, 19_____.
------------------------------
, Voting Trustee
Exhibit A - Page 2
<PAGE>
EXHIBIT B
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY UPON TRANSFER
OF VOTING TRUST CERTIFICATE)
For value received, the undersigned hereby sells, assigns and transfers
unto __________________________________ the within Voting Trust Certificate
with respect to ________________ shares of (Common Stock of iVILLAGE INC., par
value $.0005 per share)*, and does hereby irrevocably constitute and appoint
________________ the attorney to transfer the same on the books of the Trustee
with full power of substitution in the premises.
Dated:
--------------------------
(Signature must conform in all
respects to the name of holder as
specified on the face of this
Certificate)
In the presence of
- ---------------------------
___________________________
* Substitute description of other Shares, as appropriate.
Exhibit B - Page 1
<PAGE>
VOTING TRUST SIGNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement dated as of
September 19, 1995, (the "Agreement") by and among Candice Carpenter, Nancy
Evans and certain owners and holders of the common stock of iVillage Inc.
Pursuant to Section 1(2) of the Agreement, the undersigned hereby becomes a
party to the Agreement and agrees to be bound by, comply with and adhere to all
the terms and provisions of the Agreement, with the same force and effect as if
the undersigned had in fact originally executed the Agreement.
In connection with the deposit of this Voting Trust Signatory Agreement
with the Trustee, the undersigned hereby assigns, transfers and deposits with
the Trustee all certificates representing his, her or its Shares, accompanied by
a stock power or powers, duly endorsed in favor of the Trustee.
All defined terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
Dated: 5/28/97
/s/ Philip Berney
-------------------------------------
Name: Philip Berney
<PAGE>
VOTING TRUST SIGNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement dated as of
September 19, 1995, (the "Agreement") by and among Candice Carpenter, Nancy
Evans and certain owners and holders of the common stock Of iVillage Inc.
Pursuant to Section 1(2) of the Agreement, the undersigned hereby becomes a
party to the Agreement and agrees to be bound by, comply with and adhere to all
the terms and provisions of the Agreement, with the same force and effect as if
the undersigned had in fact originally executed the Agreement.
In connection with the deposit of this voting Trust Signatory Agreement
with the Trustee, the undersigned hereby assigns, transfers and deposits with
the Trustee all certificates representing his, her or its Shares, accompanied by
a stock power or powers, duly endorsed in favor of the Trustee.
All defined terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
Dated: MAY 22, 1997
BARATERRE LIMITED, SOLE DIRECTOR
FOR AND ON BEHALF OF GROWTH SHARES LTD.
/s/ Phillipa M. Delancy
/s/ Lisa E. Knowles
---------------------------------------
Name: PHILLIPA M. DELANCY
LISA E. KNOWLES
<PAGE>
VOTING TRUST SIGNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement dated as of
September 19, 1995, (the "Agreement") by and among Candice Carpenter, Nancy
Evans and certain owners and holders of the common stock of iVillage Inc.
Pursuant to Section 1(2) of the Agreement, the undersigned hereby becomes a
party to the Agreement and agrees to be bound by, comply with and adhere to all
the terms and provisions of the Agreement, with the same force and effect as if
the undersigned had in fact originally executed the Agreement.
In connection with the deposit of this Voting Trust Signatory Agreement
with the Trustee, the undersigned hereby assigns, transfers and deposits with
the Trustee all certificates representing his, her or its Shares, accompanied by
a stock power or powers, duly endorsed in favor of the Trustee.
All defined terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
Dated: May 22, 1997
/s/ Juerger Habermeier
----------------------------------
Name: Juerger Habermeier
<PAGE>
VOTING TRUST SIGNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement dated as of
September 19, 1995, (the "Agreement") by and among Candice Carpenter, Nancy
Evans and certain owners and holders of the common stock of i village Inc.
Pursuant to Section 1(2) of the Agreement, the undersigned hereby becomes a
party to the Agreement and agrees to be bound by, comply with and adhere to all
the terms and provisions of the Agreement, with the same force and effect as if
the undersigned had in fact originally executed the Agreement.
In connection with the deposit of this Voting Trust Signatory Agreement
with the Trustee, the undersigned hereby assigns, transfers and deposits with
the Trustee all certificates representing his, her or its Shares, accompanied by
a stock power or powers, duly endorsed in favor of the Trustee.
All defined terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
Dated: May 22, 1997
/s/ Ralph Mack
---------------------------------
Name: Ralph Mack
<PAGE>
VOTING TRUST SIGNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement dated as of
September 19, 1995, (the "Agreement") by and among Candice Carpenter, Nancy
Evans and certain owners and holders of the common stock of iVillage Inc.
Pursuant to Section 1(2) of the Agreement, the undersigned hereby becomes a
party to the Agreement and agrees to be bound by, comply with and adhere to all
the terms and provisions of the Agreement, with the same force and effect as if
the undersigned had in fact originally executed the Agreement.
In connection with the deposit of this Voting Trust Signatory Agreement
with the Trustee, the undersigned hereby assigns, transfers and deposits with
the Trustee all certificates representing his, her or its Shares, accompanied by
a stock power or powers, duly endorsed in favor of the Trustee.
All defined terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
Dated: 5/28/97
/s/ Stephen Parish
-----------------------------
Name: Stephen Parish
<PAGE>
VOTING TRUST SIGNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement dated as of
September 19, 1995, (the "Agreement") by and among Candice Carpenter, Nancy
Evans and certain owners and holders of the common stock of iVillage Inc.
Pursuant to Section 1(2) of the Agreement, the undersigned hereby becomes a
party to the Agreement and agrees to be bound by, comply with and adhere to all
the terms and provisions of the Agreement, with the same force and effect as if
the undersigned had in fact originally executed the Agreement.
In connection with the deposit of this Voting Trust Signatory Agreement
with the Trustee, the undersigned hereby assigns, transfers and deposits with
the Trustee all certificates representing his, her or its Shares, accompanied by
a stock power or powers, duly endorsed in favor of the Trustee.
All defined terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
Dated: 5/28/97
/s/ Steve Mizel
-----------------------------
Name: Steve Mizel
<PAGE>
VOTING TRUST SIGNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement dated as of
September 19, 1995, (the "Agreement") by and among Candice Carpenter, Nancy
Evans and certain owners and holders of the common stock of iVillage Inc.
Pursuant to Section 1(2) of the Agreement, the undersigned hereby becomes a
party to the Agreement and agrees to be bound by, comply with and adhere to all
the terms and provisions of the Agreement, with the same force and effect as if
the undersigned had in fact originally executed the Agreement.
In connection with the deposit of this Voting Trust Signatory Agreement
with the Trustee, the undersigned hereby assigns, transfers and deposits with
the Trustee all certificates representing his, her or its Shares, accompanied by
a stock power or powers, duly endorsed in favor of the Trustee.
All defined terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
Dated: 5/28/97 /s/ Norman Tulchin
-----------------------------
Name: Norman Tulchin
<PAGE>
VOTING TRUST SICNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement dated as of
September 19, 1995, (the "Agreement") by and among Candice Carpenter, Nancy
Evans and certain owners and holders of the common stock of iVillage Inc.
Pursuant to Section 1(2) of the Agreement, the undersigned hereby becomes a
party to the Agreement and agrees to be bound by, comply with and adhere to all
the terms and provisions of the Agreement, with the same force and effect as if
the undersigned had in fact originally executed the Agreement.
In connection with the deposit of this Voting Trust Signatory Agreement
with the Trustee, the undersigned hereby assigns, transfers and deposits with
the Trustee all certificates representing his, her or its Shares, accompanied by
a stock power or powers, duly endorsed in favor of the Trustee.
All defined terms used but not defined herein shall have the meaning
ascribed to them in the Agreement.
Dated: 5/28/97
/s/ Stanley Tulchin
---------------------------------
Name: Stanley Tulchin
<PAGE>
VOTING TRUST SIGNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement dated as
of September 19, 1995, (the "Agreement) by and among Candice Carpenter, Nancy
Evans and certain owners and holders of the common stock of iVillage Inc.
Pursuant to Section 1(2) of the Agreement, the undersigned hereby becomes a
party to the Agreement and agrees to be bound by, comply with and adhere to all
the terms and provisions of the Agreement, with the same force and effect as if
the undersigned had in fact originally executed the Agreement.
In connection with the deposit of this Voting Trust Signatory
Agreement with the Trustee, the undersigned hereby assigns, transfers and
deposits with the Trustee all certificates representing his, her or its Shares,
accompanied by a stock power or powers, duly endorsed in favor of the Trustee.
All defined terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.
Dated: 5/29/97
/s/ Elin Silveous
----------------------------
Name: Elin Silveous
<PAGE>
VOTING TRUST SIGNATORY AGREEMENT
Reference is hereby made to the Voting Trust Agreement
dated as of September 19, 1995 (the "Agreement") by and among Candice
Carpenter, Nancy Evans and certain owners and holders of the capital stock
of iVillage, Inc. Pursuant to Section 1(2) of the Agreement, the undersigned
hereby becomes a party to the Agreement and agrees to be bound by, comply
with and adhere to all the terms and provisions of the Agreement, with the
same force and effect as if the undersigned had in fact originally executed
the Agreement.
In connection with the deposit of this Voting Trust
Signatory Agreement with the Trustee, the undersigned hereby assigns,
transfers and deposits with the Trustee all certificates representing his,
her or its Shares, accompanied by a stock power or powers, duly endorsed in
favor of the Trustee.
All defined terms used but not defined herein shall have
the meanings ascribed to them in the Agreement.
Dated: February 1, 1998
/s/ Elaine Rubin
-----------------------------------
Elaine Rubin
<PAGE>
iVILLAGE, INC.
AMENDED AND RESTATED
1995 EMPLOYEE STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of this iVILLAGE, INC. AMENDED AND RESTATED 1995 STOCK
OPTION PLAN (the "Plan") is (i) to further the growth and success of iVILLAGE,
INC., a Delaware corporation (the "Company"), and its Subsidiaries (as
hereinafter defined) by enabling directors who are employees, officers and other
employees of, and independent consultants to, the Company and any of its
Subsidiaries to acquire shares of the Common Stock, $0.0005 par value (the
"Common Stock"), of the Company, thereby increasing their personal interest in
such growth and success, and (ii) to provide a means of rewarding outstanding
performance by such persons to the Company and/or its Subsidiaries. Options
granted under the Plan may be either "incentive stock options" ("ISOs"),
intended to qualify as such under the provisions of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or non-qualified stock options
("NSOs"). For purposes of the Plan, the terms "Parent" and "Subsidiary" shall
mean "Parent Corporation" and "Subsidiary Corporation", respectively, as such
terms are defined in Sections 424(e) and (f) of the Code. Unless the context
otherwise requires, any ISO or NSO shall hereinafter be referred to as an
"Option."
2. ADMINISTRATION OF THE PLAN.
(a) Stock Option Committee. The Plan shall be administered by the Board
of Directors of the Company (the "Board") or a Compensation Committee (the
"Committee") consisting of three persons appointed to such Committee from time
to time by the Board; provided, however, that, so long as it shall be required
to comply with Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), in order to permit officers and directors of the
Company to be exempt from the provisions of Section 16(b) of the 1934 Act with
respect to transactions pursuant to the Plan, each of person appointed to the
Committee, at the effective date of his or her appointment to the Committee,
shall be a "Non-Employee Director" within the meaning of Rule 16b-3. The members
of the Committee may be removed at any time either with or without cause by the
Board. Any vacancy on the Committee, whether due to action of the Board or any
other cause, shall be filled by the Board. The term "Committee" shall, for all
purposes of the Plan other than this Section 2, be deemed to refer to the Board
if the Board is administering the Plan.
(b) Procedures. If the Plan is administered by a Committee, the
Committee shall from time to time select a Chairman from among the members of
the Committee. The Committee shall adopt such rules and regulations as it shall
deem appropriate concerning the holding of meetings and the administration of
the Plan. A majority of the entire Committee shall constitute a quorum and the
actions of a majority of the members of the Committee present at a meeting at
which a quorum is present, or actions approved in writing by all of the members
of the Committee, shall be the actions of the Committee; provided, however, that
if the Committee
<PAGE>
consists of only two members, both shall be required to constitute a quorum and
to act at a meeting or to approve actions in writing.
(c) Interpretation. Except as otherwise expressly provided in the Plan,
the Committee shall have all powers with respect to the administration of the
Plan, including, without limitation, full power and authority to interpret the
provisions of the Plan and any Option Agreement (as defined in Section 5(b)),
and to resolve all questions arising under the Plan. All decisions of the Board
or the Committee, as the case may be, shall be conclusive and binding on all
participants in the Plan.
3. SHARES OF STOCK SUBJECT TO THE PLAN.
(a) Number of Shares. Subject to the provisions of Section 9 (relating
to adjustments upon changes in capital structure and other corporate
transactions), the number of shares of Common Stock subject at any one time to
Options granted under the Plan, shall not exceed 1,550,000 shares. If and to the
extent that Options granted under the Plan terminate, expire or are canceled
without having been fully exercised, new Options may be granted under the Plan
with respect to the shares of Common Stock constituting the unexercised portion
of such terminated, expired or canceled Options.
(b) Character of Shares. The shares of Common Stock issuable upon
exercise of an Option granted under the Plan shall be (i) authorized but
unissued shares of Common Stock, (ii) shares of Common Stock held in the
Company's treasury or (iii) a combination of the foregoing.
(c) Reservation of Shares. The number of shares of Common Stock
reserved for issuance under the Plan shall at no time be less than the maximum
number of shares which may be purchased at any time pursuant to outstanding
Options.
4. ELIGIBILITY.
(a) General. Options may be granted under the Plan only to persons who
are employees, directors, officers of, or independent consultants to, the
Company or any of its Subsidiaries.
Options granted to officers or employees (including directors who are
officers or employees) of the Company or any of its Subsidiaries shall be, in
the discretion of the Committee, either ISOs or NSOs, and Options granted to
independent consultants to or directors of the Company or any of its
Subsidiaries who are not officers or employees of the Company or any of its
Subsidiaries shall be NSOs. Notwithstanding the foregoing, Options may be
conditionally granted to persons who are prospective employees, officers or
directors of, or independent consultants to, the Company or any of its
Subsidiaries; provided, however, that any such conditional grant of an ISO to a
prospective employee shall, by its terms, become effective no earlier than the
date on which such person actually becomes an employee.
(b) Exceptions. Notwithstanding anything contained in Section 4(a) to
the contrary, no ISO may be granted under the Plan to an employee who owns,
directly or indirectly (within the meaning of Sections 422(b)(6) and 424(d) of
the Code), stock possessing more than
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10% of the total combined voting power of all classes of stock of the Company or
of its Parent, if any, or any of its Subsidiaries, unless (A) the Option Price
(as defined in Section 6(a)) of the shares of Common Stock subject to such ISO
is fixed at not less than 110% of the Fair Market Value on the date of grant (as
determined in accordance with Section 6(b)) of such shares and (B) such ISO by
its terms is not exercisable after the expiration of five years from the date it
is granted.
5. GRANT OF OPTIONS.
(a) General. Options may be granted under the Plan at any time and from
time to time on or prior to the tenth anniversary of the Effective Date (as
defined in Section 12). Subject to the provisions of the Plan, the Committee
shall have plenary authority, in its discretion, to determine:
(i) the persons (from among the class of persons eligible to
receive Options under the Plan) to whom Options shall be granted (the
"Optionees");
(ii) the time or times at which Options shall be granted;
(iii) the number of shares subject to each Option;
(iv) the Option Price (as hereinafter defined) of the shares
subject to each Option, which price, in the case of ISOs, shall not be less than
the minimum specified in Section 4(b)(i) or 6(a) (as applicable); and
(v) the time or times when each Option shall become exercisable and
the duration of the exercise period.
(b) Option Agreements. Each Option granted under the Plan shall be
designated as an ISO or an NSO and shall be subject to the terms and conditions
applicable to ISOs and/or NSOs (as the case may be) set forth in the Plan. In
addition, each Option shall be evidenced by a written agreement (an "Option
Agreement"), containing such terms and conditions and in such form, not
inconsistent with the Plan, as the Committee shall, in its discretion, provide.
Each Option Agreement shall be executed by the Company and the Optionee.
(c) No Evidence of Employment or Service. Nothing contained in the Plan
or in any Option Agreement shall confer upon any Optionee any right with respect
to the continuation of his or her employment by or service with the Company or
any of its Subsidiaries or interfere in any way with the right of the Company or
any such Subsidiary (subject to the terms of any separate agreement to the
contrary) at any time to terminate such employment or service or to increase or
decrease the compensation of the Optionee from the rate in existence at the time
of the grant of an Option.
(d) Date of Grant. The date of grant of an Option under this Plan shall
be the date as of which the Committee approves the grant; provided, however,
that in the case of an ISO, the date of grant shall in no event be earlier than
the date as of which the Optionee becomes an employee of the Company or one of
its Subsidiaries.
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6. OPTION PRICE.
(a) General. Subject to Section 9, the price (the "Option Price") at
which each share of Common Stock subject to an Option granted under the Plan may
be purchased shall be determined by the Committee at the time the Option is
granted; provided, however, that in the case of an ISO (subject to Section
4(b)(i)), or an NSO granted at any time after the initial public offering of the
Common Stock, such Option Price shall in no event be less than 100% (or 110% if
the provisions of Section 4(b)(i) hereof are applicable) of the Fair Market
Value on the date of grant (as determined in accordance with Section 6(b)) of
such share of Common Stock.
(b) Determination of Fair Market Value. Subject to the requirements of
Section 422 of the Code, for purposes of the Plan, the "Fair Market Value" of
shares of Common Stock shall be equal to:
(i) if such shares are publicly traded, (x) the closing price, if
applicable, or the average of the last bid and asked prices on the date of grant
or, if such date is not a business day on which shares are traded, the next
immediately preceding trading day, in the over-the-counter market as reported by
NASDAQ or, (y) if the Common Stock is then traded on a national securities
exchange, the closing price, if applicable, or the average of the high and low
prices on the date of grant or, if such date is not a business day on which
shares are traded, the next immediately preceding trading day, on the principal
national securities exchange on which it is so traded; or
(ii) if there is no public trading market for such shares, the fair
value of such shares on the date of grant as determined by the Committee after
taking into consideration all factors which it deems appropriate, including,
without limitation, recent sale and offer prices of the capital stock in private
transactions negotiated at arms' length.
Notwithstanding anything contained in the Plan to the contrary, all
determinations pursuant to Section 6(b)(ii) shall be made without regard to any
restriction other than a restriction which, by its terms, will never lapse.
(c) Repricing of NSOs. Subsequent to the date of grant of any NSO, the
Committee may, at its discretion and with the consent of the Optionee, establish
a new Option Price for such NSO so as to increase or decrease the Option Price
of such NSO.
7. EXERCISABILITY OF OPTIONS.
(a) Committee Determination.
(i) Each Option granted under the Plan shall be exercisable at such
time or times, or upon the occurrence of such event or events, and for such
number of shares subject to the Option, as shall be determined by the Committee
and set forth in the Option Agreement evidencing such Option; provided, however,
that if the Company files a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), for the initial public offering of the
Common Stock, no Option granted under the Plan shall be exercisable during the
180-day period immediately following the effective date of such registration
statement (the "Lock-up Period"); provided further, however, that if an Option
by its terms is to expire
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during the Lock-up Period, the Committee may extend the expiration date of such
Option for a period co-extensive with the period representing the period between
the commencement of the Lock-up Period and the expiration date of such Option.
Subject to the provisos of the immediately preceding sentence, if an Option is
not at the time of grant immediately exercisable, the Committee may (A) in the
Option Agreement evidencing such Option, provide for the acceleration of the
exercise date or dates of the subject Option upon the occurrence of specified
events and/or (B) at any time prior to the complete termination of an Option,
accelerate the exercise date or dates of such Option, provided that, except as
otherwise provided in the pertinent Option Agreement, the Committee shall not
accelerate the exercise date of any installment of any Option granted to any
employee as an ISO (and not previously converted into a NSO pursuant to Section
12) if such acceleration would violate the annual vesting limitation contained
in Section 422(d) of the Code as described in Section 7(c).
(ii) The Committee may, in its discretion, amend any term or
condition of an outstanding Option provided (A) such term or condition as
amended is permitted by the Plan, (B) any such amendment shall be made only with
the consent of the Optionee to whom the Option was granted, or in the event of
the death of the Optionee, the Optionee's survivors, if the amendment is
materially adverse to the Optionee, and (C) any such amendment of any ISO shall
be made only after the Committee, after consulting with counsel for the Company,
determines whether such amendment would constitute a "modification" of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code).
(b) Automatic Termination of Option. Except as otherwise determined by
the Committee and set forth in the Option Agreement, the unexercised portion of
any Option granted under the Plan shall automatically terminate and shall become
null and void and be of no further force or effect upon the first to occur of
the following:
(i) the tenth anniversary of the date on which such Option is
granted or, in the case of any ISO granted to a person described in Section
4(b)(i), the fifth anniversary of the date on which such ISO is granted;
(ii) the expiration of three months from the date that the Optionee
ceases to be an employee, director or officer of, or consultant to, the Company
or any of its Subsidiaries (other than as a result of an Involuntary Termination
(as defined in subparagraph (iii) below)) or a Termination For Cause (as defined
in subparagraph (iv) below)); provided, however, that if the Optionee shall die
during such three-month period, the time of termination of the unexercised
portion of such Option shall be the expiration of 12 months from the date that
such Optionee ceased to be an employee, director or officer of, or consultant
to, the Company or any of its Subsidiaries;
(iii) the expiration of 12 months from the date that the Optionee
ceases to be an employee, director or officer of, or consultant to, the Company
or any of its Subsidiaries, if such termination is due to such Optionee's death
or permanent and total disability (within the meaning of Section 22(e)(3) of the
Code) (an "Involuntary Termination");
(iv) immediately if the Optionee ceases to be an employee, director
or officer of, or consultant to, the Company or any of its Subsidiaries, if such
termination is for
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<PAGE>
cause or is otherwise attributable to a breach by the Optionee of an employment,
consulting or other similar agreement with the Company or any such Subsidiary (a
"Termination For Cause");
(v) the expiration of such period of time or the occurrence of such
event as the Committee in its discretion may provide in the Option Agreement;
(vi) on the effective date of a Corporate Transaction (as defined
in Section 9(b)) to which Section 9(b)(ii) (relating to assumptions and
substitutions of Options) does not apply; provided, however, that an Optionee's
right to exercise any Option outstanding prior to such effective date shall in
all events be suspended during the period commencing 10 days prior to the
proposed effective date of such Corporate Transaction and ending on either the
actual effective date of such Corporate Transaction or upon receipt of notice
from the Company that such Corporate Transaction will not in fact occur; and
(vii) except to the extent permitted by Section 9(b)(ii), the date
on which an Option or any part thereof or right or privilege relating thereto is
transferred (other than by will or the laws of descent and distribution),
assigned, pledged, hypothecated, attached or otherwise disposed of by the
Optionee.
The Board shall have the power to determine what constitutes a
Termination For Cause, and the date upon which such Termination For Cause shall
occur. All such determinations shall be final and conclusive and binding upon
the Optionee.
Notwithstanding anything contained in the Plan to the contrary, unless
otherwise provided in an Option Agreement, no Option granted under the Plan
shall be affected by any change of duties or position of the Optionee (including
a transfer to or from the Company or one of its Subsidiaries), so long as such
Optionee continues to be an employee, director or officer of, or consultant to,
the Company or one of its Subsidiaries.
(c) Limitations on Exercise. Notwithstanding anything contained in the
Plan to the contrary, an ISO granted under the Plan to an Optionee shall not be
exercisable to the extent that the aggregate Fair Market Value on the date of
grant of such ISO (as determined in accordance with Section 6(b)) of all stock
with respect to which incentive stock options are exercisable for the first time
by such Optionee during any calendar year (under all plans of the Company and
its Subsidiaries) exceeds $100,000.
8. PROCEDURE FOR EXERCISE.
(a) Payment. At the time an Option is granted under the Plan, the
Committee shall, in its discretion, specify one or more of the following forms
of payment which may be used by an Optionee upon exercise of his Option:
(i) cash or personal or certified check payable to the Company in
an amount equal to the aggregate Option Price of the shares with respect to
which the Option is being exercised;
(ii) stock certificates (in negotiable form) representing shares of
Common Stock having a Fair Market Value on the date of exercise (as determined
in accordance
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<PAGE>
with Section 6(b)) equal to the aggregate cash Option Price of the shares with
respect to which the Option is being exercised;
(iii) a combination of the methods set forth in clauses (i) and
(ii); or
(iv) in the case of NSOs only, in compliance with any cashless
exercise program authorized by the Company for use in connection with the Plan
at the time of such exercise.
(b) Notice. An Optionee (or other person, as provided in Section 10(b))
may exercise an Option granted under the Plan in whole or in part, as provided
in the Option Agreement evidencing his or her Option, by delivering a written
notice (the "Notice") to the Secretary of the Company. The Notice shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of shares with respect to which the Option is
being exercised (the "Optioned Shares");
(iii) state the method of payment for the Optioned Shares (which
method must be available to the Optionee under the terms of his or her Option
Agreement);
(iv) state the date upon which the Optionee desires to consummate
the purchase (which date must be prior to the termination of such Option and no
later than 30 days from delivery of such Notice);
(v) include any representations of the Optionee required pursuant
to Section 10(a);
(vi) if the Option is exercised pursuant to Section 10(b) by any
person other than the Optionee, include evidence to the satisfaction of the
Committee of the right of such person to exercise the Option; and
(vii) include such further provisions consistent with the Plan as
the Committee may from time to time require.
The exercise date of an Option shall be the date on which the Company
receives the Notice from the Optionee.
(c) Issuance of Certificates. The Company shall issue a stock
certificate in the name of the Optionee (or such other person exercising the
Option in accordance with the provisions of Section 10(b)) for the Optioned
Shares as soon as practicable after receipt of the Notice and payment of the
aggregate Option Price for such shares. Neither the Optionee nor any person
exercising an Option in accordance with the provisions of Section 10(b) shall
have any privileges as a stockholder of the Company with respect to any shares
of stock subject to an Option granted under the Plan until the date of issuance
of a stock certificate pursuant to this Section 8(c).
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9. ADJUSTMENTS.
(a) Changes in Capital Structure. Subject to Section 9(b), if the
Common Stock is changed by reason of a stock split, reverse stock split, stock
dividend or recapitalization, or converted into or exchanged for other
securities as a result of a merger, consolidation or reorganization, the
Committee shall make such adjustments in the number and class of shares of stock
with respect to which Options may be granted under the Plan as shall be
equitable and appropriate in order to make such Options, as nearly as may be
practicable, equivalent to such Options immediately prior to such change. A
corresponding adjustment changing the number and class of shares allocated to,
and the Option Price of, each Option or portion thereof outstanding at the time
of such change shall likewise be made. Notwithstanding anything contained in the
Plan to the contrary, in the case of ISOs, no adjustment under this Section 9(a)
shall be appropriate if such adjustment (i) would constitute a modification,
extension or renewal of such ISOs within the meaning of Sections 422 and 424 of
the Code, and the regulations promulgated by the Treasury Department thereunder,
or (ii) would, under Section 422 of the Code and the regulations promulgated by
the Treasury Department thereunder, be considered as the adoption of a new plan
requiring stockholder approval.
(b) Corporate Transactions. The following rules shall apply in
connection with the dissolution or liquidation of the Company, a reorganization,
merger or consolidation in which the Company is not the surviving corporation,
or a sale of all or substantially all of the capital stock or assets of the
Company to another person or entity (a "Corporate Transaction"):
(i) each holder of an Option outstanding at such time shall be
given (A) written notice of such Corporate Transaction at least 20 days prior to
its proposed effective date (as specified in such notice) and (B) an
opportunity, during the period commencing with delivery of such notice and
ending 10 days prior to such proposed effective date, to exercise the Option to
the full extent to which such Option would have been exercisable by the Optionee
at the expiration of such 20-day period; provided, however, that upon the
occurrence of a merger or consolidation in which the Company is not the
surviving corporation and the stockholders of the Company receive distributions
of cash, securities or other property of a third party in complete exchange for
their equity interests in the Company or a sale of all of the capital stock or
all or substantially all of the assets of the Company to another person or
entity (a "Sale Event"), under circumstances in which provision for assumption
or substitution of options in accordance with Section 9(b)(ii) is not made, the
exercise dates of all Options granted under the Plan shall accelerate and become
fully exercisable with respect to the total number of shares of stock to which
such Options relate, and if and to the extent not so exercised as provided in
this Section 9(b)(i), such Options shall automatically terminate; and
(ii) notwithstanding anything contained in the Plan to the
contrary, Section 9(b)(i) shall not be applicable if provision shall be made in
connection with such Corporate Transaction for the assumption of outstanding
Options by, or the substitution for such Options of new options covering the
stock of, the surviving, successor or purchasing corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number, kind and
option prices of shares subject to such options; provided, however, that in the
case of ISOs, the Board shall, to the extent not inconsistent with the best
interests of the Company or its Subsidiaries (such best interests to be
determined in good faith by the Board in its sole discretion), use its best
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<PAGE>
efforts to ensure that any such assumption or substitution will not constitute a
modification, extension or renewal of the ISOs within the meaning of Section
424(h) of the Code and the regulations promulgated by the Treasury Department
thereunder.
(c) Special Rules. The following rules shall apply in connection
with Sections 9(a) and (b) above:
(i) no fractional shares shall be issued as a result of any such
adjustment, and any fractional shares resulting from the computations pursuant
to Sections 9(a) or (b) shall be eliminated without consideration from the
respective Options;
(ii) no adjustment shall be made for cash dividends or the issuance
to stockholders of rights to subscribe for additional shares of Common Stock or
other securities; and
(iii) any adjustments referred to in Sections 9(a) or (b) shall be
made by the Board or the Committee (as the case may be) in its sole discretion
and shall be conclusive and binding on all persons holding Options granted under
the Plan.
10. RESTRICTIONS ON OPTIONS AND OPTIONED SHARES.
(a) Compliance With Securities Laws. No Options shall be granted under
the Plan, and no shares of Common Stock shall be issued and delivered upon the
exercise of Options granted under the Plan, unless and until the Company and/or
the Optionee shall have complied with all applicable Federal or state
registration, listing and/or qualification requirements and all other
requirements of law or of any regulatory agencies having jurisdiction.
The Committee in its discretion may, as a condition to the exercise of
any Option granted under the Plan, require an Optionee (i) to represent in
writing that the shares of Common Stock to be received upon exercise of an
Option are being acquired for investment and not with a view to distribution and
(ii) to make such other representations and warranties as are deemed appropriate
by the Company. Stock certificates representing shares of Common Stock acquired
upon the exercise of Options that have not been registered under the Securities
Act shall, unless otherwise directed by the Committee, bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN OPINION OF COUNSEL TO iVILLAGE INC. THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
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(b) Nonassignability of Option Rights. Except as otherwise determined
by the Committee and set forth in the Option Agreement, no Option granted under
the Plan shall be assignable or otherwise transferable by the Optionee except by
will or by the laws of descent and distribution. Except as otherwise determined
by the Committee and set forth in the Option Agreement, an Option may be
exercised during the lifetime of the Optionee only by the Optionee. If an
Optionee dies, his or her Option shall thereafter be exercisable, except as
otherwise determined by the Committee and set forth on the Option Agreement,
during the period specified in Section 7(b)(ii) or (iii) (as the case may be),
by his or her executors or administrators to the full extent to which such
Option was exercisable by the Optionee at the time of his or her death.
(c) Right of First Refusal. Until the initial public offering of Common
Stock of the Company registered under the Securities Act, the Company shall be
entitled to a right of first refusal in the event that the Optionee proposes to
sell any of his, her or its shares of Common Stock issuable upon exercise of the
Option, on such terms as are set forth in the Option Agreement between the
Company and the Optionee. The Company may, in its sole discretion, assign such
right of first refusal.
11. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date (the "Effective Date") of
its adoption by the Board; provided, however, that no Option shall be
exercisable by an Optionee unless and until the Plan shall have been approved by
the stockholders of the Company in accordance with the provisions of its
Certificate of Incorporation and By-laws, which approval shall be obtained by a
simple majority vote of stockholders, voting either in person or by proxy, at a
duly held stockholders' meeting or by written action in lieu of a stockholder's
meeting as permitted by and in accordance with the Certificate of
Incorporation and By-laws of the Company within 12 months before after
the adoption of the Plan by the Board.
12. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS: TERMINATION OF ISOs.
The Committee, at the written request of any Optionee, may in its
discretion take such actions as may be necessary to convert such Optionee ISOs
(or any portions thereof) that have not been exercised on the date of conversion
into NSOs at any time prior to the expiration of such ISOs, regardless of
whether the Optionee is an employee of the Company at the time of such
conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Options. At the time of such conversion, the Committee (with the consent
of the Optionee) may impose such conditions on the exercise of the resulting
NSOs as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any Optionee the right to have such Optionee ISOs converted
into NSOs, and no such conversion shall occur until and unless the Committee
takes appropriate action. The Committee, with the consent of the Optionee, may
also terminate any portion of any ISO that has not been exercised at the time of
such termination.
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13. EXPIRATION AND TERMINATION OF THE PLAN.
Except with respect to Options then outstanding, the Plan shall expire
on the first to occur of (i) the tenth anniversary of the date on which the Plan
is adopted by the Board, (ii) the tenth anniversary of the date on which the
Plan is approved by the stockholders of the Company and (iii) the date as of
which the Board, in its sole discretion, determines that the Plan shall
terminate (the "Expiration Date"). Any Options outstanding as of the Expiration
Date shall remain in effect until they have been exercised or terminated or have
expired by their respective terms.
14. AMENDMENT OF PLAN.
The Board may at any time prior to the Expiration Date modify and amend
the Plan in any respect; provided, however, that the approval of the holders of
a majority of the votes that may be cast by all of the holders of shares of
Common Stock and preferred stock of the Company, if any, entitled to vote
(voting as a single class) shall be obtained prior to any such amendment
becoming effective if such approval is required by law or is necessary to comply
with regulations promulgated by the SEC under Section 16(b) of the 1934 Act or
with Section 422 of the Code or the regulations promulgated by the Treasury
Department thereunder.
15. CAPTIONS.
The use of captions in this Plan is for convenience. The captions are
not intended to provide substantive rights.
16. DISQUALIFYING DISPOSITIONS.
If Optioned Shares acquired by exercise of an ISO granted under this
Plan are disposed of within two years following the date of grant of the ISO or
one year following the transfer of the Optioned Shares to the Optionee (a
"Disqualifying Disposition"), the holder of the Optioned Shares shall,
immediately prior to such Disqualifying Disposition, notify the Company in
writing of the date and terms of such Disqualifying Disposition and provide such
other information regarding the Disqualifying Disposition as the Company may
reasonably require.
17. WITHHOLDING TAXES.
Whenever under the Plan shares of Common Stock are to be delivered by
an Optionee upon exercise of an NSO, the Company shall be entitled to require as
a condition of delivery that the Optionee remit or, in appropriate cases, agree
to remit when due, an amount sufficient to satisfy all current or estimated
future Federal, state and local withholding tax and employment tax requirements
relating thereto. At the time of a Disqualifying Disposition, the Optionee shall
remit to the Company in cash the amount of any applicable Federal, state and
local withholding taxes and employment taxes.
18. OTHER PROVISIONS.
Each Option granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Committee,
in its sole
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<PAGE>
discretion. Notwithstanding the foregoing, each ISO granted under the Plan shall
include those terms and conditions which are necessary to qualify the ISO as an
"incentive stock option" within the meaning of Section 422 of the Code and the
regulations thereunder and shall not include any terms or conditions which are
inconsistent therewith.
19. NUMBER AND GENDER.
With respect to words used in this Plan, the singular form shall
include the plural form, the masculine gender shall include the feminine gender,
and vice-versa, as the context requires.
20. GOVERNING LAW.
The validity and construction of this Plan and the instruments
evidencing the Options granted hereunder shall be governed by the laws of the
State of New York.
21. VOTING TRUST AGREEMENT.
Each Optionee that is granted options hereunder shall enter into a
voting trust agreement, whereby such Optionee shall grant to the then acting
Chief Executive Officer of the Company at the time, the right to vote such
Optionee's Optioned Shares on the terms and subject to the conditions thereof.
As adopted by the Board of Directors of iVILLAGE, INC. on May 27,
1997.
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Amendment No. 1 to iVillage Inc. 1995 Amended and
Restated Employee Stock Option Plan
dated
February 23, 1998
In accordance with Section 14 to the iVillage Inc. 1995
Amended and Restated Employee Stock Option Plan (the "Plan"), the Plan is hereby
amended as follows:
Section 3(a) of the Plan is hereby amended by deleting the
reference to the number "1,550,000" and inserting in lieu thereof the reference
to the number "3,185,500".
<PAGE>
Amendment No. 2 to iVillage Inc. 1995 Amended and
Restated Employee Stock Option Plan
dated
June 5, 1998
In accordance with Section 14 to the iVillage Inc. 1995
Amended and Restated Employee Stock Option Plan (the "Plan"), the Plan is hereby
amended as follows:
Section 3(a) of the Plan is hereby amended by deleting the
reference to the number "3,185,500" and inserting in lieu thereof the reference
to the number "4,540,500".
<PAGE>
Amendment No. 3 to iVillage Inc. 1995 Amended and
Restated Employee Stock Option Plan
dated
November 30, 1998
In accordance with Section 14 to the iVillage Inc. 1995
Amended and Restated Employee Stock Option Plan (the "Plan"), the Plan is hereby
amended as follows:
Section 3(a) of the Plan is hereby amended by deleting the
reference to the number "3,185,000" and inserting in lieu thereof the reference
to the number "4,540,500".
<PAGE>
iVILLAGE INC.
1997 AMENDED AND RESTATED ACQUISITION STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of this iVILLAGE, INC. 1997 ACQUISITION STOCK OPTION PLAN (the
"Plan") is (i) to further the growth and success of iVILLAGE, INC., a Delaware
corporation (the "Company"), and its Subsidiaries (as hereinafter defined) in
connection with the acquisition of other businesses or assets directly or
indirectly by the Company by enabling directors who are employees, officers and
other employees of, and independent consultants to, the Company and any of its
Subsidiaries, or as part of one or more of such acquisitions, to acquire shares
of the Common Stock, $0.0005 par value (the "Common Stock"), of the Company,
thereby increasing their personal interest in such growth and success, and (ii)
to provide a means of rewarding outstanding performance by such persons to the
Company and/or its Subsidiaries. Options granted under the Plan may be either
"incentive stock options" ("ISOs"), intended to qualify as such under the
provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or non-qualified stock options ("NSOs"). For purposes of the Plan, the
terms "Parent" and "Subsidiary" shall mean "Parent Corporation" and "Subsidiary
Corporation", respectively, as such terms are defined in Sections 424(e) and (f)
of the Code. Unless the context otherwise requires, any ISO or NSO shall
hereinafter be referred to as an "Option."
2. ADMINISTRATION OF THE PLAN.
(a) Stock Option Committee. The Plan shall be administered by
the Board of Directors of the Company (the "Board") or a Compensation Committee
(the "Committee") consisting of three persons appointed to such Committee from
time to time by the Board; provided, however, that, so long as it shall be
required to comply with Rule 16b-3 ("Rule 16b-311) promulgated by the Securities
and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), in order to permit officers and directors of the
Company to be exempt from the provisions of Section 16(b) of the 1934 Act with
respect to transactions pursuant to the Plan, each person appointed to the
Committee, at the effective date of his or her appointment to the Committee,
shall be a "Non-Employee Director" within the meaning of Rule 16b-3. The members
of the Committee may be removed at any time either with or without cause by the
Board. Any vacancy on the Committee, whether due to action of the Board or any
other cause, shall be filled by the Board. The term "Committee" shall, for all
purposes of the Plan other than this Section 2, be deemed to refer to the Board
if the Board is administering the Plan.
(b) Procedures. If the Plan is administered by a Committee,
the Committee shall from time to time select a Chairman from among the members
of the Committee. The Committee shall adopt such rules and regulations as it
shall deem appropriate concerning the holding of meetings and the administration
of the Plan. A majority of the entire Committee shall constitute a quorum and
the actions of a majority of the members of the Committee present at a meeting
at which a quorum is present, or actions approved in writing by all of the
members of the Committee, shall be the actions of the Committee; provided,
however, that if the Committee
<PAGE>
consists of only two members, both shall be required to constitute a quorum and
to act at a meeting or to approve actions in writing.
(c) Interpretation. Except as otherwise expressly provided in
the Plan, the Committee shall have all powers with respect to the administration
of the Plan, including, without limitation, full power and authority to
interpret the provisions of the Plan and any Option Agreement (as defined in
Section 5(b)), and to resolve all questions arising under the Plan. All
decisions of the Board or the Committee, as the case may be, shall be conclusive
and binding on all participants in the Plan.
3. SHARES OF STOCK SUBJECT TO THE PLAN.
(a) Number of Shares. Subject to the provisions of Section 9
relating to adjustments upon changes in capital structure and other corporate
transactions), the number of shares of Common Stock subject at any one time to
Options granted under the Plan, shall not exceed 1,082,180 shares. If and to the
extent that Options granted under the Plan terminate, expire or are canceled
without having been fully exercised, new Options may be granted under the Plan
with respect to the shares of Common Stock constituting the unexercised portion
of such terminated, expired or canceled Options.
(b) Character of Shares. The shares of Common Stock issuable
upon exercise of an option granted under the Plan shall be (i) authorized but
unissued shares of Common Stock, (ii) shares of Common Stock held in the
Company's treasury or (iii) a combination of the foregoing.
(c) Reservation of Shares. The number of shares of Common
Stock reserved for issuance under the Plan shall at no time be less than the
maximum number of shares which may be purchased at any time pursuant to
outstanding Options.
4. ELIGIBILITY.
(a) General. Options may be granted under the Plan only to
persons who are employees, directors, officers of, or independent consultants
to, the Company or any of its Subsidiaries.
Options granted to officers or employees (including directors
who are officers or employees) of the Company or any of its Subsidiaries shall
be, in the discretion of the Committee, either ISOs or NSOs, and Options granted
to independent consultants to or directors of the Company or any of its
Subsidiaries who are not officers or employees of the Company or any of its
Subsidiaries shall be NSOs. Notwithstanding the foregoing, Options may be
conditionally granted to persons who are prospective employees, officers or
directors of, or independent consultants to, the Company or any of its
Subsidiaries; provided, however, that any such conditional grant of an ISO to a
prospective employee shall, by its terms, become effective no earlier than the
date on which such person actually becomes an employee.
(b) Exceptions. Notwithstanding anything contained in Section
4(a) to the contrary, no ISO may be granted under the Plan to an employee who
owns, directly or indirectly (within the meaning of Sections 422(b)(6) and
424(d) of the Code), stock possessing more than
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<PAGE>
lot of the total combined voting power of all classes of stock of the Company or
of its Parent, if any, or any of its Subsidiaries, unless (A) the Option Price
(as defined in Section 6(a)) of the shares of Common Stock subject to such ISO
is fixed at not less than 110% of the Fair Market Value on the date of grant (as
determined in accordance with Section 6(b)) of such shares and (B) such ISO by
its terms is not exercisable after the expiration of five years from the date it
is granted.
5. GRANT OF OPTIONS.
(a) General. Options may be granted under the Plan at any time
and from time to time on or prior to the tenth anniversary of the Effective Date
(as defined in Section 12). Subject to the provisions of the Plan, the Committee
shall have plenary authority, in its discretion, to determine:
(i) the persons (from among the class of persons
eligible to receive Options under the Plan) to whom options shall be
granted (the "Optionees");
(ii) the time or times at which Options shall be
granted;
(iii) the number of shares subject to each Option;
(iv) the Option Price (as hereinafter defined) of the
shares subject to each Option, which price, in the case of ISOS, shall
not be less than the minimum specified in Section 4(b)(i) or 6(a) (as
applicable); and
(v) the time or times when each option shall become
exercisable and the duration of the exercise period.
(b) Option Agreements. Each Option granted under the Plan
shall be designated as an ISO or an NSO and shall be subject to the terms and
conditions applicable to ISOs and/or NSOs (as the case may be) set forth in the
Plan. In addition, each Option shall be evidenced by a written agreement (an
"Option Agreement"), containing such terms and conditions and in such form, not
inconsistent with the Plan, as the Committee shall, in its discretion, provide.
Each Option Agreement shall be executed by the Company and the Optionee.
(c) No Evidence of Employment or Service. Nothing contained in
the Plan or in any Option Agreement shall confer upon any Optionee any right
with respect to the continuation of his or her employment by or service with the
Company or any of its Subsidiaries or interfere in any way with the right of the
Company or any such Subsidiary (subject to the terms of any separate agreement
to the contrary) at any time to terminate such employment or service or to
increase or decrease the compensation of the Optionee from the rate in existence
at the time of the grant of an Option.
(d) Date of Grant. The date of grant of an option under this
Plan shall be the date as of which the Committee approves the grant; provided,
however, that in the case of an ISO, the date of grant shall in no event be
earlier than the date as of which the Optionee becomes an employee of the
Company or one of its Subsidiaries.
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<PAGE>
6. OPTION PRICE.
(a) General. Subject to Section 9, the price (the "Option
Price") at which each share of Common Stock subject to an Option granted under
the Plan may be purchased shall be determined by the Committee at the time the
option is granted; provided, however, that in the case of an ISO (subject to
Section 4(b)(i)), or an NSO granted at any time after the initial public
offering of the Common Stock, such Option Price shall in no event be less than
100% (or 110% if the provisions of Section 4(b)(i) hereof are applicable) of the
Fair Market Value on the date of grant (as determined in accordance with Section
6(b)) of such share of Common Stock.
(b) Determination of Fair Market Value. Subject to the
requirements of Section 422 of the Code, for purposes of the Plan, the "Fair
Market Value,, of shares of Common Stock shall be equal to:
(i) if such shares are publicly traded, (x) the
closing price, if applicable, or the average of the last bid and asked
prices on the date of grant or, if such date is not a business day
on-which shares are traded, the next immediately preceding trading day,
in the over-the-counter market as reported by NASDAQ or, (y) if the
Common Stock is then traded on a national securities exchange, the
closing price, if applicable, or the average of the high and low prices
on the date of grant or, if such date is not a business day on which
shares are traded, the next immediately preceding trading day, on the
principal national securities exchange on which it is so traded; or
(ii) if there is no public trading market for such
shares, the fair value of such shares on the date of grant as
determined by the Committee after taking into consideration all factors
which it deems appropriate, including, without limitation, recent sale
and offer prices of the capital stock in private transactions
negotiated at arms' length.
Notwithstanding anything contained in the Plan to the
contrary, all determinations pursuant to Section 6(b)(ii) shall be made without
regard to any restriction other than a restriction which, by its terms, will
never lapse.
(c) Repricing of NSOs. Subsequent to the date of grant of any
NSO, the Committee may, at its discretion and with the consent of the Optionee,
establish a new Option Price for such NSO so as to increase or decrease the
Option Price of such NSO.
7. EXERCISABILITY OF OPTIONS.
(a) Committee Determination.
(i) Each Option granted under the Plan shall be
exercisable at such time or times, or upon the occurrence of such event
or events, and for such number of shares subject to the Option, as
shall be determined by the Committee and set forth in the Option
Agreement evidencing such Option; provided, however, that if the
Company files a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), for the initial public
offering of the Common Stock, no Option granted under the Plan shall be
exercisable during the 180-day period immediately following the
effective date of such registration statement (the "Lock-up Period");
provided further, however,
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<PAGE>
that if an Option by its terms is to expire during the Lock-up Period,
the Committee may extend the expiration date of such option for a
period co-extensive with the period representing the period between the
commencement of the Lock-up Period and the expiration date of such
Option. Subject to the provisos of the immediately preceding sentence,
if an option is not at the time of grant immediately exercisable, the
Committee may (A) in the Option Agreement evidencing such Option,
provide for the acceleration of the exercise date or dates of the
subject option upon the occurrence of specified events and/or (B) at
any time prior to the complete termination of an option, accelerate the
exercise date or dates of such Option, provided that, except as
otherwise provided in the pertinent Option Agreement, the Committee
shall not accelerate the exercise date of any installment of any Option
granted to any employee as an ISO (and not previously converted into a
NSO pursuant to Section 12) if such acceleration would violate the
annual vesting limitation contained in Section 422(d) of the Code as
described in Section 7(c).
(ii) The Committee may, in its discretion, amend any
term or condition of an outstanding option provided (A) such term or
condition as amended is permitted by the Plan, (B) any such amendment
shall be made only with the consent of the Optionee to whom the Option
was granted, or in the event of the death of the Optionee, the
Optionee's survivors, if the amendment is materially adverse to the
Optionee, and (C) any such amendment of any ISO shall be made only
after the Committee, after consulting with counsel for the Company,
determines whether such amendment would constitute a "modification" of
any option which is an ISO (as that term is defined in Section 424(h)
of the Code).
(b) Automatic Termination of Option. Except as otherwise
determined by the Committee and set forth in the Option Agreement, the
unexercised portion of any option granted under the Plan shall automatically
terminate and shall become null and void and be of no further force or effect
upon the first to occur of the following:
(i) the tenth anniversary of the date on which such
Option is granted or, in the case of any ISO granted to a person
described in Section 4(b)(i), the fifth anniversary of the date on
which such ISO is granted;
(ii) the expiration of three months from the date
that the Optionee ceases to be an employee, director or officer of, or
consultant to, the Company or any of its Subsidiaries (other than as a
result of an Involuntary Termination (as defined in subparagraph (iii)
below)) or a Termination For Cause (as defined in subparagraph (iv)
below)); provided, however, that if the optionee shall die during such
three-month period, the time of termination of the unexercised portion
of such Option shall be the expiration of 12 months from the date that
such Optionee ceased to be an employee, director or officer of, or
consultant to, the Company or any of its Subsidiaries;
(iii) the expiration of 12 months from the date that
the Optionee ceases to be an employee, director or officer of, or
consultant to, the Company or any of its Subsidiaries, if such
termination is due to such Optionee's death or permanent and total
5
<PAGE>
disability (within the meaning of Section 22(e)(3) of the Code) (an
"Involuntary Termination");
(iv) immediately if the Optionee ceases to be an
employee, director or officer of, or consultant to, the Company or any
of its Subsidiaries, if such termination is for cause or is otherwise
attributable to a breach by the Optionee of an employment, consulting
or other similar agreement with the Company or any such Subsidiary (a
"Termination For Cause");
(v) the expiration of such period of time or the
occurrence of such event as the Committee in its discretion may provide
in the Option Agreement;
(vi) on the effective date of a Corporate Transaction
(as defined in Section 9(b)) to which Section 9(b)(ii) (relating to
assumptions and substitutions of Options) does not apply; provided,
however, that an Optionee's right to exercise any Option outstanding
prior to such effective date shall in all events be suspended during
the period commencing 10 days prior to the proposed effective date of
such Corporate Transaction and ending on either the actual effective
date of such Corporate Transaction or upon receipt of notice from the
Company that such Corporate Transaction will not in fact occur; and
(vii) except to the extent permitted by Section
9(b)(ii), the date on which an option or any part thereof or right or
privilege relating thereto is transferred (other than by will or the
laws of descent and distribution), assigned, pledged, hypothecated,
attached or otherwise disposed of by the Optionee.
The Board shall have the power to determine what constitutes a
Termination For Cause, and the date upon which such Termination For Cause shall
occur. All such determinations shall be final and conclusive and binding upon
the Optionee.
Notwithstanding anything contained in the Plan to the
contrary, unless otherwise provided in an Option Agreement, no Option granted
under the Plan shall be affected by any change of duties or position of the
Optionee (including a transfer to or from the Company or one of its
Subsidiaries), so long as such Optionee continues to be an employee, director or
officer of, or consultant to, the Company or one of its Subsidiaries.
(c) Limitations on Exercise. Notwithstanding anything
contained in the Plan to the contrary, an ISO granted under the Plan to an
Optionee shall not be exercisable to the extent that the aggregate Fair Market
Value on the date of grant of such ISO (as determined in accordance with Section
6(b)) of all stock with respect to which incentive stock options are exercisable
for the first time by such optionee during any calendar year (under all plans of
the Company and its Subsidiaries) exceeds $100,000.
8. PROCEDURE FOR EXERCISE.
(a) Payment. At the time an option is granted under the Plan,
the Committee shall, in its discretion, specify one or more of the following
forms of payment which may be used by an Optionee upon exercise of his Option:
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<PAGE>
(i) cash or personal or certified check payable to
the Company in an amount equal to the aggregate Option Price of the
shares with respect to which the Option is being exercised;
(ii) stock certificates (in negotiable form)
representing shares of Common Stock having a Fair Market Value on the
date of exercise (as determined in accordance with Section 6(b)) equal
to the aggregate cash Option Price of the shares with respect to which
the option is being exercised;
(iii) a combination of the methods set forth in
clauses (i) and (ii); or
(iv) in the case of NSOs only, in compliance with any
cashless exercise program authorized by the Company for use in
connection with the Plan at the time of such exercise.
(b) Notice. An Optionee (or other person, as provided in
Section 10(b)) may exercise an Option granted under the Plan in whole or in
part, as provided in the Option Agreement evidencing his or her Option, by
delivering a written notice (the "Notice") to the Secretary of the Company. The
Notice shall:
(i) state that the Optionee elects to exercise the
option;
(ii) state the number of shares with respect to which
the Option is being exercised (the "Optioned Shares");
(iii) state the method of payment for the Optioned
Shares (which method must be available to the Optionee under the terms
of his or her Option Agreement);
(iv) state the date upon which the Optionee desires
to consummate the purchase (which date must be prior to the termination
of such Option and no later than 30 days from delivery of such Notice);
(v) include any representations of the optionee
required pursuant to Section 10(a);
(vi) if the Option is exercised pursuant to Section
10(b) by any person other than the optionee, include evidence to the
satisfaction of the Committee of the right of such person to exercise
the option; and
(vii) include such further provisions consistent with
the Plan as the Committee may from time to time require.
The exercise date of an Option shall be the date on which the
Company receives the Notice from the Optionee.
(c) Issuance of Certificates. The Company shall issue a stock
certificate in the name of the optionee (or such other person exercising the
option in accordance with the
7
<PAGE>
provisions of Section 10(b)) for the Optioned Shares as soon as practicable
after receipt of the Notice and payment of the aggregate Option Price for such
shares. Neither the Optionee nor any person exercising an option in accordance
with the provisions of Section 10(b) shall have any privileges as a stockholder
of the Company with respect to any shares of stock subject to an Option granted
under the Plan until the date of issuance of a stock certificate pursuant to
this Section 8(c).
9. ADJUSTMENTS.
(a) Changes in Capital Structure. Subject to Section 9(b), if
the Common Stock is changed by reason of a stock split, reverse stock split,
stock dividend or recapitalization, or converted into or exchanged for other
securities as a result of a merger, consolidation or reorganization, the
Committee shall make such adjustments in the number and class of shares of stock
with respect to which Options may be granted under the Plan as shall be
equitable and appropriate in order to make such Options, as nearly as may be
practicable, equivalent to such Options immediately prior to such change. A
corresponding adjustment changing the number and class of shares allocated to,
and the Option Price of, each option or portion thereof outstanding at the time
of such change shall likewise be made. Notwithstanding anything contained in the
Plan to the contrary, in the case of ISOS, no adjustment under this Section 9(a)
shall be appropriate if such adjustment (i) would constitute a modification,
extension or renewal of such ISOs within the meaning of Sections 422 and 424 of
the Code, and the regulations promulgated by the Treasury Department thereunder,
or (ii) would, under Section 422 of the Code and the regulations promulgated by
the Treasury Department thereunder, be considered as the adoption of a new plan
requiring stockholder approval.
(b) Corporate Transactions. The following rules shall apply in
connection with the dissolution or liquidation of the Company, a reorganization,
merger or consolidation in which the Company is not the surviving corporation,
or a sale of all or substantially all of the capital stock or assets of the
Company to another person or entity (a "Corporate Transaction"):
(i) each holder of an Option outstanding at such time
shall be given (A) written notice of such Corporate Transaction at
least 20 days prior to its proposed effective date (as specified in
such notice) and (B) an opportunity, during the period commencing with
delivery of such notice and ending 10 days prior to such proposed
effective date, to exercise the Option to the full extent to which such
option would have been exercisable by the Optionee at the expiration of
such 20-day period; provided, however, that upon the occurrence of a
merger or consolidation in which the Company is not the surviving
corporation and the stockholders of the Company receive distributions
of cash, securities or other property of a third party in complete
exchange for their equity interests in the Company or a sale of all of
the capital stock or all or substantially all of the assets of the
Company to another person or entity (a "Sale Event"), under
circumstances in which provision for assumption or substitution of
options in accordance with Section 9(b)(ii) is not made, the exercise
dates of all Options granted under the Plan shall accelerate and become
fully exercisable with respect to the total number of shares of stock
to which such Options relate, and if and to the extent not so exercised
as provided in this Section 9(b)(i), such Options shall automatically
terminate; and
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<PAGE>
(ii) notwithstanding anything contained in the Plan
to the contrary, Section 9(b)(i) shall not be applicable if provision
shall be made in connection with such Corporate Transaction for the
assumption of outstanding Options by, or the substitution for such
Options of new options covering the stock of, the surviving, successor
or purchasing corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number, kind and option prices of
shares subject to such options; provided, however, that in the case of
ISOS, the Board shall, to the extent not inconsistent with the best
interests of the Company or its Subsidiaries (such best interests to be
determined in good faith by the Board in its sole discretion), use its
best efforts to ensure that any such assumption or substitution will
not constitute a modification, extension or renewal of the ISOs within
the meaning of Section 424(h) of the Code and the regulations
promulgated by the Treasury Department thereunder.
(c) Special Rules. The following rules shall apply in
connection with Sections 9(a) and (b) above:
(i) no fractional shares shall be issued as a result
of any such adjustment, and any fractional shares resulting from the
computations pursuant to Sections 9(a) or (b) shall be eliminated
without consideration from the respective Options;
(ii) no adjustment shall be made for cash dividends
or the issuance to stockholders of rights to subscribe for additional
shares of Common Stock or other securities; and
(iii) any adjustments referred to in Sections 9(a) or
(b) shall be made by the Board or the Committee (as the case may be) in
its sole discretion and shall be conclusive and binding on all persons
holding options granted under the Plan.
10. RESTRICTIONS ON OPTIONS AND OPTIONED SHARES.
(a) Compliance With Securities Laws. No Options shall be
granted under the Plan, and no shares of Common Stock shall be issued and
delivered upon the exercise of Options granted under the Plan, unless and until
the Company and/or the optionee shall have complied with all applicable Federal
or state registration, listing and/or qualification requirements and all other
requirements of law or of any regulatory agencies having jurisdiction.
The Committee in its discretion may, as a condition to the
exercise of any Option granted under the Plan, require an optionee (i) to
represent in writing that the shares of Common Stock to be received upon
exercise of an option are being acquired for investment and not with a view to
distribution and (ii) to make such other representations and warranties as are
deemed appropriate by the Company. Stock certificates representing shares of
Common Stock acquired upon the exercise of Options that have not been registered
under the Securities Act shall, unless otherwise directed by the Committee, bear
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THE SHARES HAVE BEEN
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<PAGE>
ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF
COUNSEL TO iVILLAGE INC. THAT REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT."
(b) Nonassignability of Option Rights. Except as otherwise
determined by the Committee and set forth in the option Agreement, no Option
granted under the Plan shall be assignable or otherwise transferable by the
optionee except by will or by the laws of descent and distribution. Except as
otherwise determined by the Committee and set forth in the option Agreement, an
Option may be exercised during the lifetime of the Optionee only by the
Optionee. If an Optionee dies, his or her Option shall thereafter be
exercisable, except as otherwise determined by the Committee and set forth on
the Option Agreement, during the period specified in Section 7(b)(ii) or (iii)
(as the case may be), by his or her executors or administrators to the full
extent to which such option was exercisable by the Optionee at the time of his
or her death.
(c) Right of First Refusal. Until the initial public offering
of Common Stock of the Company registered under the Securities Act, the Company
shall be entitled to a right of first refusal in the event that the Optionee
proposes to sell any of his, her or its shares of Common Stock issuable upon
exercise of the option, on such terms as are set forth in the Option Agreement
between the Company and the Optionee. The Company may, in its sole discretion,
assign such right of first refusal.
11. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the date (the "Effective
Date") of its adoption by the Board; provided, however, that no Option shall be
exercisable by an optionee unless and until the Plan shall have been approved by
the stockholders of the Company in accordance with the provisions of its
Certificate of Incorporation and By-laws, which approval shall be obtained by a
simple majority vote of stockholders, voting either in person or by proxy, at a
duly held stockholders, meeting or by written action in lieu of a stockholder's
meeting as permitted by and in accordance with the Certificate of Incorporation
and By-laws of the Company within 12 months before after the adoption of the
Plan by the Board.
12. CONVERSION OF ISOs INTO NON-OUALIFIED OPTIONS:
TERMINATION OF ISOs.
The Committee, at the written request of any Optionee, may in
its discretion take such actions as may be necessary to convert such Optionee
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into NSOs at any time prior to the expiration of such ISOs,
regardless of whether the Optionee is an employee of the Company at the time of
such conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Options. At the time of such conversion, the Committee (with the consent
of the optionee) may impose such conditions
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<PAGE>
on the exercise of the resulting NSOs as the Committee in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any optionee the right to have
such Optionee ISOs converted into NSOs, and no such conversion shall occur until
and unless the Committee takes appropriate action. The Committee, with the
consent of the optionee, may also terminate any portion of any ISO that has not
been exercised at the time of such termination.
13. EXPIRATION AND TERMINATION OF THE PLAN.
Except with respect to Options then outstanding, the Plan
shall expire on the first to occur of (i) the tenth anniversary of the date on
which the Plan is adopted by the Board, (ii) the tenth anniversary of the date
on which the Plan is approved by the stockholders of the Company and (iii) the
date as of which the Board, in its sole discretion, determines that the Plan
shall terminate (the "Expiration Date"). Any Options outstanding as of the
Expiration Date shall remain in effect until they have been exercised or
terminated or have expired by their respective terms.
14. AMENDMENT OF PLAN.
The Board may at any time prior to the Expiration Date modify
and amend the Plan in any respect; provided, however, that the approval of the
holders of a majority of the votes that may be cast by all of the holders of
shares of Common Stock and preferred stock of the Company, if any, entitled to
vote (voting as a single class) shall be obtained prior to any such amendment
becoming effective if such approval is required by law or is necessary to comply
with regulations promulgated by the SEC under Section 16(b) of the 1934 Act or
with Section 422 of the Code or the regulations promulgated by the Treasury
Department thereunder.
15. CAPTIONS.
The use of captions in this Plan is for convenience. The
captions are not intended to provide substantive rights.
16. DISQUALIFYING DISPOSITIONS.
If Optioned Shares acquired by exercise of an ISO granted
under this Plan are disposed of within two years following the date of grant of
the ISO or one year following the transfer of the Optioned Shares to the
Optionee (a "Disqualifying Disposition"), the holder of the Optioned Shares
shall, immediately prior to such Disqualifying Disposition, notify the Company
in writing of the date and terms of such Disqualifying Disposition and provide
such other information regarding the Disqualifying Disposition as the Company
may reasonably require.
17. WITHHOLDING TAXES.
Whenever under the Plan shares of Common Stock are to be
delivered by an Optionee upon exercise of an NSO, the Company shall be entitled
to require as a condition of delivery that the Optionee remit or, in appropriate
cases, agree to remit when due, an amount sufficient to satisfy all current or
estimated future Federal, state and local withholding tax and employment tax
requirements relating thereto. At the time of a Disqualifying Disposition, the
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Optionee shall remit to the Company in cash the amount of any applicable
Federal, state and local withholding taxes and employment taxes.
18. OTHER PROVISIONS.
Each Option granted under the Plan may contain such other
terms and conditions not inconsistent with the Plan as may be determined by the
Committee, in its sole discretion. Notwithstanding the foregoing, each ISO
granted under the Plan shall include those terms and conditions which are
necessary to qualify the ISO as an "incentive stock option" within the meaning
of Section 422 of the Code and the regulations thereunder and shall not include
any terms or conditions which are inconsistent therewith.
19. NUMBER AND GENDER.
With respect to words used in this Plan, the singular form
shall include the plural form, the masculine gender shall include the feminine
gender, and vice-versa, as the context requires.
20. GOVERNING LAW.
The validity and construction of this Plan and the instruments
evidencing the Options granted hereunder shall be governed by the laws of the
State of New York.
21. VOTING TRUST AGREEMENT.
Each Optionee that is granted options hereunder shall enter
into a voting trust agreement, whereby such Optionee shall grant to the then
acting Chief Executive Officer of the Company at the time, the right to vote
such Optionee's optioned Shares on the terms and subject to the conditions
thereof.
As adopted by the Board of Directors of iVILLAGE, INC. on May
27, 1997.
<PAGE>
Confidential
INTERACTIVE SERVICES AGREEMENT
This agreement (the "Agreement"), effective as of July 1, 1997 (the
"Effective Date"), is made and entered into by and between America Online, Inc.
(AOL), a Delaware corporation, with its principal offices at 22000 AOL Way,
Duties, Virginia 20166, and iVillage, Inc. (collectively. "Interactive Content
Provider" or "ICP"), a Delaware corporation, with its principal offices at 170
Fifth Avenue, 4th Floor, New York, New York 10010 (each a "Party" and
collectively the "Parties").
INTRODUCTION
AOL and ICP each desires that AOL provide access to the ICP Sites (as
defined below) through the AOL Network (as defined below), subject to the terms
and conditions set forth in this Agreement. Defined terms used but not defined
in the body of this Agreement or in Exhibit D shall be as defined on Exhibit C
attached hereto.
TERMS
1. DISTRIBUTION; PROGRAMMING
1.1 Anchor Tenancy. Beginning on the applicable Launch Date and
continuing during the Term, ICP shall receive anchor tenant
distribution within the AOL Service, as follows: AOL shall (a) place
ICP logos or banners throughout the AOL Service as specified on
Exhibit A, such logos or banners to all link directly to the
applicable Welcome Mat; (b) provide ICP with the keywords specified
on Exhibit A-1 hereto (provided that (i) AOL shall have the right to
discontinue provision to ICP of any "generic" keywords specified on
Exhibit A-1 on 30 days notice and (ii) ICP may submit for AOL's
approval (not to be unreasonably withheld) any other trademarks of
ICP as potential additional keywords), which shall Link to the
applicable Welcome Mat; and (c) list "Parent Soup," "About Work,"
"Better Health," and "About Life" in AOL's "Directory of Services"
and "Find" features. The placements specified in Exhibit A shall be
comparable to the placement of other standard anchor tenants on the
relevant screens.
1.1.1 Changes to AOL Service. AOL reserves the right to redesign or
modify the organization, structure, "look and feel,"
navigation and other elements of the AOL Service. If AOL
implements changes and modifications to the screens specified
in Exhibit A in a manner that substantially modifies the
nature of the placements for ICP described above in an adverse
fashion, AOL will work with ICP in good faith to provide ICP
with a comparable package of placements which are reasonably
satisfactory to ICP.
1.1.2 Further Carriage Negotiation. AOL and ICP will whenever
appropriate and in good faith negotiate terms and conditions
regarding (a) anchor tenant placement of ICP's "About Work"
property in the AOL Service Workplace channel main screen, and
(b) carriage of appropriate ICP properties through AOL.com.
1.1.3 Discontinuation of ICP properties. If ICP discontinues
provision of any property specified on Exhibit A, ICP shall
continue to be obligated to pay AOL the full carriage fee
specified in Section 1.5, provided that ICP and AOL shall
negotiate in good faith for a "make-good" provision to ICP for
the discontinued property, which may include carriage for
another ICP property or provision to ICP of remnant AOL ad
inventory. Any such "make-good" provision shall occur during
the term of this Agreement.
1.2 ICP Sites. The ICP Sites shall consist of the Content described on
Exhibit B hereto. The Content shall be produced in a mixture of HTML
and AOL's "Rainman" production format, as specified on Exhibit B.
For the purposes of this Agreement, (a) the ICP Sites (or portions
or areas thereof) that are located on the AOL Network shall be
referred to herein as the "AOL Sites," (b) and the ICP Sites (or
portions or areas thereof) that are located on the world wide web
portion of the Internet
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shall be referred to herein as the "ICP Internet Sites." ICP shall
develop the design of the AOL Sites in consultation with AOL and in
accordance with any standard design and content publishing
guidelines provided to ICP by AOL (including, without limitation,
any HTML publishing guidelines). ICP shall not authorize or permit
any third party to distribute any other Content of ICP through the
AOL Network absent AOL's prior written approval (not to be
unreasonably withheld or delayed). The inclusion of any additional
Content for distribution through the AOL Network (including, without
limitation, any features, functionality or technology) not expressly
described on Exhibit B shall be subject to AOL's prior approval (not
to be unreasonably withheld or delayed), provided that any material
additions to Exhibit B shall require AOL's prior written approval
(not to be unreasonably withheld or delayed). ICP shall provide
Exhibit B to AOL in writing within ten (10) business days from the
date of execution of the Agreement, provided that AOL shall have
prior reasonable approval rights for such Exhibit B.
1.3 License. ICP hereby grants AOL a worldwide license to use, market,
license, store, distribute, display, communicate, perform, transmit,
and promote the ICP Sites and the Licensed Content contained therein
(or any portion thereof) through such areas or features of the AOL
Network as deems appropriate, including without limitation the right
to integrate Content from the ICP Internet Sites by linking to
specific areas on the ICP Sites. Without limiting the generality of
the foregoing, to the extent AOL wishes to distribute the Licensed
Content through a product or service separate and distinct from the
AOL Service (each an "Additional AOL Product"): (i) AOL shall
provide ICP with prior written notice of the Additional AOL Product
through which the Licensed Content will be made available; and (ii)
any changes in the form or presentation of the Licensed Content
within the Additional AOL Product shall be subject to ICP's
approval, which shall not be unreasonably withheld or delayed. AOL
shall not be required to pay any additional fees or other forms of
compensation in connection with distribution of the Licensed Content
through any such Additional AOL Product.
1.4 Management of ICP Internet Sites. ICP shall be responsible for any
hosting or communication costs associated with the ICP Internet
Sites (including, without limitation, the costs associated with (i)
any agreed-upon direct connections between the AOL Network and the
ICP Internet Sites or (ii) a mirrored version of the ICP Internet
Sites). AOL Members shall not be required to go through a
registration process (or any similar process) in order to access and
use the ICP Sites, provided that if ICP elects to have all users of
ICP Internet Sites go through a registration and subscription
process (or other similar process) in order to access and use the
sites, then ICP shall be permitted to require AOL Members to go
through the identical process, provided, further, that (a) AOL
Members shall not be required to go through any such registration
process from a Welcome Mat, and (b) in any event the ICP Internet
Sites shall contain a material amount of Content that is available
without AOL Members having to go through any such registration
process.
1.5 (Carriage Fee. ICP shall pay AOL as follows:
1.5.1 Cash Payment. Subject to Section 6. 1 relating to renewal of
this Agreement for an additional year from February 28, 1999:
(a) for the period September 1, 1997, through August 31, 1998,
ICP shall make monthly payments to AOL of [*] on the first day
of each month; and (b) for the period September 1, 1998,
through February 28, 1999 (the "Extension Period"), ICP shall
make monthly payments to AOL of $[*] on the first day of each
month, provided that, with respect to any anchor tenant
placement specified on Exhibit A, if as of September 1,1998,
the most recent price offered to and accepted by AOL as valid
for any such anchor tenant placement (e.g., for a continuous
and prominent logo or banner on the Families Screen) (an
"Offer") exceeds by [*]% or more the value for that placement
specified on Exhibit G, ICP shall pay AOL the difference
between the applicable value specified in Exhibit G and the
Offer, in a combination of cash and in-kind commitments,
subject to the following: (i) if AOL guarantees more
impressions associated with the relevant Offer then specified
herein, ICP
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shall receive such additional impressions; (ii) the proportion
of cash to in-kind commitments shall be determined by ICP but
at least [*]% of the additional amount payable to AOL shall be
in cash (e.g., if there is an Offer for $1,000,000 for a
continuous and prominent logo or banner on the Families
Screen, then ICP shall pay AOL an extra $250,000 during the
Extension Period, with no less than $[*] payable as cash
and $[*] payable as in-kind commitments); (iii) the value
placed by ICP on and schedule of any additional in-kind
commitments shall be subject to AOL's prior written approval
(not to be unreasonably withheld): (iv) any cash portion shall
be payable in equal monthly installments during the Extension
Period as an addition to the $[*] installments specified in
this subparagraph (b); and (v) any in-kind commitments must
occur during the Extension Period.
1.5.2 In-Kind Programming and Promotion. Subject to adjustment
during the Extension Period as specified in Section 1.5.1(b),
ICP shall provide AOL during the initial term with the
equivalent of $[*] made up of the in-kind commitments
specified on Exhibit F attached hereto in the amounts and with
the bona-fide values listed in such exhibit (the "ICP In-Kind
Commitments"). Without limiting any other rights or remedies
available to AOL, AOL's anchor tenant and impressions
commitments specified in Sections 1.1 and 1.6 herein are and
will be contingent upon provision by ICP of the ICP In-Kind
Commitments in accordance with Exhibit F.
1.6 Impressions Guarantee. AOL shall provide ICP with at least
[*] million Impressions per year from ICP presence on the
AOL Network hereunder, as specified on Exhibit C hereto (the
"Impressions Guarantee"). AOL shall use reasonable efforts to ensure
that the Impressions Guarantee is delivered in relatively consistent
amounts over the Term, measured on a quarterly basis, subject to
seasonal, customary and other appropriate fluctuations. A minimum of
[*]% of the Impressions Guarantee specified on Exhibit C for each
screen placement listed thereon (other than the "Other" category to
be determined in AOL's discretion, as listed on Exhibit G) shall be
generated from the presence of ICP on the relevant screen, and the
remaining impressions, if any, may be generated from ICP's presence
on other appropriate screens on the AOL Network as AOL may determine
in its discretion (e.g., for the placement of "Parent Soup" on the
Families Screen, AOL shall provide ICP with a minimum of [*]
Impressions from "Parent Soup's" presence on the Families Screen,
and the remaining [*] Impressions, if any, may be generated
from ICP's presence on other appropriate screens). For the purposes
of this Section, ICP presence on an AOL screen shall conform to
the specifications set forth on Exhibit E, provided that only
screens that contain a link to an ICP Site or a Welcome Mat (or any
portion thereof) will count against the Impressions Guarantee. The
Term with respect to placement of a particular ICP property shall be
extended without additional carriage fees payable by ICP until the
relevant Impressions Guarantee is met.
2. PROMOTION
2.1 Cooperation. Each Party shall cooperate with and reasonably assist
the other Party in supplying material for marketing and promotional
activities.
2.2 Interactive Site. ICP shall include the following promotions within
each ICP Interactive Site during the Term: a continuous promotional
banner for AOL appearing "above the fold" on the first screen of the
ICP Interactive Site.
2.3 Publications, etc. ICP shall use commercially reasonable efforts to
prominently and regularly promote AOL and the ICP Sites availability
through the AOL Service in publications, programs, features or other
forms of media over which ICP exercises at least partial editorial
control
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2.4 Keyword. In any instances when ICP makes promotional reference to an
ICP Interactive Site and exercises at least partial editorial
control, including any listings of the applicable "URL(s)" for such
web site(s) (each a "Web Reference"). ICP shall include a listing of
the applicable AOL "keyword" of comparable prominence to the Web
Reference.
2.5 Preferred Access Provider.
2.5.1 When promoting AOL, ICP shall use commercially reasonable
efforts to promote AOL as the preferred access provider
through which a user can access the ICP Sites (and ICP shall
not implement or authorize any other promotions on behalf of
any third parties which are inconsistent with the foregoing).
2.5.2 With respect to any ICP Interactive Site accessible or
operating through any operating system (including without
limitation any Microsoft system) or through a channel or area
delivered through a "push" product such as the Pointcast
Network or interactive environment such as Microsoft's
proposed "Active Desktop" or Netscape's "Netcaster"(an
"Operating System"), ICP shall (a) include in any such ICP
Interactive Site a prominent "Try AOL" feature (and controls
and software provided by AOL relating to such feature) that
will cause a user of such site to link directly to AOL access
software located or present on or within the Operating System,
so that the user who already is an AOL Member or who does not
have Internet access will be connected to the AOL registration
screen, the AOL service, the AOL application setup program or
elsewhere as determined by AOL, and (b) use or support any AOL
provided software or feature that directs a user of such ICP
Interactive Site who does not have Internet access to the AOL
application setup program located or present on or within the
Operating System (instead of the Internet Referral Server or
any similar service or successor thereto). ICP's commitments
specified above shall be subject to any standard policies and
restrictions generally proscribed by the operator of the
Operating System.
2.6 Direct Marketing. The Parties shall execute any commercially
reasonable New Member acquisition programs, and ICP shall earn
bounties for such programs, as specified described in Exhibit H
attached hereto.
3. REPORTING.
3.1 Usage Data. AOL shall make available to ICP, on a property by
property basis, a monthly report specifying for the prior month
aggregate usage and Impressions with respect to ICP's presence on
the AOL Network. In addition, to the extent AOL is caching the ICP
Sites, AOL shall supply ICP with monthly reports, on a property by
property basis, reflecting aggregate impressions by AOL Members to
the cached version of the ICP Sites during the prior month. ICP will
supply AOL with monthly reports, on a property by property basis,
which reflect total impressions by AOL Members to Welcome Mats
during the prior month and any transactions involving AOL Members at
the ICP Sites during the period in question. ICP shall also provide
AOL with "click-through" data with respect to the promotions
specified in Section 2.
3.2 Advertising Data. ICP shall provide detailed information to AOL
regarding AOL Site Advertisements and Welcome Mat Advertisements
(both as defined below in Section 4.1). In reporting any
advertisement or promotion, ICP shall indicate the name of the
advertiser, the term of the advertising arrangement and the amounts
paid (or to be paid) to ICP or its agent(s).
3.3 Promotional Commitments. ICP shall provide to AOL a monthly report
documenting its compliance with any promotional commitments it has
undertaken pursuant to Sections 1.5 and 2 in the form attached as
Exhibit I hereto.
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3.4 Payment Schedule. Except as otherwise specified herein, each Party
agrees to pay the other Party all amounts received and owed to such
other Party as described herein on a monthly basis within thirty
(30) days of the end of the month in which such amounts were
collected by such Party.
4. ADVERTISING AND MERCHANDISING
4.1 Advertising Rights. AOL owns all right, title and interest in and to
the advertising and promotional spaces within the AOL Network
(including, without limitation, advertising and promotional spaces
on any AOL forms or pages which are included within, preceding,
framing or otherwise associated with the ICP Sites). The specific
advertising inventory within any such AOL forms or pages shall be as
reasonably determined by AOL. With respect to the AOL Sites
(including without limitation the Welcome Mats), AOL hereby grants
ICP the sole right, subject to the terms hereof, to license or sell
promotions, advertisements, links, pointers or similar services or
rights in or through such AOL Sites ("AOL Site Advertisements"),
subject to (i) AOL's approval for each AOL Site Advertisement (such
approval not to be unreasonably delayed) and (ii) the Advertising
Minimum. In addition, with respect to promotions, advertisements,
links, pointers or similar services or rights in or through the
Welcome Mats (not including screens linked from the Welcome Mats)
("Welcome Mat Advertisements"), which pursuant to the preceding
sentence ICP has the sole right to license or sell, ICP shall pay
AOL [*] percent ([*]%) of the Advertising Revenue with respect to
such Welcome Mat Advertisements. If and when AOL makes its ad server
technology generally available to third parties, AOL shall make such
technology available for use by ICP with respect to the AOL Site
Advertisements on AOL's then-standards terms and conditions.
4.2 Advertising Policies. Any Welcome Mat advertisements or AOL Site
Advertisements (collectively, "AOL Advertisements") sold by ICP or
its agents shall be subject to AOL's then-standard advertising
policies.
4.3 Advertising Registration Form. In connection with the sale by ICP
of any AOL Advertisement, ICP shall, in each instance, provide AOL
with a completed standard AOL Advertising Registration Form relating
to such AOL Advertisement. ICP shall take all reasonable steps
necessary to ensure that any AOL Advertisement sold by ICP complies
with all applicable federal, state and local laws and regulations.
4.4 Advertising Packages. To the extent ICP sells a Welcome Mat
Advertisement as part of an advertising package including multiple
placement locations (e.g., both Welcome Mat and another area or
site), ICP shall allocate the payment for such advertising package
between or among such locations in an equitable fashion, subject to
the Advertising Minimum. When selling advertising associated with
the ICP Sites, ICP shall use commercially reasonable efforts to sell
related advertising within the Welcome Mats. To the extent an
advertisement is delivered through a dynamic mechanism primarily
linked to particular AOL Members viewing such advertisement (rather
than a defined space within the Welcome Mats), the amount of revenue
from the advertisement allocable to Advertising Revenue shall be
determined based on the number of impressions to the advertisement
generated by AOL Members while viewing Content within the Welcome
Mat relative to the total impressions to the advertisement during
the given period (or such other formula as AOL may reasonably
implement given the then-existing advertising models).
4.5 Interactive Commerce. ICP's offer, sale or license of products or
services (including surcharged services) shall be subject to the
"Shopping Channel Promotional Agreement" between AOL and ICP dated
as of October ___, 1997 (the "Commerce Agreement").
5. CUSTOMIZATION OF SITES
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5.1 Performance. ICP shall optimize the ICP Sites for distribution
hereunder according to AOL specifications and guidelines (as
indicated in (a), (b) and (c) below) to ensure that (i) the
functionality and features within the ICP Sites are optimized for
the client software then in use by a majority of AOL Members and
(ii) the forms used in the ICP Sites are designed and populated in a
manner intended to minimize delays when AOL Members attempt to
access such forms. With respect to any ICP Internet Sites, the
following shall also apply:
(a) ICP shall design the ICP Internet Sites to support the
Windows version of the Microsoft Internet Explorer 3.0
browser, and make commercially reasonable efforts to support
all other AOL browsers listed at:
http://webmaster.info.aol.com/BrowTable.html and set forth on
Exhibit J hereto;
(b) ICP shall configure the servers from which it serves the
ICP Internet Sites to examine the HTTP User-Agent field in
order to identify the AOL User-Agents listed at:
http://webmaster.info.aol.com/Brow2Text.html and as set forth
on Exhibit J hereto (the "AOL User-Agents") and
(c) ICP shall design its web site to support HTTP 1.0 or
later protocol as defined in RFC 1945 (available at
http://ds.internic.net/rfc/rfcl945.text) and to adhere to
AOL's parameters for refreshing cached information listed at
http://webmaster.info.aol.com/CacheText.html.
AOL reserves the right to review the ICP Internet Sites to determine
whether such sites are compatible with AOL's then-available client and
host software and the AOL Network.
5.2 Customization. ICP shall customize the ICP Sites for AOL Members as
follows:
(a) ICP shall create a Welcome Mat for each "home page" or
initial main screen on the ICP Sites linked to from the AOL
Network on a continuous basis;
(b) ICP shall ensure that AOL Members linking to the ICP Sites
from the AOL Network do not receive advertisements, promotions
or links for any entity reasonably construed to be in
competition with AOL and that such advertisements, promotions
and links are not otherwise in conflict with AOL advertising
policies and any contractual AOL exclusivities (with respect
to ICP Internet Sites, ICP shall ensure this by, at a minimum,
identifying the AOL User-Agents as specified above), provided
that AOL shall provide ICP with at least sixty (60) days prior
notice of any changes in the advertising policies; and
(c) provide continuous navigational ability (e.g., a link on a
hybrid browser form) for AOL members to return to an
agreed-upon point on the AOL Service (for which AOL shall
supply the proper address) from the ICP Sites (e.g., the point
on the AOL Service from which such sites are linked).
5.3 Links on Sites. The Parties will work together on mutually
acceptable links (including links back to AOL) within the ICP Sites
in order to create a robust and engaging AOL member experience. ICP
shall take reasonable efforts to insure that AOL traffic is
generally either kept within the ICP Sites or channeled back into
the AOL Network. Except for links to a commerce area as specified in
the Commerce Agreement and except as set forth on Exhibit B hereto,
subject to the last sentence of this Section, ICP shall not be
permitted to establish any "pointers" or links between the ICP Sites
and any other area on or outside of the AOL Network, including,
without limitation, other ICP Sites or sites on the World Wide Web
portion of the Internet ("Linked Sites"), without the prior written
approval of AOL, which approval may be conditioned upon, among other
things, payment of certain linking fees and commitments providing
for promotion of the AOL Sites and AOL through the Linked Site in
question. In addition, AOL may restrict its approval (at any time)
to specific portions of Content or functionality within a Linked
Site (based on AOL's programming
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objectives related to the ICP Sites). In such case, establishment of
the link from the ICP Site to the Linked Site will be subject to
mutual agreement of the Parties regarding the means by which access
will be restricted to the approved portions of the Linked Site.
Notwithstanding the foregoing, ICP may establish links from an ICP
Site to another ICP Site provided that such links are editorial,
content-specific links, to relevant areas of the ICP Sites. In
general, such links shall be temporary (i.e., generally no more than
7 days continuous duration, and in any event, for no more than 30
days continuous duration and no more than 60 days cumulatively
(including partial duration days) in any 12-month period).
6. TERM AND TERMINATION.
6.1. Term. Unless earlier terminated as set forth herein, the initial
term of this Agreement shall be from the Effective Date to February
28, 1999. For two (2) years after expiration of the Term, AOL shall
continue to have the option to link to any ICP Interactive Sites.
This Agreement may be extended by mutual written agreement of the
Parties.
6.1.1 One Year Extension by AOL. AOL may extend the Agreement for an
additional year from February 28, 1999, upon AOL's then-standard
terms and conditions generally applicable to anchor tenants (but in
no event less favorable to ICP than the terms and conditions
provided for herein) and with payments by ICP to AOL of $[*]
(the "Renewal Carriage Fee") by providing ICP with written notice
thereof no later than sixty (60) days prior to the expiration of the
initial term (the "Put Notice"), provided, however, that if the most
recent price offered to and accepted by AOL as valid for the
placements specified herein (e.g., for continuous and prominent
logos or banners as specified in Section 1.1) is $[*] or less
(a "Renewal Offer"), then AOL may only extend this Agreement for an
additional year by a Put Notice specifying to ICP the Renewal Offer
as the applicable carriage fee. The Renewal Carriage Fee (or Renewal
Offer as the applicable carriage fee, as the case may be) shall be
made up of a combination of cash and in-kind commitments, subject to
the following: (i) the proportion of cash to in-kind commitments
shall be determined by ICP but at least $[*] of the Renewal Carriage
Fee (or [*]% of the Renewal Offer, as the case may be) shall be in
cash and payable in equal monthly installments in advance of each
month beginning on March 1, 1999; and (ii) the value placed by ICP
on and schedule of the in-kind commitments shall be subject to AOL's
prior written approval (not to be unreasonably withheld).
6.1.2 One Year Extension by ICP. If AOL does not deliver the Put Notice,
ICP may, no later than forty five (45) days prior to the expiration
of the initial term, notify AOL in writing (the "Call Notice") that
ICP desires to renew this Agreement for an additional year from
February 28, 1999, on AOL's then-standard terms and conditions
generally applicable to anchor tenants (but in no event less
favorable to ICP than the terms and conditions provided for herein)
and with payments by ICP to AOL of the "Market Rate" (as defined
below). AOL shall then provide ICP written notice of the "Market
Rate" for the additional year within thirty (30) days of AOL's
receipt of the Call Notice (the "Market Rate Notice"). ICP shall
have ten (10) days from receipt of the Market Rate Notice to either
accept or decline the terms contained therein for the additional
year, provided that ICP's failure to respond to the Market Rate
Notice within such 10 day period shall be deemed to be an acceptance
of the terms contained therein. If ICP accepts the terms contained
in the Market Rate Notice for the additional year, then the Market
Rate shall payable by ICP to AOL in a combination of cash and
in-kind commitments, subject to the following: (i) the proportion of
cash to in-kind commitments shall be determined by ICP but at least
[*]% of the Market Rate shall be in cash and payable in equal
monthly installments in advance of each month beginning on March 1,
1999; and (ii) the value placed by ICP on and schedule of the
in-kind commitments shall be subject to AOL's prior written approval
(not to be unreasonably withheld). If ICP declines the terms
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contained in the Market Rate Notice for the additional year, AOL
shall not, for a period of one hundred twenty days (120) days
thereafter, agree with any non-affiliated third party for continuous
placement on the Screens (as specified in this Agreement) for a
carriage fee that is materially less than the Market Rate. For the
purposes hereof, "Market Rate" shall mean the rate, specified by AOL
in its notice to ICP, reasonably determined by AOL for anchor tenant
placement as specified herein for the screens specified in this
Agreement, taking into account such reasonable considerations as AOL
may determine in its discretion
6.2 Termination for Breach. Either Party may terminate this Agreement at
any time in the event of a material breach by the other Party which
remains uncured after thirty (30) days written notice thereof.
6.3 Termination for Bankruptcy/Insolvency. Either Party may terminate
this Agreement immediately following written notice to the other
Party if the other Party (i) ceases to do business in the normal
course, (ii) becomes or is declared insolvent or bankrupt, (iii) is
the subject of any proceeding related to its liquidation or
insolvency (whether voluntary or involuntary) which is not dismissed
within ninety (90) calendar days or (iv) makes an assignment for the
benefit of creditors.
6.4 Entire Agreement. This Agreement sets forth the entire agreement and
supersedes any and all prior agreements of the Parties with respect
to the transactions set forth herein (including without limitation
the Information Provider Agreement between ICP and AOL dated as of
May 6, 1996, as amended on May 28, 1997 and the Information Provider
Agreement between ICP and AOL dated as of Septeniber 19, 1995).
Neither Party shall be bound by, and each Party specifically objects
to, any term, condition or other provision which is different from
or in addition to the provisions of this Agreement (whether or not
it would materially alter this Agreement) and which is proffered by
the other Party in any correspondence or other document, unless the
Party to be bound thereby specifically agrees to such provision in
writing.
7. TERMS AND CONDITIONS. The legal terms and conditions set forth on Exhibit
D attached hereto are hereby made a part of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the Effective Date.
AMERICA ONLINE,INC. VILLAGE, INC
By /s/ Barry Schuler By: /s/ Steven [ILLEGIBLE]
----------------------------------------- --------------------------------
Print Name: BARRY SCHULER Print Name: Steven [ILLEGIBLE]
Title: President, Creative Development Title: VP Finance
AOL Networks Tax ID/EIN#: ________________
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EXHIBIT A
Anchor Tenant Placements
A. AOL shall continuously and prominently place an agreed-upon ICP logo or
banner for ICP's "Parent Soup" property on the (a) Families channel
main screen (or any specific successor thereof) (the "Families Screen")
and (b) Health channel "Children's Health" subsereen (or any specific
successor thereof) (the "Children's Health Screen").
B. AOL shall continuously and prominently place an agreed-upon ICP logo or
banner for ICP's "About Work" property on the (a) Workplace channel
"Careers" subscreen (or any specific successor thereof) (the "Careers
Screen") and (b) Workplace channel "Getting Started" subscreen (or any
specific successor thereof) (the "Getting Started Screen").
C. AOL shall continuously and prominently place an agreed-upon ICP logo or
banner for ICP's "Better Health" property on the (a) Health channel
main screen (or any specific successor thereof) (the "Health Screen")
and (b) Health channel "Illnesses and Treatments" subscreen (or any
specific successor thereof) (the "Illnesses Screen").
D. AOL shall continuously and prominently place an agreed-upon ICP logo or
banner for ICP's "About Life" property on the Lifestyles channel train
screen (or any specific successor thereof) (the "Lifestyles Screen").
EXHIBIT A-1
Keywords
"Parent Soup"
"About Work"
"Better Health"
"About Life"
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EXHIBIT B
Description of Content on ICP Sites
[specify rainman/HTML]
1. Parent Soup
2. About Work
3. Better Health
4. About Life
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EXHIBIT C -- DEFINITIONS.
The following definitions shall apply to this Agreement:
Advertising Revenues. Aggregate amounts collected plus the fair market value of
any other compensation received (such as barter advertising) by ICP or ICP's
agents arising from the license or sale of Welcome Mat Advertisements, less
applicable Advertising Sales Commissions; provided that, in order to ensure
that AOL receives fair value in connection with Welcome Mat Advertisements. ICP
shall be deemed to have received no less than the Advertisrng Minimums in
instances when ICP makes a Welcome Mat Advertisement available to a third party
at a cost below the Advertising Minimum.
Advertising Minimum. (i) Thirty dollars ($30) per thousand entries per month
or, with respect to any chat room, Five dollars ($5) per thousand entries per
month, or (ii) such different rate or rates as AOL may establish based upon
market conditions and publish during the Term.
Advertising Sales Commission. (i) Actual amounts paid as commission to third
party agencies in connection with sale of the Welcome Mat Advertisement or
(ii) 15%, in the event ICP has sold the Welcome Mat Advertisement directly and
will not be deducting any third party agency commissions.
Affiliate. Any agent, distributor or franchisee of AOL, or an entity in which
AOL holds at least a nineteen percent (19%) equity interest.
AOL Look and Feel. The distinctive and particular elements of graphics.
design, organization, presentation, layout, user interface, navigation, trade
dress and stylistic convention (including the digital implementations thereof)
within the AOL Network and the total appearance and impression substantially
formed by the combination, coordination and interaction of these elements.
AOL Member(s). Authorized users of the AOL Network, including any sub-accounts
using the AOL Network under an authorized master account.
AOL Network. (i) The America Online(R) brawl service, (ii) AOL's "Driveway"
product, (iii) any international versions of the America Online service
through which AOL or its affiliates elect to offer the ICP Sites and (iv) any
other product or service owned, operated. distributed or authorized to be
distributed by or through AOL or its Affiliates worldwide through which such
party elects to offer the ICP Sites (which may include, without limitation.
Internet sites promoting AOL products and services and any "offline"
information browsing products of AOL or its Affiliates).
AOL Service. The U.S. version of the America Online brand service (excluding
Digital City, AOL.com, NetFind or any similar "sub" service that may be
distributed by or through the America Online brand service).
Confidential Information. Any information relating to or disclosed in the course
of the Agreement, which is, or should be reasonably understood to be,
confidential or proprietary to the disclosing party, including, but not limited
Confidential Information. Any information relating to or disclosed in the course
of the Agreement, which is, or should be reasonably understood to be,
confidential or proprietary to cIte disclosing Party, including, but not limited
to the material costs of this Agreement, information about AOL Members,
technical processes and formulas, source codes, product designs. sales, cost and
other unpublished financial information, product and business plans, projections
and marketing data. "Confidential Information" shall not include information
(a) already lawfully known to or indepentensly developed by the receiving Party.
(h) disclosed its published materials. (c) generally known to she public,
(d) lawfully obtained from any third party or (e) required or reasonably
advised to be disclosed by law.
Content. Information, materials, features, products, services, advertisements,
promotions, links, pointers, techology and software.
ICP Interactive Site. Any interactive site or area I not including any AOL Site
bus including any ICP Internet Site) which is managed. maintained or owned by
ICP or its agents. including, by way of example and without limitation. (i) an
ICP site on the World Wide Web portion of the Internet or (ii) a channel or area
delivered through a "push" product such as the Pointcast Network or interactive
environment such as Microsofts proposed "Active Desktop."
ICP Sites. The sites and Content specified on Exhibit B which are managed,
mainstained or owned by ICP or its agents. The ICP Sites shall consis of the
AOL Sites (including the Welcome Mats) and the ICP lnternet Sites, both as
defined in Section 1.2.
Impression. An AOL Member's viewing of any promotion for, reference to or point
of access to ICP or an ICP Site.
Launch Date. The date on which AOL generally releases the new version of a
screen listed in Exhibit A, to be set forth in writing from AOL to ICP.
Licensed Content. All Content provided by ICP or its agents for distribution
through the AOL Network pursuant to this Agreement (including, without
limitation. Content contained within any ICP Internet Site).
New Member. Any person or entity (a) who registers for the AOL Network
using ICP's special promotion identifier and (b) from whom AOL or an
Affiliate of AOL collects at least two (2) monthly usage fees for the use of
the AOL Network.
Term. The period beginning on the Effective Date and ending upon the
expiration or earlier termination of the Agreement.
Welcome Mat. A customized home page "welcome mat" created and produced by ICP
in AOL's "Rainman" production format or its HTML format for the AOL
audience.
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EXHIBIT D -- STANDARD LEGAL TERMS AND CONDITIONS
I. AOL NETWORK
Content. ICP represents and warrants that all Content contained within the ICP
Sites (i) will conform to AOL's then-standard Terms of Service, the terms of
this agreement and any other standard, written AOL policy, (ii) will not
infringe on or violate any copyright, trademark, U.S. patent or any other third
party right, including without limitation, any music performance or other music
related rights, and (iii) will not contain any Content which violates any
applicable law or regulation (collectively, the "Rules"). AOL shall have the
right to remove, or direct ICP to remove, any Content which, as reasonably
determined by AOL: (i) violates AOL's then-standard Terms of Service, the terms
of this Agreement or any other standard, written AOL policy; or (ii) is not
specifically described in Exhibit B. To the extent ICP wishes to implement any
rules of conduct or terms of service related to any AOL Sites which are separate
from or supplementary to AOL's Terms of Service, ICP must obtain the prior
written approval of the AOL Legal Department.
Contests. ICP shall take all steps necessary to ensure that any contest,
sweepstakes or similar promotion conducted or promoted through the ICP Sites (a
"Contest") complies with all applicable federal, state and local laws and
regulations. ICP shall provide AOL with (i) at least thirty (30) days prior
written notice of any Contest and (ii) upon AOL's request, an opinion from ICP's
counsel confirming that the Contest complies with all applicable federal, state
and local laws and regulations.
AOL Look and Feel. ICP acknowledges and agrees that AOL shall own all right,
title and interest in and to the AOL Look and Feel. In addition, AOL shall
retain editorial control over the portions of the AOL pages and forms which
frame the ICP Sites (the "AOL Frames"). AOL may, at its discretion, incorporate
navigational icons, links and pointers or other Content into such AOL Frames.
Management. ICP shall review, delete, edit, create, update, and otherwise manage
all Content available on or through the ICP Sites, including but not limited to
the Licensed Content and message boards, in a timely and professional manner and
in accordance with the terms of this Agreement, AOL's then-standard Terms of
Service and any generally applicable guidelines and service standards for
interactive content providers published by AOL. AOL shall have no obligations of
any kind with respect to the Content available on the ICP Sites. In managing the
AOL Sites, ICP agrees to refrain from editing or altering any opinion expressed
by an AOL member within the AOL Site, except in cases when ICP (i) has a good
faith belief that the Content in question violates an applicable law,
regulation, third party right or portion of AOL's Terms of Service or (ii)
obtains AOL's prior approval. ICP shall ensure that the ICP Sites are reasonably
current, accurate and well-organized.
Operations. AOL shall be entitled to require reasonable changes to the ICP Sites
to the extent such site will, in AOL's good faith judgement, adversely affect
operations of the AOL network.
Duty to Inform. ICP shall promptly inform AOL of any information related to the
ICP Sites which could reasonably lead to a claim, demand or liability of or
against AOL and/or its Affiliates by any third party.
Response to Questions/Comments; Customer Service. ICP shall respond promptly and
professionally to questions, comments, complaints and other reasonable requests
regarding the ICP Sites by AOL members or on request by AOL, and shall cooperate
and assist AOL in promptly answering the same.
Classifieds. During the perion form the Effective Date until nine months after
the effective Date, ICP shall not enter into any long term (i.e, 12 months or
more) agreement with respect to the implementation or promotion of any
classifieds listing features through the ICP Sites ("Classifieds"). Thereafter,
ICP will only enter into any such agreement after first notifying AOL. In
addition, ICP and AOL shall also discuss in good faith the integration of the
any ICP Classifieds (including any database related to ICP Classifieds) into any
AOL classifieds features, on terms and conditions to be agreed upon.
Message Boards. Any Content submitted by ICP or its agents within message boards
or any comparable vehicles will be subject to the license grant relating to
submissions to "public areas" set forth in the Proprietary Rights section of the
Terms of Service.
Statements to Third Parties. ICP shall not make, publish, or otherwise
communicate, or cause to be made, published, or otherwise communicated, any
deletions remarks whatsoever to any third parties concerning AOL or its
affiliates, directors, officers, employees or agents, including without
limitation, AOL's business projects, business capabilities, performance of
duties and services or financial position.
Production Work. In the event that ICP requests any AOL production assistance,
ICP shall work with AOL to develop detailed production plans for the requested
production assistance (the "Production Plan"). Following receipt of the final
Production Plan, AOL shall notify ICP of (i) AOL's availability to perform the
requested production and maintenance work and (iii) the estimated development
schedule for such work. To the extent the parties reach agreement regarding
implementation of agreed-upon Production Plan, such agreement shall be reflected
in a separate work order signed by the parties. To the extent ICP elects to
retain a third party provider to perform any such production work, work produced
by such third party provider must generally conform to AOL's production
Standards & Practices (a copy of which will be supplied by AOL to ICP upon
request). The specific production resources which AOL allocates to any
production work to be performed on behalf of ICP shall be as determined by AOL
in its sole discretion.
Publishing Tools. AOL shall determine, in its sole discretion, which of its
proprietary publishing tools (each, a "Tool") shall be made available to ICP to
develop and implement the AOL Sites during the Term. ICP shall be granted a
nonexclusive license to use any such Tool, which license shall be subject to:
(i) ICP's timely payment of AOL's then-current fees and charges for such
license, which fees may be adjusted from time to time during the Term, (ii)
ICP's compliance with all rules and regulations relating to use of the Tools, as
published from time to time by AOL, (iii) AOL's right to withdraw or modify such
license at any time, and (iv) ICP's express recognition that AOL provides all
Tools on an "as is" basis, without warranties of any kind.
Training and Support. AOL shall make available to ICP standard AOL training and
support programs necessary to produce any AOL areas hereunder. ICP can select
its training and support program from the options then offered by AOL. ICP shall
be responsible to pay the fees associated with its chosen training and support
package. In addition, ICP will pay travel and lodging costs associated with its
participation in any AOL training programs (including AOL's travel and lodging
costs when training is conducted at ICP's offices).
II. TRADEMARKS
Trademark License. In designing and implementing any marketing, advertising,
press releases or other promotional materials related to this Agreement and/or
referencing the other party and/or its trade names, trademarks and service marks
(the "Promotional Materials") and subject to the other provisions contained
herein, ICP shall be entitled to use the following trade names, trademarks and
service marks of ICP (collectively, together with the AOL marks listed above,
the "Marks"): provided that each Party: (i) does not create a unitary composite
mark involving a Mark of the other Party without the prior written approval of
such other party and (ii) displays symbols and notices clearly and sufficiently
indicating the trademark status and ownership of the other Party's Marks in
accordance with applicable trademark law and practice.
Rights. Each Party agrees that its utilization of the other Party's Marks will
not create in it, nor will it represent it has, any right, title or interest in
or to such Marks other than the licenses expressly granted herein, Each Party
agrees not to do anything contesting or impairing the trademark rights of the
other Party.
Quality Standards. Each Party agrees that the nature and quality of its products
and services supplied in connection with the other party's Marks shall conform
to quality standards communicated in writing by the other Party for use of its
trademarks. Each Party agrees to supply the other Party, upon request, with a
reasonable number of samples of any Materials publicly disseminated by such
Party which utilize the other Party's Marks. Each Party shall disseminated by
all applicable laws, regulations and customs and obtain any required government
approvals pertaining to use of the other Party's Marks.
Promotional Materials/Press Releases. Each Party will submit to the other Party,
for its prior written approval, which shall not be unreasonably withheld or
delayed, any Promotional Materials; provided, however, that either Party's
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factual reference to the existence of a business relationship between AOL and
ICP, including, without limitation, the availability of the Licensed Content
through the AOL Network, or use of screen shots relating to the distribution
under this Agreement (so long as the AOL Network is clearly identified as the
source of such screen shots) for promotional purposes shall not require the
approval of the other Party. Once approved, the Promotional Materials may be
used by a Party and its affiliates for the purpose of promoting the distribution
of the Licensed Content through the AOL Network and reused for such purpose
until such approval is withdrawn, existing inventories of Promotional Materials
may be depleted.
Infringement Proceedings. Each Party agrees to promptly notify the other Party
of any unauthorized use of the other Party's Marks of which it has actual
knowledge. Each Party shall have the sole right and discretion to bring
proceedings alleging infringement of its Marks or unfair competition related
thereto; provided, however, that each party agrees to provide the other Party,
at such other Party's expense, with its reasonable cooperation ad assistance
with respect to any such infringement proceedings.
III. REPRESENTATIONS AND WARRANTIES
Each Party represents and warrants to the other Party that: (i) such Party has
the full corporate right, power and authority to enter into this Agreement, to
grant the licenses granted hereunder and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it is
otherwise bound; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; (iv) such Party's
Promotional Materials will neither infringe on any copyright, U.S. patent or any
other third party right nor violate any applicable law or regulation and (v)
such Party acknowledges that the other Party makes no representations,
warranties or agreements related to the subject matter hereof which are not
expressly provided for in this Agreement.
IV. CONFIDENTIALITY
Each Party acknowledges that Confidential Information may be disclosed to the
other Party during the course of this Agreement. Each Party agrees that it shall
take reasonable steps, at least substantially equivalent to the steps it takes
to protect its own propriety information, during the Term and for a period of
three (3) years following expiration or termination of this Agreement, to
prevent the duplication or disclosure of Confidential Information of the other
Party, other than by or to its employees or agents who must have access to such
Confidential Information to perform such Party's obligations hereunder, who
shall each agree to comply with this Section of this Agreement.
V. RELATIONSHIP WITH AOL MEMBERS
Solicitation of Subscribers. During the Term and for the two-year period
following the expiration or termination of this Agreement, neither ICP nor its
agents will use the AOL Network to (i) solicit or participate in the
solicitation of AOL Members when that solicitation is for the benefit of any
entity (including ICP) which could reasonably be construed to be or become in
competition with AOL or (ii) promote any services which could reasonably be
construed to be in competition with services available through AOL including,
but not limited to, services available through the Internet (e.g, the ICP
Sites). ICP may not send any AOL Member e-mail communications on or through the
AOL Network without a "Prior Business Relationship." For purposes of this
Agreement, a "Prior Business Relationship" shall mean that the AOL Member has
either (i) purchased Products from ICP through the AOL Network or (ii)
voluntarily provided information to ICP through a contest, registration, or
other communication, which included clear and conspicuous notice to the AOL
Member that the information provided by the AOL Member could result in an e-mail
being sent to that AOL Member by ICP or its agents.
Collection of Member Information. ICP is prohibited from collecting AOL Member
screennames from public or private areas of the AOL Network, except as
specifically provided below. ICP shall ensure that any survey, questionnaire or
other means of collecting Member Information including, without limitation,
requests directed to specific AOL Member screennames and automated methods of
collecting screennames (an "Information Request") complies with (i) all
applicable laws and regulations, (ii) AOL's applicable Terms of Service, and
(iii) any privacy policies which have been issued by AOL in writing during the
Term (the "AOL Privacy Policies"). Each Information Request shall clearly and
conspicuously specify to the AOL Members at issue the purpose for which Member
Information collected through the Information Request shall be used (the
"Specified Purpose").
Use of Member Information. ICP shall restrict use of the Member Information
collected through an Information Request to the Specified Purpose. In no event
shall ICP (i) provide AOL Member names, screennames, addresses or other
identifying information ("Member Information") to any third party (except to the
extent specifically (a) permitted under the AOL Privacy Policies or (b)
authorized by the AOL Members in question) or (ii) otherwise use any Member
Information in contravention of the above section regarding "Solicitation of
Members."
VI. TREATMENT OF CLAIMS
Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
(EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES),
ARISING FROM THE USE OF OR INABILITY TO USE THE AOL NETWORK OR ANY OTHER
PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR
ANTICIPATED PROFITS OR LOST BUSINESS. EXCEPT AS PROVIDED BELOW IN THE
"INDEMNITY" SECTION, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR MORE
THAT THE AGGREGATE AMOUNTS AS OF THE DATE OF THE APPLICABLE CLAIM.
No Additional Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE AOL NETWORK, OR
ANY AOL PUBLISHING TOOLS, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND IMPLIED WARRANTIES ARISING FROM COURSE OF
DEALING OR COURSE OF PERFORMANCE. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, AOL SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING THE PROFITABILITY
OF AOL NETWORK OR THE ICP SITES.
Indemnity. Each Party will defend, indemnify, save and hold harmless the other
Party and the officers, directors, agents, affiliates, distributors, franchisees
and employees of the other Party from any and all third party claims, demands,
liabilities, costs or expenses including reasonable outside and in-house
attorney's fees ("Liabilities"), resulting from the indemnifying Party's
material breach of any obligation, duty, representation or warranty of this
Agreement, except where Liabilities result from the gross negligence or knowing
and willful misconduct of the other party.
Claims. Each Party agrees to (i) promptly notify the other party in writing of
any indemnifiable claim and give the other Party the opportunity to defend or
negotiate a settlement of any such claim at such other Party's expense and (ii)
cooperate fully with the other Party, at that other Party's expense, in
defending or settling such claim. AOL reserves the right, at its own expense, to
assume the exclusive defense and control of any matter otherwise subject to
indemnification by ICP hereunder, and in such event, ICP shall have no further
obligation to provide indemnfication for such matter hereunder.
Acknowledgement. AOL AND ICP EACH ACKNOWLEDGES THAT THE PROVISIONS OF THIS
AGREEMENT WERE NEGOTIATED TO REFLECT AN INFORMED, VOLUNTARY ALLOCATION BETWEEN
THEM OF ALL RISKS (BOTH KNOWN AND UNKNOWN) ASSOCIATED WITH THE TRANSACTIONS
CONTEMPLATED HEREUNDER. THE LIMITATIONS AND DISCLAIMERS RELATED TO WARRANTIES
AND LIABILITY CONTAINED IN THIS AGREEMENT ARE INTENDED TO LIMIT THE
CIRCUMSTANCES AND EXTENT OF LIABILITY. THE PROVISIONS OF THIS SECTION VI SHALL
BE ENFORCEABLE INDEPENDENT OF AND SEVERABLE FROM ANY OTHER ENFORCEABLE OR
UNENFORCEABLE PROVISION OF THIS AGREEMENT.
VII. MISCELLANEOUS
Auditing rights. Each Party shall maintain complete, clear and accurate records
of all expenses, revenues, fees, transactions and related documentation
(including agreements) in connection with the performance of this Agreement
("Records"). All such Records shall be maintained for a minimum of two (2) years
following termination of this Agreement. For the sole purpose of ensuring
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compliance with this Agreement, each Party shall have the right, at its expense,
to direct an independent certified public accounting firm subject to strict
confidentiality restrictions to conduct a reasonable and necessary copying and
inspection of portions of the Records of the other Party which are directly
related to amounts payable to the Party requesting the audit pursuant to this
Agreement. Any such audit may be conducted after twenty (20) business days prior
written notice, subject to the following. Such audits shall not be made more
frequently than once every twelve months. No such audit of AOL shall occur
during the period beginning on June 1 and ending October 1. In lieu of providing
access to its Records as described above, a Party shall be entitled to provide
the other Party with a report from an independent certified public accounting
firm confirming the information to be derived from such Records.
Excuse. Neither Party shall be liable for or be considered in breach of or
default under this Agreement on account of, any delay or failure to perform as
required by this Agreement as a result of any causes or conditions which are
beyond such Party's reasonable control and which such Party is unable to
overcome by the exercise of reasonable diligence.
Independent Contractors. The Parties to this Agreement are independent
contractors. Neither Party is an agent, representative or partner of the other
Party. Neither Party shall have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. This Agreement shall not be interpreted or
construed to create an association, agency, joint venture or partnership between
the Parties or to impose any liability attributable to such a relationship upon
either Party.
Notice. Any notice, approval, request, authorization, direction or other
communication under this Agreement shall be given in writing and shall be deemed
to have been delivered and given for all purposes (i) on the delivery date if
delivered by electronic mail on the AOL Network; (ii) on the delivery date if
delivered personally to the Party to whom the same is directed; (iii) one
business day after deposit with commercial overnight carrier, with written
verification of receipt, or (iv) five business days after the mailing date,
whether or not actually received, if sent by U.S. mail, return receipt
requested, postage and charges prepaid, or any other means of rapid mail
delivery for which a receipt is available, to the person(s) specified below at
the address of the Party set forth in the first paragraph of this Agreement.
No Waiver. The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall be
and remain in full force and effect.
Return of Information. Upon the expiration or termination of this Agreement,
each Party shall, upon the written request of the other Party, return or destroy
(at the option of the Party receiving the request) all confidential information,
documents, manuals and other materials specified the other Party.
Survival. Sections IV, V, VI, and VII of this Exhibit C, shall survive the
completion, expiration, termination or cancellation of this Agreement.
Amendment. No change, amendment or modification of any provision of this
Agreement shall be valid unless set forth in a written instrument signed by the
Party subject to enforcement of such amendment.
Further Assurances. Each Party shall take such action (including, but not
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.
Assignment. ICP shall not assign this Agreement or any right, interest or
benefit under this Agreement without the prior written consent of AOL. Subject
to the foregoing, this Agreement shall be fully binding upon, inure to the
benefit of and be enforceable by the Parties hereto and their respective
successors and assigns.
Construction; Severability. In the event that any provision of this Agreement
conflicts with the law under which the law under which this Agreement is to be
construed or if any such provision is held invalid by a court with jurisdiction
over the Parties to this Agreement, (i) such provision shall be deemed to be
restated to reflect as nearly as possible the original intentions of the Parties
in accordance with applicable law, and (ii) the remaining terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect.
Remedies. Except where otherwise specified, the rights and remedies granted to a
Party under this Agreement are cumulative and in addition to, and not in lieu
of, any other rights or remedies which the Party may possess at law or in
equity.
Applicable Law; Jurisdiction. This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of the Commonwealth of
Virginia except for its conflicts of laws principles. Each Party irrevocably
consents to the exclusive jurisdiction of the courts of the Commonwealth of
Virginia and the federal courts situated in the Commonwealth of Virginia, in
connection with any action to enforce the provisions of this Agreement, to
recover damages or other relief for breach or default under this Agreement, or
otherwise arising under or by reason of this Agreement.
Export Controls. Both parties shall adhere to all applicable laws, regulations
and rules relating to the export of technical data and shall not export or
re-export any technical data, any products received from the other Party or the
direct product of such technical data to any proscribed country listed in such
applicable laws, regulations and rules unless properly authorized.
Headings. The captions and headings used in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same document.
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EXHIBIT E
Format For ICP's Presence on the AOL Network
o Any ICP trademark or logo
o Any headline or picture from ICP content
o Any teaser, icon, link to ICP Site or Welcome Mat
o Any other Content which originates from, describes or promotes ICP or ICP's
Content
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EXHIBIT F
Detailed Schedule and Bona-Fide Value of ICP In-Kind Commitments
<TABLE>
<CAPTION>
In-Kind Commitment Bona Fide Value
------------------ ---------------
<S> <C>
1. Daily mentions in the "Ask the Family Doctor" $_________
syndicated column (in newspapers with daily
circulation of [*]); [*] total impressions
for the mentions
2. Mentions in Kaleidoscope TV; approximately $_________
[*] annual impressions for the mentions
3. Mentions in monthly NBC Today Show segment; $________
approximately [*] impressions for the
mentions
4. Mentions on the "American Baby" show on the Lifetime Network;
approximately [*] impressions for the mentions
5. Mentions on CNNfn, 30 weekly segments, 3-4 $_________
minutes each segment
</TABLE>
For the purposes hereof, with respect to each promotion specified above, a
"mention shall mean a coherent spoken or graphic reference to the relevant ICP
keyword and/or area on AOL, which shall also include at a minimum a reference to
"America Online" and/or "AOL." Additionally, the mentions shall be exclusive to
AOL (i.e., they shall not mention or refer to any ICP Interactive Site).
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EXHIBIT G
Impressions Guarantee
- --------------------------------------------------------------------------------
Placement Impressions Valuation
- --------------------------------------------------------------------------------
Families Screen [*] [*]
- --------------------------------------------------------------------------------
Children's Health Screen [*] [*]
- --------------------------------------------------------------------------------
Careers Screen [*] [*]
- --------------------------------------------------------------------------------
Getting Started Screen [*] [*]
- --------------------------------------------------------------------------------
Health Screen [*] [*]
- --------------------------------------------------------------------------------
Illnesses Screen [*] [*]
- -------------------------------------------------------------------------------
Lifestyles Screen [*] [*]
"Other" [*] [*]
(i.e., additional placement of ICP
Content on the AOL Network as
determined by AOL in its discretion
- --------------------------------------------------------------------------------
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EXHIBIT H
New Member Acquisition Programs
A. Download banner on ICP web site and promotions specified in Section 2.5 --
bounties shall be [*] for each New Member.
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EXHIBIT I
CERTIFICATION OF COMPLIANCE WITH COMMITMENTS
REGARDING PROMOTIONS AND EXCLUSIVITY
Pursuant to Section 3 of the Interactive Services Agreement between
________________ ("ICP") and America Online, Inc. ("AOL"), dated as of
___________________,1997 (the "Agreement"), the following report is delivered to
AOL for the month ending ____________ (the "Month"):
I. Promotional Commitments
ICP hereby certifies to AOL that ICP completed the following promotional
commitments during the Month:
Type of Promotion Date(s) of Duration/Circulation of Relevant
Promotion Promotion Contract
Section
- --------------------------------------------------------------------------------
1.
- --------------------------------------------------------------------------------
2.
- --------------------------------------------------------------------------------
3.
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, this Certificate has been executed this ___ day of
___________, 199_
__________________________________________
By:_______________________________________
Print Name: ______________________________
Title: ___________________________________
Date: ____________________________________
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EXHIBIT J
TECHNICAL SPECIFICATIONS
1. Browser Table (attached hereto)
2. User-Agents Table (attached hereto)
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BANKCARD MARKETING AGREEMENT
THIS AGREEMENT, made this 4th day of June, 1998, by and between
iVILLAGE, INC., a Delaware corporation having its principal office at 170 Fifth
Avenue, New York, New York 10010 (the "Company") and FIRST CREDIT CARD SERVICES
USA L.L.C., a Delaware limited liability company ("FCCSU-LLC") sometimes
referred to as the "Parties" and individually as a "Party". This Agreement is
made together with the BankCard Issuance and Servicing Agreement by and
between FIRST USA BANK ("FUSA") and the Company of even date herewith (the
"Issuance and Servicing Agreement").
RECITALS:
WHEREAS, FCCSU-LLC assists FUSA in connection with the ongoing
efforts of FUSA to market its various MasterCard and/or Visa consumer credit
products and related services (hereinafter referred to as "Credit Card(s)") to
the general public;
WHEREAS, this Agreement has been negotiated and executed by FCCSU-LLC
and the Company in connection with those efforts of FUSA in order to document
the terms of their agreement concerning the marketing of Credit Cards to the
officers, directors, employees, subscribers, customers and users of Company's
on-line services (the "Company Users" or "Users"), including a Credit Card
which bears the name and logo of the Company on the face thereof (the
"iVillage-branded Credit Card"), and the subsequent and immediate acquisition
of the underlying account relationships by FUSA;
WHEREAS, FCCSU-LLC has agreed, subject to the terms and conditions
hereinafter contained, to market Credit Cards, including the iVillage-branded
Credit Card, to Company Users on behalf of FUSA in the manner and to the
extent set forth in this Agreement;
WHEREAS, immediately upon the successful completion of the marketing
acquisition efforts of FCCSU-LLC as determined by FUSA and FCCSU-LLC in their
sole and absolute discretion, the underlying accounts will be immediately sold
by FCCSU-LLC to FUSA so that the account in question can then be serviced by
FUSA in accordance with its then current business practices and serviced by
FUSA in the manner contemplated by the Issuance and Servicing Agreement and in
a manner consistent with the then current business practices of FUSA;
WHEREAS, the Company is willing to endorse the offering of FUSA's
Credit Card(s) to and among the Company Users subject to the terms and
conditions contained in this Agreement and in the Issuance and Servicing
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties herein contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereby agree as follows:
1. License to Use Marks.
(a) During the term of this Agreement, FCCSU-LLC shall have
the limited right and license, for the purpose of fulfilling all of the
obligations contained within this Agreement, to use the current and future
respective name, trademarks, servicemarks, copyrights and logo of the Company
(collectively, the "Marks") solely in connection with
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FCCSU-LLC's marketing of FUSA's Credit Card(s) to Company Users under this
Agreement (the "Program"). Examples of Company's current Marks are set forth
in Exhibit B attached hereto. Such right and license is restricted to the
products and services described herein and shall not apply or extend to any
other product or service. Subject to and consistent with the rules and
regulations of Visa and MasterCard, FCCSU-LLC shall comply with the standards
established by the Company with respect to the form of the Marks and their
usage.
(b) Subject to the foregoing, each of the parties hereto is
and shall remain the owner of all rights in and to its name and logo, as the
same now exist or as they may hereafter be modified, including all rights in
and to any copyright, trademark, servicemark and/or like rights pertaining
thereto. Any and all rights to Company's Marks not herein specifically granted
and licensed to FCCSU-LLC are reserved to Company. Upon the termination of
this Agreement, all rights conveyed by Company to FCCSU-LLC with respect to
the use of Company's Marks shall cease, and all such rights shall revert to
Company. Upon termination of this Agreement, FCCSU-LLC shall have no further
right to market FUSA's cardmember products using the Company Marks or to
further utilize any promotional materials containing the Company Marks.
2. Customer Lists.
(a) In the event that direct mail becomes a marketing method
used, the Parties agree to work together in conformity with any applicable
rules, regulations and/or privacy policies established to determine the method
by which FCCSU-LLC can be provided with mailing lists of the Company Users,
including names, addresses (residential and e-mail), residential telephone
numbers (where available), and all other data pertaining to Company Users, via
magnetic tape, cartridge, or any other media which is mutually agreed upon
(the "Lists"). All Lists shall be provided to FCCSU-LLC by Company at no cost
to FCCSU-LLC.
(b) FCCSU-LLC shall use the Lists provided by Company on a
basis consistent with the intent and terms of this Agreement, i.e. to market
Credit Cards on behalf of FUSA, and shall not rent, use or permit any third
party handling such Lists to use them for any other purpose. FCCSU-LLC shall
not rent or otherwise make available such Lists to any third party (except for
the purposes of fulfilling obligations under this Agreement) without the
express written consent of Company. The Lists provided by Company are and
shall remain the sole property of Company provided they have been provided to
FCCSU-LLC by Company at no expense to FCCSU-LLC, except to the extent that
such Company names are available to FCCSU-LLC from another source. FCCSU-LLC
will, subject to applicable law requiring their retention, return such Lists
to Company or destroy them upon the termination of this Agreement.
(c) FCCSU-LLC and/or its affiliates may maintain separately
all information which is submitted and/or obtained as a result of an
application for an Account relationship with a Company Users. This information
becomes a part of FCCSU-LLC's own files and shall not be subject to this
Agreement provided that, any use of such information, except for fulfilling
obligations under the Program, will not imply or suggest an endorsement by
Company.
(d) FCCSU-LLC and Company mutually agree that given the
nature of the industry, additional and/or various marketing vehicles not
specifically addressed in this Agreement may require additional User
information. As a result, subject to the established rules, regulations and
privacy policies, the Company acknowledges and agrees to use commercially
reasonable efforts to work with FCCSU-LLC for the purpose of providing
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any necessary User information as requested from time to time, including but
not limited to Lists of Users, as referenced in subsection (a) above.
3. Offering of Credit Cards by FCCSU-LLC. FCCSU-LLC shall offer
Credit Card(s) to Company Users in accordance with the following provisions:
(a) Subject to subparagraph (c) of this Paragraph 3,
FCCSU-LLC shall, at its own expense, design and develop such marketing,
promotion and solicitation materials as it deems appropriate to promote the
Program among Company Users, and the Company shall endorse and reasonably
assist FCCSU-LLC with the administration of such promotional and solicitation
activities. FCCSU-LLC and the Company will jointly schedule and direct the
solicitation of Company Users, provided, that FCCSU-LLC reserves the right to
limit its solicitation materials to those persons deemed to be creditworthy in
accordance with FCCSU-LLC's and/or FUSA's normal credit criteria and credit
practices.
(b) In the event of any change in its Marks, the Company
shall bear and promptly reimburse FCCSU-LLC for any reasonable expenses
incurred by FCCSU-LLC in connection with the mutually agreed upon
implementation and use of the altered Marks.
(c) FCCSU-LLC shall submit to Company, for its prior
approval, samples of all marketing, promotional or solicitation materials,
printed or otherwise, which FCCSU-LLC intends to utilize to market the Program
to and among Company Users. Company shall review such materials and respond to
FCCSU-LLC's requests for approval on a timely basis. Approval by Company of
any marketing materials submitted by FCCSU-LLC for review shall not be
unreasonably withheld.
(d) On-line Offering of Credit Cards. During the initial
term of this Agreement, Company agrees to provide site integration to FUSA and
FCCSU-LLC through impressions as well as other site integration (e.g. user
registration processing, bundling and other company marketing activities) for
the purpose of providing a vehicle to market and advertise the Program (the
"Impressions"). In order to test the optimal usage of the aforementioned
Impressions and/or to take advantage of information garnered through
FCCSU-LLC's use of the Impressions, FCCSU-LLC and Company may, exchange the
allotment of Impressions (i.e. banner advertisements, popup banner
advertisements, etc.). The Company agrees that during the term of this
Agreement it shall provide no less of a marketing and advertising commitment,
(both quantity and quality) than that which was provided in the preceding
period in order to ascertain the marketing goal and Advance earned within the
prior period. In other words, if in a given three (3) month period, the
Company provided 5,000,000 Impressions in order to ascertain the marketing
goal and Advance paid for the associated period pursuant to this Agreement,
then the Company shall provide no less than 5,000,000 Impressions for the
following three (3) months and all equivalent three (3) month periods thereafter
until termination of this Agreement. Essentially, it is agreed that the
Company will provide no less of a marketing commitment and provide at least
the same quantity and quality of Impressions as that which was provided so as
to earn the Advance level ascertained. The parties agree that at the end of
each year, FCCSU-LLC and the Company will meet to review the year-to-date
performance of the Program. If at the end of the year, the Program has not
attained the anticipated goals, then the parties may adjust the marketing
program by increasing the delivery of Impressions or the manner in which the
Impressions are displayed in order to attain the anticipated goals. Company
acknowledges and agrees that Company's provision of the Credit Card
advertising is material to FCCSU-LLC's decision to enter into this transaction
with Company and that a failure to provide the minimum advertising
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commitment described herein shall be deemed a material default under Section
11(b) of this Agreement.
(e) Further, this Program shall include the ability to process
Credit Card applications on-line at Company sites provided that processing
such applications does not violate applicable laws or regulations. Company
shall provide an icon on Company's Website (the "Company Credit Card
Application Vehicle") whereby Company Users shall be connected to the Company
Credit Card Application Vehicle. Company shall work with FCCSU-LLC in the
design, development and maintenance of same.
4. [Intentionally Omitted]
5. Fees.
(a) During the term of this Agreement (including any renewal terms
as provided in Paragraph 11 hereof) and in consideration of the use of
Company's Marks, the supplying of Impressions to FCCSU-LLC, and the Company's
endorsement of the Program, FCCSU-LLC shall pay to Company certain Marketing
Fees (the "Fees") as set forth on Exhibit A attached hereto.
(b) Notwithstanding any of the above, FCCSU-LLC shall not be
obligated to pay to the Company any duplicate Fees described in Exhibit A in
the event that the Accounts on which such fees are calculated represent
substitute Accounts, including, but not limited to, Accounts which are
established due to the loss or theft of a cardmember's existing Credit Card or
Accounts which were established as a result of former joint cardmembers
requesting individual Accounts.
(c) FCCSU-LLC shall provide Company with a reconciliation report
within sixty (60) days following the end of each calendar quarter setting
forth the amount of Fees earned by Company during such calendar quarter. Any
amounts owing to Company and payable pursuant to the terms of this Paragraph
5 shall be paid to Company within sixty (60) days following the end of such
calendar quarter.
(d) FCCSU-LLC's obligation to pay any of the aforementioned Fees
to the Company shall cease immediately upon the termination of this Agreement
for any reason whatsoever, provided that such Fees shall be reconciled and
paid to the date of termination.
6. Records.
During the term of this Agreement (including any renewals), FCCSU-LLC
shall keep accurate books of account and copies of all documents and other
material related to FCCSU-LLC's obligations under this Agreement at FUSA's
principal office, including without limitation (a) Marketing Fees, (b) all
Accounts established under this Agreement. The Parties agree that within
thirty (30) days of the Company's written request, but not more frequently
than once per year, Company, by its duly authorized agents and
representatives, shall have the right, upon reasonable notice to FCCSU-LLC, to
audit such books, documents and other material from time to time and shall
have access thereto during ordinary business hours, and shall be at liberty to
make copies of such books, documents and other material, subject to such
security procedures as FCCSU-LLC may reasonably impose and subject to such
limitations as may be required under applicable rules, regulations or statutes
governing the conduct of FCCSU-LLC's business. Company shall maintain the
confidentiality of all information obtained as a result of auditing FCCSU-LLC,
and shall not reveal any such information to any third party except in
connection with any
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legal action or other proceeding implemented to enforce any rights under this
Agreement. If any audit of FCCSU-LLC's books and records reveals that
FCCSU-LLC has failed to account for and pay Marketing Fees owed, FCCSU-LLC
shall promptly pay such underpayment.
7. Relationship. Nothing in this Agreement is intended to or shall
be construed to constitute or establish an agency, joint venture, partnership
or fiduciary relationship between the parties, and neither party shall have
the right or authority to act for or on behalf of the other party.
8. Confidentially
(a) The parties acknowledge and agree that the terms of this
Agreement and all information provided to or in connection with either party's
performance under this Agreement shall be considered confidential and
proprietary information ("Confidential Information") and shall not be
disclosed to any third party without the prior written consent of the party
providing the Confidential Information ("Disclosing Party"). Confidential
Information shall include, without limitation: (i) names, addresses, and
demographic, behavioral, and credit information relating to FCCSU-LLC
Cardholders, potential FCCSU-LLC Cardholders or the Lists provided to FCCSU-LLC
pursuant to Paragraph 2; (ii) marketing materials, strategies and targeting
methods; (iii) business objectives, assets and properties; and (iv)
programming techniques and technical, developmental, cost and processing
information.
(b) The party receiving such Confidential Information ("Receiving
Party") shall use Confidential Information only for the purpose of performing
the terms of this Agreement and shall not accumulate in any way or make use of
Confidential Information for any other purpose. The Receiving Party shall
ensure that only its employees, authorized agents, or subcontractors who need
to know Confidential Information to perform this Agreement will receive
Confidential Information and that such persons agree to be bound by the
provisions of this Paragraph and maintain the existence of this Agreement and
the nature of their obligations hereunder strictly confidential.
(c) The obligations with respect to Confidential Information shall
not apply to Confidential Information that: (i) either party or its personnel
already know at the time it is disclosed as shown by their written records;
(ii) is publicly known without breach of this Agreement; (iii) either party
received from a third party authorized to disclose it without restriction;
(iv) either party, its agents or subcontractors, developed independently
without use of Confidential Information; or (v) either party is required by
law, regulation or valid court or governmental agency order or request to
disclose, in which case the party receiving such an order or request, to the
extent practicable, must give notice to the other party, allowing them to seek
a protective order.
(d) Each party agrees that any unauthorized use or disclosure of
Confidential Information may cause immediate and irreparable harm to the
Disclosing Party for which money damages may not constitute an adequate
remedy. In that event, each party agrees that injunctive relief may be
warranted in addition to any other remedies the Disclosing Party may have. In
addition, the Receiving Party agrees promptly to advise the Disclosing Party
in writing of any unauthorized misappropriation, disclosure or use by any
person of the Confidential Information which may come to its attention and to
take all steps at its own expense reasonably requested by the Disclosing Party
to limit, stop or otherwise remedy such misappropriation, disclosure or use.
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(e) Upon either Party's demand, or upon the termination of this
Agreement, the Parties shall comply with each other's reasonable instructions
regarding the disposition of Confidential Information which may include return
of any and all Confidential Information (including any copies or reproductions
thereof). Such compliance shall be certified in writing, including a statement
that no copies of confidential information have been kept.
(f) Except as necessary for its performance under this Agreement
and/or the Marketing Agreement, neither Party shall use the name of the other
Party, its affiliates or subsidiaries in connection with any representation,
publication or advertisement, or make any public statement relating to the
other Party, its affiliates or subsidiaries, without the prior full disclosure
of same to the other Party, and the prior written consent of the respective
Party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, either Party may utilize the name of the other
Party for the purpose of advertising within any Party related advertising
portfolio (e.g. SEC filings, Q's and 1OK's), without the prior written consent
of the respective Party.
(g) Except as may be required by law, regulation or any
governmental authority, neither Party, nor any of its affiliates, shall issue
a press release or make public announcement or any disclosure to any third
party related to the transactions contemplated by this Agreement without the
prior consent of the other Party, which consent shall not be unreasonably
withheld or delayed.
(h) The obligations of this Paragraph 8 shall survive the
termination of this Agreement for a period of two (2) years.
9. Representations and Warranties.
(a) FCCSU-LLC represents and warrants that (i) it is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware and (ii) the execution and delivery by
FCCSU-LLC of this Agreement, and the performance by FCCSU-LLC of the
transactions contemplated hereby, are within FCCSU-LLC's corporate powers, have
been duly authorized by all necessary corporate action, do not require any
consent or other action by or in respect of, or filing with, any third party
or governmental body or agency (other than informational filings required by
MasterCard or Visa), and do not contravene, violate or conflict with, or
constitute a default under, any provision of applicable law or regulation or
of the charter or by-laws of FCCSU-LLC or of any agreement, judgment,
injunction, order, decree or other instrument binding upon FCCSU-LLC.
(b) The Company represents and warrants that it is a Delaware
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Company further represents and warrants that
(i) the execution and delivery by Company of this Agreement, and the
performance by Company of the transactions contemplated hereby, are within
Company's powers, have been duly authorized by all necessary action, do not
require any consent or other action by or in respect of, filing with, any
third party or any governmental body or agency, and do not contravene, violate
or conflict with, or constitute a default under, any provision of applicable
law, regulation, or under any governing documents, charter or bylaw, or any
agreement, judgment, injunction, order, decree or other instrument binding on
Company; (ii) it is not currently aware of any claims, and is not currently
involved in any litigation, challenging Company's ownership of the Marks and
(iii) it is not aware of any claims, and is not currently involved in any
litigation, challenging the Company's access to the Web
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and/or the Internet. Company represents and warrants that it has the right,
power and authority to execute this Agreement and act in accordance herewith.
10. Release and Indemnification.
(a) FCCSU-LLC shall not be responsible in any way for any
misrepresentation, negligent act or omission or willful misconduct of Company,
its affiliates, officers, directors, agents, or employees in connection with
the entry into or performance of any obligation of Company under this
Agreement. Further, Company shall indemnify, defend and hold FCCSU-LLC
harmless from and against all claims, actions, suits or other proceedings, and
any and all losses, judgments, damages, expenses or other costs (including
reasonable counsel fees and disbursements), arising from or in any way
relating to (i) any actual or alleged violation or inaccuracy of any
representation or warranty of Company contained in Paragraph 9 above, (ii) any
actual or alleged infringement of any trademark, copyright, trade name or
other proprietary ownership interest resulting from the use by FCCSU-LLC
and/or FUSA of the Marks of Company as contemplated by this Agreement, and
(iii) any negligent act or omission or willful misconduct of Company or its
directors, officers, employees, agents or assigns in connection with the entry
into or performance of this Agreement.
(b) Company shall not be responsible in any way for any
misrepresentation, negligent act or omission or willful misconduct of
FCCSU-LLC, its affiliates, officers, directors, agents, or employees in
connection with the entry into or performance of any obligation of FCCSU-LLC
under this Agreement. Further, FCCSU-LLC shall indemnify, defend and hold
Company harmless from and against all claims, actions, suits or other
proceedings, and any and all losses, judgments, damages, expenses or other
costs (including reasonable counsel fees and disbursements), arising from or
in any way relating to (i) any actual or alleged violation or inaccuracy of
any representation or warranty of FCCSU-LLC contained in Paragraph 9 above,
(ii) any act or omission of FCCSU-LLC in connection with the marketing of
Credit Card(s), and (iii) any negligent act or omission or willful misconduct
of FCCSU-LLC or its directors, officers, employees, agents or assigns in
connection with the entry into or performance of this Agreement.
11. Term/Termination
(a) Subject to the provisions of subparagraphs 11(b), (c),
(d) and (e) below, this Agreement shall be effective as of the date hereof and
shall continue for an initial term of three (3) years (the "Initial Term").
Following the Initial Term, this Agreement shall be automatically renewed for
successive renewal terms of two (2) years each (the "Renewal Term(s)") unless,
at least ninety (90) days prior to the termination of the Initial Term or the
then current Renewal Term, either party shall have notified the other in
writing of its decision not to renew this Agreement. Notwithstanding the
foregoing, the Issuance and Servicing Agreement and this Agreement shall
terminate at the same time, so that the term of this Agreement shall not be
deemed to have been extended for a Renewal Term unless the Issuance and
Servicing Agreement has also been extended for the same Renewal Term. If the
terms hereof are to be amended in connection with any Renewal Term, an
appropriate addendum shall be added hereto reflecting, as applicable, the
revised terms hereof.
(b) If there is a material default by either party in the
performance of the terms and conditions of this Agreement, and such default
shall continue for a period of thirty (30) days after receipt by the
defaulting party of written notice thereof from the nondefaulting party
(setting forth in detail the nature of such default), then this Agreement
shall terminate at the option of the non-defaulting party as of the
thirty-first (31st) day following
<PAGE>
the receipt of such written notice. If, however, the default cannot be
remedied within such thirty (30) day period, such time period shall be
extended for an additional period of not more than thirty (30) days, so long
as the defaulting party has notified the non-defaulting party in writing and
in detail of its plans to initiate substantive steps to remedy the default and
diligently thereafter pursues the same to completion within such additional
thirty (30) day period.
(c) This Agreement shall be deemed immediately terminated,
without the requirement of further action or notice by either party, in the
event that either party, or a direct or indirect holding company of either
party, shall become subject to voluntary or involuntary bankruptcy,
insolvency, receivership, conservatorship or like proceedings (including, but
not limited to, the takeover of such party by the applicable regulatory
agency) pursuant to applicable state or federal law.
(d) In the event that any material change in any federal,
state or local law, statute, operating rule or regulation, or any material
change in any operating rule or regulation of either MasterCard or Visa makes
the continued performance of this Agreement under the then current terms and
conditions unduly burdensome, then FCCSU-LLC shall have the right to terminate
this Agreement upon ninety (90) days advance written notice. Such written
notice shall include a detailed explanation and evidence of the burden imposed
as a result of such change.
(e) In the event that of any breach of a representation or
warranty set forth in Paragraph 9 of this Agreement, the non-breaching party
shall have the right to immediately terminate this Agreement and all of its
obligations contained herein by notice to the breaching party.
(f) Upon termination of this Agreement:
(i) Company shall promptly return to FCCSU-LLC all
marketing materials that have been supplied to Company by FCCSU-LLC, if any;
(ii) Except those provisions which by their terms
shall survive, all obligations to Company shall cease after the effective date
of termination.
12. Exclusivity.
(a) During the term of this Agreement, FCCSU-LLC shall have
the exclusive right to perform the credit card marketing services contemplated
by this Agreement. Company agrees that during the term hereof it shall not by
itself or in conjunction with others, directly or indirectly, or through any
parent, affiliate or subsidiary, offer, advertise, endorse, or facilitate any
on-line processing or enter into any agreement with any Competitor for the
provision of any credit card, charge card or credit card related products or
services to Company Customers. For the purposes of this Agreement, "Competitor"
shall mean any entity (other than FUSA or FCCSU-LLC) which advertises, markets,
issues or otherwise provides access to consumer card products or any entity
which is a member of the bankcard associations now known as Visa and
MasterCard. Visa and MasterCard themselves shall not be considered Competitors
so long as they are not representing, or otherwise working on behalf of, a
bankcard association member. Further, the Company agrees that during the term
hereof it shall not by itself or in conjunction with others, directly or
indirectly, or through any parent, affiliate or subsidiary, offer, advertise,
endorse, or facilitate any marketing or advertising, of any products and/or
services, regardless of whether the products or services are in the credit
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card category, to or on behalf of any of the following: MBNA American, N.A.,
Capital One, Providian, Associates Bank, Household Credit Corporation, Metris,
U.S. Bank Corporation and Advanta (the "Specific Competitors"). Additionally,
the parties agree that any future Competitor shall be defined as any
individual, corporation, corporate division, retail site, Web site or other
entity that either derives more than fifty percent (50%) of its annual gross
revenues from the issuance of consumer card products, or is primarily known as
an issue of consumer card products. Notwithstanding the foregoing, the Company
may accept advertising (e.g. banners on a web page) from a Competitor, but not
a Specific Competitor, provided that the advertising does not include the
advertising of credit cards or charge cards, nor does the advertising enable a
Internet user to link directly to a web page that is used to process, accept,
and/or market applications for any credit card, charge card or credit card
related products or services.
(b) In the event Company desires to introduce any current new or
unaddressed product, service, property and/or entity relating to consumer
credit products and related services ("New Product") by itself or through
another entity, Company agrees to work with FCCSU-LLC, so as to negotiate in
good faith an agreement whereby FCCSU-LLC could provide some or all of its
products or services through or on behalf of the New Product.
13. Non-Competition. With respect to all Accounts established
pursuant to this Agreement, Company agrees that neither Company, nor any entity
which Company controls including any parent, affiliate or subsidiary, shall by
itself or in conjunction with others, during the term of this Agreement
(including any Renewal Term) and for a period of one (1) year following the
termination of this Agreement for any reason whatsoever, specifically target
any offer of a credit card, charge card or credit card related product to
cardmembers possessing an Account.
14. Notices. Any and all notices or other communications required
or permitted under this Agreement shall be in writing and shall be delivered
either by personal delivery; by telex, telegram, mailgram or telecopy; by
nationally recognized overnight courier service; or by certified or registered
mail, return receipt requested, addressed as follows:
If to FCCSU-LLC, to:
FIRST CREDIT CARD SERVICES USA L.L.C.
Three Christina Centre
201 North Walnut Street
Wilmington, DE 19801
Attention: General Manager
with a copy to:
General Counsel
General Counsel
iVILLAGE INC.
170 Fifth Avenue
New York, New York 10010
with copies to:
Attention: Vice President of Finance/Legal Affairs
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or to such other person or address as either party shall have previously
designated to the other by written notice given in the manner set forth above.
Where notice requires a response in ten (10) or less business days, the notice
should be sent by hand delivery or telecopy. Notices shall be deemed given one
day after sent, if sent by telex, telegram, mailgram, telecopy or by overnight
courier; when delivered and receipted for, if hand delivered; or when
receipted for (or upon the date of attempted delivery where delivery is
refused) if sent by certified or registered mail, return receipt requested.
15. Alternative Dispute Resolution. Company and FCCSU-LLC hereby
waive their rights to resolve disputes through any court proceeding or
litigation and acknowledge that all disputes shall be resolved pursuant to
Paragraphs 16 and 17 as referenced below, except that equitable relief may be
sought pursuant to Section 8 from any court of competent jurisdiction. Both
parties represent to the other that this waiver is made knowingly and
voluntarily after consultation with and upon the advice of counsel and is a
material part of this Agreement.
16. Informal Dispute Resolution. Any controversy or claim between
Company, on the one hand, and FCCSU-LLC on the other hand, arising from or in
connection with this Agreement or the relationship of the parties under this
Agreement whether based in contract, tort, common law, equity, statute,
regulation, order or otherwise ("Dispute") shall be resolved as follows:
(a) Upon written request of either Company, on the one hand, or
FCCSU-LLC on the other hand, a duly appointed representative(s) of each party
will meet for the purpose of attempting to resolve such Dispute. Should they
be unable to resolve the Dispute, the designated representative of iVILLAGE,
INC. will meet with FCCSU-LLC's Executive Vice President of Marketing (the
"Executives") in an effort to resolve the Dispute. Said meeting shall be in
person or by telephone.
(b) The Executives shall meet as often as the parties agree to
discuss the problem in an effort to resolve the Dispute without the necessity
of any formal proceeding.
(c) Formal proceedings for the resolution of a Dispute may not be
commenced until the earlier of
i. the parties concluding in good faith that amicable
resolution through the procedures set forth in subsections
(a)-(b) hereof does not appear likely; or
ii. the expiration of a thirty-five (35) day period immediately
following the initial request to negotiate the Dispute;
provided, however, that this Paragraph will not be construed to prevent a
party from instituting formal proceedings earlier to avoid the expiration of
any applicable Statute of Limitations or to preserve a superior position with
respect to other creditors or to seek temporary or preliminary injunctive
relief. The commencement of a proceeding pursuant to this provision does not
relieve a party from the executive consultation requirement contained in this
Paragraph.
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17. Arbitration.
(a) If the parties are unable to resolve any Dispute as contemplated
above, such Dispute shall be submitted to mandatory and binding arbitration at
the election of either Company, on the one hand, or FCCSU-LLC on the other
hand (the "Disputing Party"). Except as otherwise provided in this Paragraph,
the arbitration shall be pursuant to the Code of Procedure of the National
Arbitration Forum ("NAF'), P.O. Box 50191, Minneapolis, MN 55405, (800)
474-2371.
(b) To initiate arbitration, the Disputing Party shall notify the
other party in writing (the "Arbitration Demand") with a copy to the NAF,
which shall (i) describe in reasonable detail the nature of the Dispute, (ii)
state the amount of the claim, and, (iii) specify the requested relief. Within
fifteen (15) days after the other party's receipt of the Arbitration Demand,
such other party shall file, and serve on the Disputing Party, a written
statement (i) answering the claims set forth in the Arbitration Demand and
including any affirmative defenses of such party; (ii) asserting any
counterclaim, which shall describe in reasonable detail the nature of the
Dispute relating to the counterclaim, state the amount of the counterclaim,
and specify the requested relief.
(c) If the amount of the controversy set forth in either the claim or
counterclaim is less than $100,000, then the matter shall be resolved by a
single Arbitrator selected pursuant to the rules of the NAF.
(d) If the amount of the controversy set forth in either the claim or
counterclaim is equal to or exceeds $100,000, then the matter shall be
resolved by a panel of three arbitrators (the "Arbitration Panel") selected
pursuant to the rules of the NAF. Decisions of a majority of the members of the
Arbitration Panel shall be determinative.
(e) The arbitration hearing shall be held in such neutral location as
the parties may mutually agree or, if they cannot agree, Wilmington, Delaware.
The Arbitrator or Arbitration Panel is specifically authorized in proceeding
pursuant to Section (d) to render partial or full summary judgment as provided
for in the Federal Rules of Civil Procedure. Unless otherwise agreed by the
parties, partial or full summary judgment shall not be available in
proceedings pursuant to subsection (c) above. In the event summary judgment or
partial summary judgment is granted, the non-prevailing party may not raise as
a basis for a motion to vacate an award that the Arbitrator or Arbitration
Panel failed or refused to consider evidence bearing on the dismissed claim(s)
or issue(s). The Federal Rules of Evidence shall apply to the arbitration
hearing. The party bringing a particular claim or asserting an affirmative
defense will have the burden of proof with respect thereto. The arbitration
proceedings and all testimony, filings, documents and information relating to
or presented during the arbitration proceedings shall be deemed to be
information subject to the confidentiality provisions of this Agreement. The
Arbitration Panel will have no power or authority, under the Code of Procedure
of the NAF or otherwise, to relieve the parties from their agreement hereunder
to arbitrate or otherwise to amend or disregard any provision of this
Agreement, including, without limitation, the provisions of this Paragraph.
(f) Should an Arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Paragraph, the Arbitrator shall
be replaced pursuant to the rules of the NAF. If an arbitrator is replaced
after the arbitration hearing has commenced, then a rehearing shall take place
in accordance with this Section and the Code of Procedure of the NAF.
11
<PAGE>
(g) At the time of granting or denying a motion of summary judgment
as provided for in (e) and within fifteen (15) days after the closing of the
arbitration hearing, the Arbitrator or Arbitration Panel will prepare and
distribute to the parties a writing setting forth the Arbitrator's or
Arbitration Panel's finding of facts and conclusions of law relating to the
Dispute, including the reasons for the giving or denial of any award. The
findings of fact and the conclusions of law along with the award, if any,
shall be deemed to be information subject to the confidentiality provisions of
this Agreement.
(h) The Arbitrator of Arbitration Panel is instructed to schedule
promptly all discovery and other procedural steps and otherwise to assume case
management initiative and control to effect an efficient and expeditious
resolution of the Dispute. The Arbitrator or Arbitration Panel is authorized
to issue monetary sanctions against either party if, upon a showing of good
cause, such party is unreasonably delaying the proceeding.
(i) Any award rendered by the Arbitrator or Arbitration Panel will
be final, conclusive and binding upon the parties and any judgment hereon may
be entered and enforced in any court of competent jurisdiction.
(j) Each party will bear a pro rata share of all fees, costs and
expenses of the Arbitrators, and notwithstanding any law to the contrary, each
party will bear all the fees, costs and expenses of its own attorneys, experts
and witnesses; provided, however, that in connection with any judicial
proceeding to compel arbitration pursuant to this Agreement or to confirm,
vacate or enforce any award rendered by the Arbitrator or Arbitration Panel,
the prevailing party in such a proceeding shall be entitled to recover
reasonable attorney's fees and expenses incurred in connection with such
proceedings, in addition to any other relief to which it may be entitled.
18. Entire Agreement/Amendment. This Agreement, including exhibits,
constitutes the entire understanding between the parties with respect to the
subject matter, and supersedes all prior written and oral proposals,
understandings, agreements and representations, all of which are merged
herein. No amendment or modification of this agreement shall be effective
unless it is in writing and executed by all of the parties hereto.
19. Non-Waiver of Default. The failure of either party to insist, in
any one or more instances, on the performance of any terms or conditions of
this Agreement shall not be construed as a waiver or relinquishment of any
rights granted hereunder or of the future performance of any such term or
condition, and the obligations of the non-performing party with respect
thereto shall continue in full force and effect.
20. Severability. In the event that any provision of this Agreement
shall, for any reason, be deemed to be invalid and unenforceable, the
remaining provisions of this Agreement shall remain in full force and effect.
12
<PAGE>
21. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware without
regard to its conflict of law principles.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
iVILLAGE, INC.
By: /s/ Steven Elkes
--------------------------
(type/print name & title below line)
Steven Elkes
VP Finance/Legal Affairs
FIRST CREDIT CARD SERVICES USA L.L.C.
By: /s/ Dennis Moroney
-------------------------
(type/print name & title below line)
Dennis Moroney
F.C.C.S. CEO
13
<PAGE>
EXHIBIT A
FEES
During the term of this Agreement and any renewal terms
thereof, FCCSU-LLC agrees to pay to Company the following in conjunction with
the marketing of the Program which is the subject of this Agreement.
1. FCCSU-LLC shall pay to Company a one-time payment in the sum of
[*] dollars. The payment shall be due to Company by FCCSU-LLC upon the display
of the first of the Impressions, scheduled for the 31st of May 1998, 1998 (the
"Launch Date") and paid within forty-five (45) days thereafter.
2. Furthermore, FCCSU-LLC shall pay to the Company four equal
quarterly payments of [*] dollars. The first quarterly payment shall be due
ninety (90) days after the Launch Date and paid within thirty (30) days
thereafter. Each additional quarterly payment of [*] dollars shall be due within
ninety (90) days of the prior quarterly payment and paid within thirty (30) days
thereafter.
3. In addition, FCCSU-LLC shall advance the following sums (the
"Advance(s)") to be offset against all amounts earned by the Company under
this Program. The Advance shall be paid as follows:
a.) Within Three (3) months after the Launch Date: If the
Company adds the following aggregate Accounts within three (3) months
after the Launch Date, then the Company will be paid the respective
Advance:
Three Months after the Accounts Attained Additional Advance:
Launch Date:
1.) [*] [*]
2.) [*] [*]
3.) [*] [*]
b.) Within Six (6) months after the Launch Date: If the
Company adds the following incremental Accounts within six (6) months
after the Launch Date, then the Company will be paid the respective
Advance:
Six Months after the Additional Accounts: Additional Advance:
Launch Date:
1.) [*] $[*]
2.) [*] $[*]
3.) [*] $[*]
All Marketing Fees earned shall be off-set against all Advances paid as a
result of the Agreement.
[*] Confidential treatment requested.
<PAGE>
4. After the first [*] Accounts are opened, the Company shall be
paid a minimum of a $[*] Marketing Fee for every Account opened thereafter
during the term of this Agreement and during any extensions and/or renewals.
5. Furthermore, FCCSU-LLC agrees that if after the first [*]
Accounts are opened the Company's performance exceeds the below listed
projected account goal for any given quarter during the remaining term of this
Agreement, that FCCSU-LLC will retroactively increase the Marketing Fee
applicable to the quarter, and only that quarter, in accordance with the
following schedule:
QUARTERLY MARKETING FEE INCREASE:
OPENED ACCOUNTS: INCREMENTAL INCREASE:
[*] $[*]
[*] $[*]
[*] $[*]
[*] $[*]
The cumulative opened Accounts for each remaining quarter shall be
deemed to be zero (0) as of beginning of each quarter for the purpose of
establishing the Marketing Fee Incremental Increase.
For example, in the first quarter, after the opening of [*]
Accounts, the Company shall be paid a Marketing Fee of $[*] for each Account
opened. If in that first cumulative quarter, the Company opens [*] Accounts,
then the Company will be paid a $[*] incremental increase for the [*]
opened Accounts, retroactively (essentially an additional Marketing Fee of
$[*]). If in the next applicable quarter, the Company opens an incremental
[*] Accounts (for a cumulative total of [*] Accounts) then the Company
will be paid a $[*] increase for the [*] incremental opened Accounts,
retrospectively (essentially an additional Marketing Fee of $[*]).
If this Agreement is terminated by FCCSU-LLC and/or its affiliates,
then the payment of any and all future Advances, shall immediately cease.
15
[*] Confidential treatment requested.
<PAGE>
EXHIBIT B
LICENSED MARKS
--------------
[iVillage logo]
16
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EXCLUSIVE SPONSORSHIP AGREEMENT
This Exclusive Sponsorship Agreement ("Agreement") is entered into as
of February 28, 1998 (the "Effective Date") by and between Amazon.com, Inc., a
Delaware corporation ("Amazon.com") with offices at 1516 Second Avenue, 4th
Floor, Seattle, Washington 98 1 01 and iVillage, Inc., a Delaware corporation,
("iVillage") with offices at 170 Fifth Avenue, New York, New York 10010.
Amazon.com and iVillage may be referred to generically as a "Party", or
collectively as "Parties".
WHEREAS, iVillage operates a site on the World Wide Web and America
OnLine, which contains channels including but not limited to Parent Soup,
ParentsPlace, Better Health and Armchair Millionaire as well as career, fitness
& beauty, food, relationships and work from home channels (collectively the
"Network").
WHEREAS, Amazon.com seeks to drive Network users ("Users") to its World
Wide Web site (the "Amazon.com Web site"), to acquire repeat customers, to
increase book purchases focusing on lifestyle categories such as parenting,
health, finance and career, and to reinforce the Amazon.com brand as the
"Earth's Biggest Bookstore".
WHEREAS, iVillage and Amazon.com now desire to enter into this
Agreement whereby Amazon.com shall be an exclusive sponsor and retailer
throughout the Network (the "Program") subject to the terms and conditions
stated herein.
Section 1. Exclusivity
For the term of this Agreement and any subsequent renewal thereto,
iVillage agrees that Amazon.com shall be the exclusive book sponsor and
retailer, with respect to entities whose primary business is that of a book
retailer, throughout the Network and that no advertising, links, promotional
information or marketing materials for or relating to any of the entities listed
in Exhibit A hereto or any other individual, entity or web site which derives
more than ten percent (10%) of its annual gross revenue from the sales of books
or magazines (whether in printed, audio, electronic or other format) or is
primarily functioning or primarily known as a seller of books or magazines,
shall be placed or displayed on the Network. In addition, iVillage will not (a)
sell, or permit any other person or entity to sell, any books or magazines on
the Network; or (b) use, or permit any other person or entity to use, all or any
part of iVillage's customer information database to sell any books or magazines;
provided, that such books or magazines are available from Amazon.com. Nothing
herein shall (a) prevent an author or subject matter expert from discussing or
promoting the sale of a particular book or magazine on the Network, provided
that such author or expert does not recommend or promote the purchase of -such
book or magazine from a specific party other than Amazon.com; or (b) prevent any
other sponsor from selling books or magazines on its own web site, provided that
the sale of such books or magazines is not promoted or referenced on the
Network. In the event that iVillage produces or publishes any private label
books, iVillage will offer Amazon.com the first right of refusal as to the
ability to sell such books before such opportunity is offered to any third
party. Amazon.com's sponsorship and exclusivity with regard to products other
than books or magazines shall be determined on a case by case basis, whereby
Amazon.com shall provide
<PAGE>
iVillage with written notice of any other products it seeks to include within
the scope of this Agreement, and iVillage shall have sole discretion as to
whether such other product(s) shall be included.
Section 2. Term and Termination
2.1 Term
The initial term of this Agreement (the "Initial Term") shall commence
on the Effective Date and shall continue for a period of twelve (12) months from
the date that all of the Promotional Placements and Opportunities described in
Section 3 below are available on the Network (the "Implementation Date") unless
terminated earlier or extended as provided herein. Promptly after the
Implementation Date has occurred, the parties shall in good faith agree upon and
document in writing such Implementation Date. Upon mutual agreement of the
parties within no less than sixty (60) days prior to the expiration date of the
Initial Term, the Agreement may be renewed for an additional twelve (12) month
term (the "Renewal Term"). The Parties agree to discuss, in good faith, prior to
the end of the Initial Term, the status of the relationship of the Parties and
the terms of the Agreement. Notwithstanding the foregoing, if the parties agree
to renew the Agreement, the terms of the Agreement, including without limitation
the compensation terms stated in Section 7 below, shall remain in full force and
effect without amendment. However, if prior to sixty (60) but no more than
ninety (90) days before the expiration of the Initial Term, iVillage receives a
bona fide offer from a third party to become the exclusive book sponsor and
retailer throughout the Network on financial terms more advantageous to iVillage
than those stated in Section 7 herein and provides Amazon.com with written
notice and a copy of such offer, Amazon.com must notify iVillage in writing
within thirty (30) days of receiving such notice whether it is willing to amend
the Agreement to match the financial terms offered by such third party for the
Renewal Term. If Amazon.com notifies iVillage that it is willing to renew the
Agreement upon the amended financial terms, then those terms shall be applied to
the Renewal Term, notwithstanding anything in this Agreement to the contrary. If
Amazon.com does not notify iVillage that it is willing to amend the financial
terms of the Agreement for the Renewal Term within thirty (30) days of receiving
such notice, then iVillage shall have fifteen (15) days thereafter to give
Amazon.com written notice to terminate this Agreement at the end of the Initial
Term and may then enter into an Agreement with such third party on the amended
terms offered to Amazon.com.
2.2 Termination
In the event of a material breach by either party of any term of this
Agreement, the nonbreaching party may terminate this Agreement by written notice
to the breaching party if the breaching party fails to cure such material breach
within thirty (30) days of receipt of written notice thereof. Either party may
terminate this Agreement effective upon written notice stating its intention to
terminate in the event the other party (a) ceases to function as a going concern
or to conduct operations in the normal course of business, or (b) has a petition
filed by or against it under any state or federal bankruptcy or insolvency law
which petition has not been dismissed or set aside within sixty (60) days of its
filing.
2
<PAGE>
2.3 Survival
Sections 9, 11, 12, 13, 15 and 16 hereof shall survive any termination
of this Agreement.
Section 3. Promotion
Throughout the term of this Agreement, and any extensions or renewals
thereof, iVillage will provide links, advertisements and other promotional
placements and opportunities to promote Amazon.com and its sponsorship of the
Network (collectively the "Promotional Placements and Opportunities") in a
manner to be agreed upon by the parties. The Promotional Placements and
Opportunities provided by iVillage will at a minimum be no less prominent or
frequent than those provided to any other Network sponsor or advertiser. The
parties will cooperate in good faith to develop and implement such Promotional
Placements and Opportunities and to maximize the effectiveness of all such
Promotional Placements and Opportunities. The Promotional Placements and
Opportunities as described herein shall be available on the Network no later
than May 31 and shall include, without limitation, the following promotions:
3.1 Book Club Sponsorship
3.1.1 iVillage shall create and make available a Network-wide
Book Club ("Book Club") which shall be sponsored exclusively by
Amazon.com and accessible from the ivillage.com home page located at
the URL: http://www.ivillage.com. Members of the Network will be
invited to become Book Club Members ("Book Club Members") and those who
join the Book Club will be eligible for special promotional benefits
including but not limited to book-related gifts and discounts from
iVillage and Amazon.com. Book Club Members will also have the
opportunity to submit questions to featured book authors. Amazon.com
will cooperate with iVillage in the implementation of these and other
special promotional premiums in connection with the Book Club, but will
have no financial obligation to iVillage for such promotions. Subject
to availability and budget, the Parties agree to work together to
produce and promote co-branded premiums.
3.1.2 iVillage, its editors and producers, shall select book
titles from the Ainazon.com library which shall be prominently featured
in the Book Club throughout the Network ("Selected Titles") and shall
provide a direct link to the Amazon.com Web Site for the purchase of
such Selected Titles. Selected Titles may be works of fiction or
non-fiction and it is anticipated that selection of Selected Titles may
also be made by Book Club Members. iVillage shall select and feature
those titles which concern subjects and/or issues that appeal to the
Users and/or which have been published within 3 months of the date the
title is featured and/or would appear on the Network for the first time
anywhere online.
3.1.3 In connection with Selected Titles, iVillage shall post
excerpts from featured authors and shall host message boards and chats
to be moderated by a Book Club leader and to be accessed by Book Club
Members.
3.1.4 iVillage shall also include a "Click here to buy from
Amazon.com" icon to be placed throughout the Book Club areas of the
Network which shall link Users to the Amazon.com Web site.
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<PAGE>
3.2 Channel Book Lists
Throughout the channels of the Network, iVillage shall promote reading
lists ("Reading Lists"), on a rotating basis, of topic-specific titles which are
appropriate for those given subchannels of the Network channel on which the
Reading Lists are featured. The "Click here to buy from Amazon.com" icon will
also appear in connection with the Reading Lists.
3.3 Search Engine Integration
iVillage shall fully integrate the Amazon.com database of available
titles into an iVillage search database, resulting in identical queries being
carried to both the iVillage search database and that of Amazon.com. When a User
accesses the iVillage search engine, a "Click here to find Related Books" icon
will appear as part of the search results, allowing a User to view a list of
related titles for purchase. In addition, iVillage will reserve the key words
listed in Exhibit B exclusively for Amazon.com and will display an Amazon.com
banner (in addition to the Amazon.com "Click here to find Related Books" icon)
whenever one of these key words is used in a search query of the iVillage site.
3.4 Shopping
iVillage shall prominently feature Amazon.com, its products and
services, in its Shopping Channel, located at the URL
http:Hwww.ivillage.com/shopping.htmi. During the term of this Agreement,
Amazon.com shall be listed in the Shopping Channel with a branded button which
shall link Users directly to the Amazon.com Web site.
3.5 Newsletter
Amazon.com will have the opportunity to include a promotional message
of its choosing, subject to iVillage's reasonable approval, in at least one
email newsletter per month (twelve (12) total newsletters per year) that
iVillage will send to its email subscribers.
3.6 Banner Advertising
During the term of this Agreement, iVillage agrees to provide
advertising banners that will run across the tops of the home pages of various
channels within the Network. The advertising banners will permit recipients to
navigate directly to a page on the Amazon.com Web Site selected by Amazon.com.
3.7 Right of First Presentation and Promotion
iVillage will present to Amazon.com an equal opportunity (prior to
presenting the opportunity to any other sponsor or other third party) to
participate in any new advertising, promotional or merchandising placement or
activity on any Network service or other service that is wholly or partially
owned by iVillage and/or any of its corporate parents or wholly or partially
owned subsidiaries. Any such Amazon.com placements will come at no additional
fixed costs to Amazon.com, but instead will earn referral fees in accordance
with the schedule specified in Section 7 of this Agreement.
4
<PAGE>
iVillage will make a good faith effort to include Amazon.com whenever
reasonably possible in its marketing campaigns (including without limitation any
TV, radio, print, and online ads) and will work with Amazon.com to determine the
method and content to be used in such marketing campaigns. iVillage will feature
Amazon.com at least as prominently as any other sponsor in such marketing
campaigns. Possible methods include selection and use of Amazon.com screenshots
and/or logo where the iVillage bookclub and Amazon.com logo are visible,
voice-over mentions of iVillage bookclub in association with Amazon-com,
voice-over mentions of iVillage channel book lists in association with
Amazon.com, or voice-over mentions of the Amazon.com / iVillage partnership when
discussing iVillage features. Any such promotional placement featuring the
Amazon.com brand will come at no additional cost to Amazon.com.
3.8 Amazon.com Policies
iVillage acknowledges that Users who purchase books through the Program
will be deemed to be customers of Amazon.com and subject to all Amazon.com
rules, policies and operating procedures concerning customer orders, customer
service and books sales. Amazon.com may change its policies and operating
procedures at any time. In addition, Amazon.com will provide commercially
reasonable efforts to present accurate information with respect to any given
book or Amazon.com program.
Section 4. Impression Guarantees
4.1 In connection with each of the promotions listed below (as
described in further detail in Section 3 above), iVillage guarantees to provide
at least the following number of Impressions (as defined below) to Amazon.com
during each of the Initial Term and the Renewal Term, if any (the "Impression
Guarantees"):
------------------------------------------ ---------------------------------
PROMOTION NO. OF IMPRESSIONS
------------------------------------------ ---------------------------------
Book Club [*]
------------------------------------------ ---------------------------------
Search Engine Integration [*]
------------------------------------------ ---------------------------------
Shopping [*]
------------------------------------------ ---------------------------------
Banner Advertising [*]
------------------------------------------ ---------------------------------
Newsletter
[*]
------------------------------------------ ---------------------------------
4.2 In the event that iVillage fails to meet the Impression Guarantees,
then iVillage shall be required to either, at Amazon.com's option: (a) continue
to provide the Promotional Placements and Opportunities until the guaranteed
number of Impressions have been met, in which case the applicable term of this
Agreement shall be extended, at no additional cost to Amazon.com, until such
guarantees are met; or (b) cooperate in good faith with Amazon.com to
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[*] Confidential treatment requested.
<PAGE>
develop and implement such other advertising or promotional placements as are
acceptable to Amazon.com to "make good" the shortfall. In addition, if iVillage
fails to meet the Impression Guarantees, Amazon.com may at any time thereafter
terminate this Agreement upon thirty (30) days written notice.
4.3 iVillage shall provide to Amazon.com on a quarterly basis, within
thirty (30) days following the end of each calendar quarter, a written report
signed by an authorized representative of iVillage showing in reasonable detail
the number of Impressions delivered during such quarter. iVillage shall keep and
retain, during the term of this Agreement and for a period of three years
thereafter, books and records sufficient to demonstrate the number of
Impressions delivered, and Amazon.com shall have the right to have such books
and records examined by an independent third party acceptable to iVillage as are
necessary to verify the number of Impressions reported to Amazon.com. Amazon.com
is entitled to conduct such an audit only during normal business hours and no
more frequently than once per calendar year. Amazon.com agrees to provide
iVillage with at least one (1) week advance notice of any audit. If the audit
reveals that the number of Impressions was misreported by more that ten percent
(10%), iVillage will pay for all costs reasonably incurred by Amazon.com in
connection with the audit.
4.4 As used herein, the term "Impressions" shall mean a User's viewing
of a web page or equivalent containing one or more promotional hypertext links
to the Amazon.com Web Site of the nature specified in the applicable portion of
Section 3.
Section 5. Legal Compliance
Both Parties shall operate their respective Web sites and services in
compliance with all applicable laws and regulations and each will be solely
responsible for obtaining all required governmental authorizations necessary for
the full performance of its services as provided for under this Agreement.
Section 6. Maintenance
Each Party shall monitor and periodically test the general availability
and operation of its Web site.
Section 7. Compensation
7.1 Upfront Fees
7.1.1 Amazon.com agrees to pay iVillage, upon the signing of
this Agreement, an upfront, nonrefundable, non-recoupable setup fee in
the amount of [*].
7.1.2 In the event that this Agreement is renewed, Amazon.com
agrees to pay iVillage, within thirty (30) days after the commencement
of the Renewal Term, an upfront, nonrefundable, non-recoupable renewal
fee in the amount of [*].
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[*] Confidential treatment requested.
<PAGE>
7.2 Referral Fees
7.2.1 In addition to the above fee, Amazon.com shall pay to
iVillage, on a quarterly basis-and payable within thirty (30) days
after the end of each quarter, referral fees based upon a percentage of
the Sale Price of Qualifying Books actually purchased from Amazon.com
(the "Referral Fees'). Amazon.com shall receive a credit for any
Referral Fees paid on Qualifying Books which are later returned. The
term "Sale Price" as used herein shall mean the sale price (i.e. the
price listed under the "Our Price" heading) for such book listed in the
Amazon.com catalog in effect at the time of order and does not include
costs for shipping, handling, gift-wrapping, and taxes. The term
"Qualifying Books" as used herein shall mean all in-print books listed
in Amazon.com's catalogue at the time of order that are purchased by
Users as a direct result of following a hypertext link from the Network
to the Amazon.com Web Site. Notwithstanding anything herein to the
contrary, sales of books listed in our catalog or in search results a.%
"out of print" or "hard to find" are not eligible for any Referral
Fees.
7.2.2 iVillage will earn referral fees according to the
following fee schedule:
(a) [*]% of the Sales Price on sales of each
Individually Linked Book (as defined below)
that, on the date of order, is listed in the
Amazon.com catalog at [*]%-[*]% off the
publishers list price;
(b) [*]% of the Sales Price on sales of each
Individually Linked Book that, on the date
of order, is listed in the Amazon.com
catalog at the publisher's list price (such
as special order books);
(c) [*]% of the Sales Price on sales of
Individually Linked Book that, on the date
of order, is listed in the Amazon.com
catalog at more than [*]% off the publishers
list price;
(d) [*]% of the Sales Price on sales of
Qualifying Books other than Individually
Linked Books; and
(e) the Referral Fees for Individually Linked
Books as set forth in Sections 7.2.2 (a),
(b) and (c) shall be increased to [*]% of
the fees specified therein for any
Individually Linked Books shipped prior to
June 30, 1998.
The term "Individually Linked Books" as used herein shall mean books which are
specifically featured by title in a Promotional Placement or Opportunity on the
Network (as described in Section 3 above) and purchased by Users as a direct
result of following a link on the Network to the Amazori.com Web Site that
specifically identifies the title of such book.
7.3 Referral Fee Guarantee
7.3.1 Initial Term
Notwithstanding the foregoing Section 7.2, if during the
course of the Initial Term of this Agreement iVillage earns less than
[*] in Referral
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[*] Confidential treatment requested.
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Fees (the "Target Referral Fee Amount"), Amazon.com shall include, in
the final quarterly Referral Fee payment for Referral Fees earned
during the Initial Term, that amount which causes iVillage's total
Referral Fees for the Initial Term to equal not less than the Target
Referral Fee Amount. Any amount earned by iVillage during the Initial
Term in excess of the Target Referral Fee Amount shall be due and owing
to iVillage in accordance with the above-mentioned quarterly payment
schedule.
7.3.2 Renewal Term
Notwithstanding the foregoing Section 7.2, if during the
course of the Renewal Term of this Agreement, iVillage earns less than
[*] in Referral Fees (the "Renewal Target Referral Fee Amount"),
Amazon.com shall include, in the final quarterly Referral Fee payment
for Referral Fees earned during the Renewal Term, that amount which
causes iVillage's total Referral Fee for the Renewal Term to equal not
less than the Renewal Target Referral Fee Amount. Any amount earned by
iVillage during the Renewal Term in excess of the Renewal Target
Referral Fee Amount shall be due and owing to iVillage in accordance
with the abovementioned quarterly payment schedule.
Section 8. Reports and Audit
Amazon.com shall track sales from iVillage through a uniform resource
locator and shall provide iVillage with monthly reports in a form satisfactory
to iVillage. iVillage shall have the right to have examined by an independent
certified public accounting fin-n acceptable to Amazon.com, such of Amazon.com's
books and records as are necessary to verify the accuracy of payments made to
iVillage pursuant to this Agreement. iVillage is entitled to conduct such an
audit only during normal business hours and no more frequently than once per
calendar year. iVillage agrees to provide Amazon.com with at least one week
advance notice of any audit. The audit will be limited to revenue generated
pursuant to this Agreement and the calculation of payments due to iVillage under
this Agreement. If the audit reveals that Amazon.com has paid iVillage less than
the sum to which iVillage is entitled, Amazon.com agrees to pay iVillage the
additional sums due. If such sums exceed [*] of the total monies paid to
iVillage under the Agreement, Amazon.com will pay for all costs reasonably
incurred by iVillage in connection with the audit.
Section 9. Representations and Warranties; Limitation of liability
9.1 Each party hereby represents and warrants that: (a) it is a
corporation duly organized and validly existing and in good standing under the
laws of the state of its incorporation, (b) it has full power and authority to
enter into this Agreement and to perform its obligations hereunder; (c) it has
obtained all permits, licenses, and other governmental authorizations and
approvals required for its performance under this Agreement; and (d) the
services to be rendered by each party under this Agreement neither infringe nor
violate any patent, copyright, trade secret, trademark, or other proprietary
right of any third party.
9.2 Amazon.com will remain solely responsible for the operation of the
Amazon.com Site, and iVillage will remain solely responsible for the operation
of the Network. Each Party (a) acknowledges that the Amazon.com Web Site and the
Network may be subject to temporary
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[*] Confidential treatment requested.
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shutdowns due to causes beyond the operating Party's reasonable control, and (b)
subject to the specific terms of this Agreement, retains sole right and control
over the programming, content and conduct of transactions over its respective
site or service. EACH PARTY SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY REGARDING (A) THE AMOUNT OF SALES THAT AMAZON.COM MAY GENERATE DURING
THE TERM, AND (B) ANY ECONOMIC OR OTHER BENEFIT THAT THE OTHER PARTY MIGHT
OBTAIN THROUGH ITS PARTICIPATION IN THIS AGREEMENT.
9.3 NEITHER AMAZON.COM NOR IVILLAGE WILL BE LIABLE TO THE OTHER FOR ANY
INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, LOST PROFITS OR LOST DATA) ARISING OUT OF THIS AGREEMENT. EACH
PARTY'S ENTIRE LIABILITY ARISING FROM THIS AGREEMENT (EXCEPT FOR LIABILITIES
ARISING UNDER SECTION 13 OR RESULTING FROM THE PARTY'S WILLFUL MISCONDUCT),
WHETHER IN CONTRACT OR TORT, WILL NOT EXCEED THE AMOUNTS TO BE PAID BY
AMAZOIN.COM UNDER SECTION 7.
Section 10. Fulfillment
Amazon.com shall be solely responsible for (a) fulfilling all orders
for its products and (b) calculating, collecting and paying all appropriate
taxes associated with payment processing. Amazon.com's products offered through
the Network will be supported by the same warranty and return policy for such
products as offered through other Amazon.com channels.
Section 11. Intellectual Property Rights
11.1 Subject to the license granted to iVillage under Section 11.3,
Amazon.com reserves all of its right, title and interest in its intellectual
property rights (e.g., patents, copyrights, trade secrets, trademarks and other
intellectual property rights). Subject to the license granted to Amazon.com
under Section 1 1.2, iVillage reserves all of its right, title and interest in
its intellectual property rights.
11.2 Amazon.com hereby grants to iVillage, during the term of this
Agreement and any extensions or renewals thereof, a non-exclusive,
non-transferable, royalty-free license to establish hyperlinks between the
Party's Web Sites and to use Amazon.com's trade names, logos, trademarks and
service marks (the "Amazon.com Marks") on the Network as is reasonably necessary
to establish and promote such hyperlinks and to otherwise perform its
obligations under this Agreement; provided, however, that any promotional
materials or usages containing any of the Amazon.com Marks will be subject to
Amazon.com's prior written approval.
11.3 iVillage hereby grants to Amazon.com, during the term of this
Agreement and any extensions or renewals thereof, a non-exclusive,
nontransferable, royalty-free license to establish hyperlinks between the
Party's Web Sites and to use iVillage's trade names, logos, trademarks and
service marks (the "iVillage Marks") as is reasonably necessary to establish and
promote such hyperlinks and to otherwise perform its obligations under this
Agreement;
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provided, however, that any promotional materials or usages containing any of
the iVillage Marks will be subject to iVillage's prior written approval.
11.4 Neither Party will modify, alter or obfuscate the other Party's
Marks or use the other Party's Marks in a manner that disparages the other Party
or its products or services, or portrays the other Party or its products or
services in a false, competitively adverse or poor light. Each Party will comply
with the other Party's requests as to the form of use of the other Party's Marks
and will avoid any action that diminishes the value of such Marks. Either
Party's unauthorized use of the other's Marks is strictly prohibited. Upon
termination of this Agreement and upon written request, the Party in receipt of
the requesting Party's intellectual or proprietary property and/or information
pursuant to this Agreement shall return such information to the requesting
Party.
Section 12. Confidentiality
Except as expressly set forth herein, iVillage and Amazon.com shall
maintain in confidence the terms of this Agreement. It is expected that pursuant
to discussions to date and to this Agreement, the Parties may disclose to one
another certain information, as defined herein, which is considered by the
disclosing Party to be proprietary or confidential information (the
"Confidential Information"). Confidential Information is defined as any
information, communication or data, in any form, including, but not limited to
oral, written, graphic or electromagnetic forms, models or samples, which the
disclosing party identifies as confidential or which or is of such a nature that
the receiving party should reasonably understand that the disclosing party
desires to protect such information, communication or data against unrestricted
disclosure or use, including without limitation, business information, financial
data and marketing data. All Confidential Information shall remain the sole
property of the disclosing party and its confidentiality shall be maintained and
protected by the receiving party with the same degree of care as the receiving
party uses for its own confidential and proprietary information. The receiving
party shall not use the Confidential Information of the other party except as
necessary to fulfill its obligations under this Agreement, nor shall it disclose
such Confidential Information to any third party without the prior written
consent of the disclosing party. The restrictions on the use or disclosure of
any Confidential Information shall not apply to any Confidential Information:
(i) after it has become generally available to the public without breach of this
Agreement by the receiving party; (ii) is rightfully in the receiving party's
possession prior to disclosure to it by the disclosing party; (iii) is
independently developed by the receiving party; (iv) is rightfully received by
the receiving party from a third party without a duty of confidentiality; or (v)
is disclosed under operation of law.
Section 13. Indemnification
13.1 Amazon.com will defend and indemnify iVillage and its affiliates
(and their respective employees, directors and representatives) against any
claim or action brought by a third party, to the extent relating to (a) the
operation of the Amazon.com Web Site, (b) any breach of its obligations under
this Agreement, or (c) the violation of third-party intellectual property rights
by any editorial content or other materials provided by Amazon.com for display
on the Network. Subject to iVillage's compliance with the procedures described
in Section 13.3, Amazon.com will pay any award against iVillage or its
affiliates (or their respective employees,
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directors or representatives) and any costs and attorneys' fees reasonably
incurred by iVillage and its affiliates resulting from any such claim or action.
13.2 iVillage will defend and indemnify Amazon.com and its affiliates
(and their respective employees, directors and representatives) against any
claim or action brought by a third party, to the extent relating to (a) the
operation of the Network, (b) any breach of its obligations under this
Agreement, or (c) the violation of third-party intellectual property rights by
any materials provided by iVillage for display on the Amazon.com Web Site.
Subject to Amazon.com's compliance with the procedures described in Section
13.3, iVillage will pay any award against Amazon.com or its affiliates (or their
respective employees, directors or representatives) and any costs and attorneys'
fees reasonably incurred by Amazon.com and its affiliates resulting from any
such claim or action.
13.3 " In connection with any claim or action described in this
Section, the Party seeking indemnification (a) will give the indemnifying Party
prompt written notice of the claim, (b) will cooperate with the indemnifying
Party (at the indemnifying Party's expense) in connection with the defense and
settlement of the claim, and (c) will permit the indemnifying Party to control
the defense and settlement of the claim, provided that the indemnifying Party
may not settle the claim without the indemnified Party's prior written consent
(which will not be unreasonably withheld). Further, the indemnified Party (at
its cost) may participate in the defense and settlement of the claim.
Section 14. Traffic Data
On a quarterly basis, iVillage will use its best efforts to provide
Amazon.com with mutually agreed data concerning search and browsing behavior on
the Network, to the extent such behavior reasonably could relate to the online
promotion or sale of books or other products that Amazon.com i-nay sell from
time to time. Amazon.com shall treat such data as Confidential Information and
will not use it iii except in accordance with reasonable guidelines to be agreed
by the Parties. Notwithstanding anything contained in this Section, iVillage
will not be required to deliver to Amazon.com any user data in violation of its
then-existing policies regarding the protection of user information.
Section 15. Dispute Resolution
15.1 In a] I discussions and activities relating to this Agreement,
Amazon.com and iVillage will cooperate in good faith to accomplish the
objectives specified in this Agreement. If any dispute arises relating to either
Party's rights or obligations under this Agreement, and the Parties are unable
to resolve the dispute in the ordinary course of business, Amazon.com and
iVillage will use good-faith efforts to resolve the matter in accordance with
this Section 15.
15.2 Within five (5) business days following the written request of
either Party (which will describe the nature of the dispute and other relevant
information), the Parties' managers who are responsible for the
Amazon.com/iVillage relationship will meet to resolve the dispute at a mutually
convenient time and place. If the relationship managers are unable to resolve
the dispute within two (2) business days following their initial meeting, they
will refer the matter to the Parties' divisional executives who are responsible
for the administration of this Agreement,
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along with a written statement (or statements) describing the nature of the
dispute and other relevant information.
15.3 Within five (5) business days following the referral of the matter
to the Parties' divisional executives, the divisional executives will meet to
resolve the dispute at a mutually convenient time and place. Additional
representatives of the parties may be present at the meeting. If the divisional
executives are unable to resolve the dispute within two (2) business days
following their initial meeting, they will refer the matter to the Parties'
Chief Executive Officers (or other appropriate corporate officer with the
authority to settle disputes), along with a written statement (or statements)
describing the nature of the dispute and other relevant information.
15.4 Within five (5) business days following the referral of the matter
to the Parties' CEOs, the CEOs will meet to resolve the dispute at a mutually
convenient time and place. Additional representatives of the parties may be
present at the meeting. If the CEOs are unable to resolve the dispute within two
(2) business days following their initial meeting (or such later date as they
may agree), the Parties will be free to pursue whatever remedies may be
available at law or in equity.
15.5 All negotiations pursuant to this Section IS will be confidential
and treated as compromise and settlement negotiations for purposes of applicable
rules of evidence. Any resolution reached under this Section will be reduced to
writing and signed by the Parties. During any dispute resolution procedure
conducted under this Section, the Parties will diligently perform all
obligations hereunder that are not directly related to the dispute.
Section 16. General Provisions
16.1 The Parties are entering this Agreement as independent
contractors, and this Agreement will not be construed to create a partnership,
joint venture or employment relationship between them. Neither Party will
represent itself to be an employee or agent of the other or enter into any
agreement on the other's behalf of or in the other's name.
16.2 Following the execution of this Agreement, Amazon.com and iVillage
will prepare and distribute a joint press release (or coordinated press
releases) announcing the transaction. The contents and timing of the release (or
releases) will be mutually agreed by the Parties. Neither Party will issue any
further press releases, make any other disclosures regarding this Agreement or
its terms or use the other Party's trademarks, trade names or other proprietary
marks without the other Party's prior written consent.
16.3 In its performance of this Agreement, each Party will comply with
all applicable laws, regulations, orders and other requirements, now or
hereafter in effect, of governmental authorities having jurisdiction. Without
limiting the generality of the foregoing, each Party will pay, collect and remit
such taxes as may be imposed with respect to any compensation, royalties or
transactions under this Agreement. Except as expressly provided herein, each
Party will be responsible for all costs and expenses incurred by it in
connection with the negotiation, execution and performance of this Agreement.
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16.4 Neither Amazon.com nor iVillage will be liable for, or will be
considered to be in breach of or default under this Agreement on account of, any
delay or failure to perform as required by this Agreement as a result of any
causes or conditions that are beyond such Party's reasonable control and that
such Party is unable to overcome through the exercise of commercially reasonable
diligence. If any force majeure event occurs, the affected Party will give
prompt written notice to the other Party and will use commercially reasonable
efforts to minimize the impact of the event.
16.5 Any notice or other communication under this Agreement given by
any Party to any other Party will be in writing and will be deemed properly
given when sent to the intended recipient by registered letter, receipted
commercial courier, or electronically receipted facsimile transmission
(acknowledged in like manner by the intended recipient) at its address and to
the attention of the individual specified below its signature at the end of this
Agreement. Any Party may from time to time change such address or individual by
giving the other Party notice of such change in accordance with this Section
16.5.
16.6 Neither Amazon.com nor iVillage may assign this Agreement, in
whole or in part, without the other Party's prior written consent (which will
not be withheld unreasonably), except to (a) any corporation resulting from any
merger, consolidation or other reorganization involving the assigning Party, (b)
any of its Affiliates, or (c) any individual or entity to which the assigning
Party may transfer substantially all of its assets; provided that the assignee
agrees in writing to be bound by all the terms and conditions of this Agreement.
Subject to the foregoing, this Agreement will be binding on and enforceable by
the Parties and their respective successors and permitted assigns.
16.7 The failure of either party to enforce any provision of this
Agreement will not constitute a waiver of the party's rights to subsequently
enforce the provision. Any remedies specified in this Agreement are in addition
to any other remedies that may be available at law or in equity.
16.8 This Agreement (a) represents the entire agreement between the
parties with respect to the subject matter hereof and supersedes any previous or
contemporaneous oral or written agreements regarding such subject matter, (b)
may be amended or modified only by a written instrument signed by a duly
authorized agent of each party, and (c) will be interpreted, construed and
enforced in all respects in accordance with the laws of the State of Washington,
without reference to its choice of law rules. If any provision of this Agreement
is held to be invalid, such invalidity will not effect the remaining provisions.
The parties agree that the venue for any disputes hereunder shall be King
County, Washington, if such dispute is brought by iVillage, and in New York
City, Borough of Manhattan, New York, if such dispute is brought by Amazon.com..
16.9 If any provision of this Agreement shall be declared by any court
of competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall remain in full
force and effect.
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16.10 This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have executed and delivered this
Agreement as of the date first above written.
Amazon.com, Inc. iVillage, Inc.
By [illegible] By /s/ Steven Elkes
------------------------------ ---------------------------
Its SVP Its VP Finance/Legal
------------------------------ ---------------------------
Date 3/28/98 Date 3/28/98
------------------------------ ---------------------------
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EXHIBIT A
Competitors
As used in this Agreement, "Competitors" includes (without limitation) the
following entities:
alt.bookstore
Baker & Taylor
Barnes & Noble (including B. Dalton)
Bibliofind
BooksAmerica
BooksNow
Bookpages
Bookport
Bookserve
Booksamillion
BookSearch
BookSite
Booksmith
Book Stacks Unlimited
Book Web
Book Zone
Borders (including Walden Books)
CBooks
Computer Literacy Bookshop
Cody's Books
Crown Books
Ingram
Interloc
Internet Book Shop
Intertain Internet Bookstore
Online BookStore
Powell's Books
Simon and Schuster
Tower Books
Waterstone's
WordsWorth Books
<PAGE>
EXHIBIT B
Keywords
As used in this Agreement, "Keywords" includes (without limitation) the
following terms and phrases:
Book
Books
Bookstore
Bookstores
Bookseller
Booksellers
Amazon
Amazon.com
AMZN
Book Store
Book Stores
<PAGE>
SNAP PROMOTION AGREEMENT
------------------------
(iVillage)
This Promotion Agreement (the "Agreement") is dated as of November 6, 1998
between Snap! LLC, with its principal place of business located at One Beach
Street, San Francisco, California 94111 ("Snap"), and iVillage, Inc., with
its principal place of business located at 170 Fifth Avenue, New York, NY
10010 (the "Company"). Pursuant to this Agreement, Snap will provide various
promotions to the Company to assist the Company in promoting its network of
Internet sites and related services. Accordingly, the parties hereby agree
as follows:
1. Background.
1.1 The Company. The Company operates a network of Internet
sites including but not limited to content pertaining to
parenting, work and health, including the site located at
http://www.ivillage.com.
1.2 Snap. Snap operates a search and aggregation "portal" site
on the World Wide Web.
2. Definitions.
"Above the Fold" means that a particular item on a Web page is
viewable on a computer screen at an 800 x 600 pixels resolution
when the User first accesses such Web page, without scrolling down
to view more of the Web page.
"Agreed Channels" means all of the Targeted Impressions plus up to
five additional channels, as mutually agreed. Such additional
channels shall initially be Business & Money, Computing, Travel,
Education and Entertainment.
"Company Marks" means any trademarks, trade names, service marks
and logos that may be delivered by the Company to Snap expressly
for inclusion in the Promotions.
"Company Sites" means the Internet sites operated by the Company and
promoted on Snap through the Promotions, including the Internet sites
expressly referenced in Section 3, together with any mirror
sites, co-branded sites and successors thereto.
"Content Portal" means an area on the front page of a Resource
Center that is designed to be programmed with content from a third
party content provider such as the Company.
"Family Center" means a Resource Center within Snap's Kids & Family
Channel that is focused on family issues and is linked to directly
from the front door of the Snap Site and from within the Kids &
Family Channel.
"Health Center" means a Resource Center within Snap's Health
Channel, currently referred to as the "Guide to Better Health,"
that is focused on health issues and is linked to directly from the
front door of the Snap Site and from within the Health Channel.
<PAGE>
"Impression" means the display of a Promotion for any Company Site
on any Snap Site in accordance with this Agreement.
"Parenting Center" means a Resource Center within Snap's Kids &
Family Channel that is focused on parenting issues and is linked to
from within the Kids & Family Channel and from the parenting
section of Snap's Living Channel.
"Products" means any product or service sold on or through the
Company Sites.
"Promotions" means banners, buttons, text links, branded text,
Content Portals, links within email newsletters distributed by Snap
and other promotions displayed on any Snap Site, including the
specific types of promotions referenced in Section 3.
----------
"Referral Users" are any users that access the Company Site through a
Promotion. All Referral Users will be tagged and tracked by the Company
during the first and any subsequent visit to the Company Site via the
Snap Site for the purpose of revenue sharing as referenced in Section
5.3.
"Resource Center" means a collection of related Web pages, links,
portals and other resources on the Snap Site focused on a
particular subject matter.
"Snap Box" means a search box with Snap's full Internet search
functionality and containing icons for and links to the Snap Site.
Each Snap Box will take users directly to the Snap Site to view the
results of their search query.
"Snap Results Page" means a successful search results page on the
Snap Site that is served by Snap in response to a search inquiry
through a Snap Box on the Company Site.
"Snap Marks" means any trademarks, trade names, service marks and
logos delivered by Snap to the Company expressly for inclusion on a
Company Site.
"Snap Site" means the search and aggregation "portal" site operated by
Snap at http://www.snap.com, together with any co-branded editions of
such site that have been or may be developed for Snap's third party
distribution partners and licensees.
"Targeted Impressions" means (a) any Impressions within the Kids &
Family, Health, Living, or Shopping Channels; (b) other Impressions
that appear in context within editorial content or tools provided
by the Company (for example, a "calorie counter" feature); (c)
Impressions within email newsletters distributed pursuant to
Section 3.4; (d) Impressions within My Snap!, as contemplated by
Section 3.5; and (e) Keyword banner Impressions delivered pursuant
to Section 3.6.
"Term" means the term of this Agreement, as set forth in Section 5.
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"User" means a user of the Snap Site.
3. Promotions.
3.1 Promotions within the Health Channel.
3.1.1 During the Term, the Company will have the
exclusive right to program the Content Portal on
the front page of the Health Center with health
related content from its Better Health site or
any successor Web site thereto ("Better Health"),
as well as health related content from the
ivillage.com Site, subject to the reasonable
discretion of a Snap producer.
3.1.2 Subject to the mutual agreement of the parties,
to the extent Snap reasonably deems it to be
appropriate editorially, Snap may include other
Promotions for Better Health throughout the
Health Center and may provide additional
opportunities for the Company to provide content
from the Better Health site for display within
the Health Channel.
3.1.3 Notwithstanding the foregoing or anything herein
to the contrary, the parties mutually agree that
the Company's content will appear in the Health
Center 31 days after Snap gives notice to the
content providers currently in such center, which
notice will be given within 10 days following the
execution of this Agreement.
3.2 Promotions within the Kids and Family Channel
3.2.1 During the Term, the Company will have the
exclusive right to program the Content Portals on
the front pages of the Family Center and the
Parenting Center with content from its Parent
Soup site, subject to the reasonable discretion
of a Snap producer.
3.2.2 Subject to the mutual agreement of the parties,
to the extent Snap reasonably deems it to be
appropriate editorially, Snap may include other
Promotions for Parent Soup throughout the Family
Center and the Parenting Center and may provide
additional opportunities for the Company to
provide content from the Parent Soup site for
display on the Snap Site.
3.3 Promotions for iBaby. Snap shall, subject to Snap's
discretion include Promotions for the Company's iBaby site
throughout the Kids and Family, Health, Living and
Shopping Channels, and Snap may provide additional
opportunities for the Company to provide content from the
iBaby site for display on the Snap Site, including working
with Snap to create a Baby Shop.
3.4 Newsletters. If Snap develops an area where Users can
register for e-mail newsletters from third party content
providers, Snap will provide the Company a reasonable
opportunity to offer a newsletter to Users through such
area.
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3.5 Promotions for My Snap!. The Company's Better Health and
Parent Soup content and links will be included as an
initial default option for Snap's "My Snap!" personalized
home page, meaning that initial default links for Better
Health and Parent Soup will automatically appear on the My
Snap! start page for each first time User. All Company
content linked to from within My Snap! will be hosted in
its entirety by Snap!.
3.6 Keyword Banners. The Company will receive [*]% of the
banner advertisements served on search results pages that
result from searches that include any of the 30 search
terms identified in Exhibit A.
---------
3.7 Best Labels. To the extent Snap deems it to be appropriate
editorially, links to Company Sites included within Snap
search results will include a "Best" editorial label.
3.8 Snap may provide standard Promotions throughout the Snap Site
in an amount sufficient to meet the minimum impressions in
Section 3.9. The Company may request any reasonable
reallocation of the location and type of the Promotions
subject to Snap's then-current inventory availability. Snap
shall not charge the Company any extra fees for such requested
reallocations of Promotions if they are equivalent in value to
those that would otherwise be provided by Snap hereunder.
3.9 Minimum Impressions.
3.9.1 During the first year of the Term, Snap will
deliver a total of at least [*] Impressions. Snap
will deliver [*] additional Impressions at no
additional charge on a run-of-site basis.
3.9.2 During the second year of the Term, Snap will
deliver a total of at least [*] Impressions. Snap
will deliver [*] additional Impressions at no
additional charge on a run-of-site basis.
3.9.3 In each year of the of the Term, at least [*]% of
the minimum number of Impressions will be
Targeted Impressions. Of the remaining minimum
number of Impressions, at least half will be
displayed within Agreed Channels. The remaining
Impressions may be untargeted and may appear
anywhere within the Snap Site (for example,
run-of-site banner advertisements).
Notwithstanding these minimum requirements, Snap
will endeavor to deliver a larger percentage of
Targeted Impressions during the Term, subject to
Snap's discretion.
3.9.4 If Snap does not deliver the required number of
Impressions during any year of the Term, Snap
will have an additional three months to deliver
such Impressions (together with any other
Impressions otherwise required during such three
month period hereunder) on the Snap Site. Such
Impressions delivered during this three month
period shall be allocated to the appropriate
category, (i.e. targeted or untargeted) to
fulfill the impressions guarantee pursuant to
Section 3.9.3.
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3.9.5 If Snap does not deliver the required number of
Impressions during the additional three month
period described in Section 3.9.4, Snap will have
a second three month period to deliver such
Impressions (together with any other Impressions
otherwise required during such three month period
hereunder) on the Snap Site or any other Internet
site operated by CNET, Inc. or the National
Broadcasting Company, Inc. or their affiliates,
subject (in the case of sites other than the Snap
Site) to the Company's prior consent, which shall
not be unreasonably withheld, and provided that
such substituted Impressions are substantially
equivalent in value.
4. Exclusivity.
4.1 Content provided by On Health, Women.com and Oxygen
(individually, a "Competitor") will not constitute, in the
aggregate, more than [*]% of the total content provided on
the front page of the Health Center; the aforementioned
notwithstanding, each Competitor may provide not more than
[*]% of the total content on that page. In addition Snap
will agree not to receive any payment for such content.
Promotions for On Health, Women.com and Oxygen will not
constitute, in the aggregate, more than [*]% of the total
number of Promotions displayed within the Health Center of
Snap.
4.2 Content provided by Home Arts and Oxygen (individually, a
"Competitor") will not constitute, in the aggregate, more
than [*]% of the total content provided on the front page
of the Family Center or the Parenting Center; the
aforementioned notwithstanding, each Competitor may
provide not more than [*% of the total content on that
page. In addition Snap will agree not to receive any
payment for such content. Promotions for Home Arts and
Oxygen will not constitute, in the aggregate, more than
[*]% of the total number of Promotions displayed on the
front page of the Family Center or the Parenting Center.
4.3 For purposes of this Section 4, the percentage of content
provided on a page will be measured based on the total
area of the page on which such content appears. In the
event that Snap plans to offer any Competitor an editorial
or promotional opportunity, other than standard media buys
that are up to three months, or aggregation and selection
of content, provided such content is not paid for, in
connection with the Health Center, Family Center or
Parenting Center, Snap agrees to provide the Company with
such opportunity first Notwithstanding the foregoing,
Company shall, at all times during the Term of this
Agreement, be the preferred provider of content and
promotions throughout those areas of the Snap Site which
are set forth herein, the Health Center, Family Center and
Parenting Center.
5. Payments.
5.1 First Year. The Company will pay Snap a total of
$[*] with respect to the first year of the Term, as
follows:
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5.1.1 The Company will pay Snap a one time development
fee of $[*] for content integration payable
within five days after execution of this
Agreement;
5.1.2 The Company will pay Snap an annual slotting fee
of $[*] for carriage of the Promotions within
the Snap Site, payable in twelve equal monthly
installments, within 30 days of each month; and
5.1.3 The Company will pay Snap a partnership fee of
$[*], payable in the following installments
by the fifth day of each calendar month:
5.1.3.1 $[*] per month during months 1-6
of the Term
5.1.3.2 $[*] per month during months 7-12
of the Term
5.2 Second Year. The Company will pay Snap a total of
$[*] with respect to the second year of the Term, as
follows:
5.2.1 The Company will pay Snap an annual slotting fee
of $[*] for carriage of the Promotions within
the Snap Site, payable in twelve equal monthly
installments, within 30 days of each month; and
5.2.2 The Company will pay Snap a partnership fee of
$[*] payable in equal monthly
installments of $[*] by the fifth day of
each calendar month.
5.3 Revenue Sharing. The Company will pay to Snap an amount
equal to [*]% of all gross margin earned by the Company
from sales made through the Company's iBaby site to
Referral Users. Such revenue sharing will be payable
monthly, simultaneously with delivery of the monthly
reports referenced in Section 8.2, which will support the
Company's calculation of the required payment for the
preceding month.
5.4 Required payments hereunder will be made by check or wire
transfer of immediately available funds as reasonably
directed by Snap.
5.5 Notwithstanding the foregoing: if Snap has not delivered:
(i) [*] impressions on or before the date that is
six months from this Agreement then Snap and the Company
will meet in good faith within 30 days of that time to
re-negotiate the agreement; if no agreement is reached
after that time, the Company may terminate the agreement,
or (ii) [*] impressions (based on the proportions
described in section 3.9 including the additional
impressions as referenced in section 3.9.1 and section
3.9.2.), on or after the date that is twelve months from
the date of this agreement the Company may terminate the
agreement.
5.6 Snap Results Pages. Snap will pay the Company a standard
monthly fee based on the daily average number of Snap
Results Pages delivered to users. Such fee will be
calculated as follows: (1) divide the total number of Snap
Results Pages for the
6
[*] Confidential treatment requested.
<PAGE>
month by the number of days in the month, (2) divide the
result by [*], (3) multiply the result by the appropriate
Guaranteed Daily CPM as set forth below, and (4) multiply
the result by the number of days in the month. For
example, if the Company's Snap Box produces a total of
[*] Snap Results Pages for June, the monthly fee for
June will be calculated by the following formula: ((([*]
/ [*]) / [*]) * $[*]) = $[*] = $[*]. Thus, Snap will
pay the Company $[*] for [*] Snap Results.
Average Number of
Daily Snap Results Pages Guaranteed Daily CPM
------------------------ --------------------
[*] $[*]
[*] $[*]
[*] $[*]
[*] $[*]
[*] $[*]
[*] $[*]
6. Design of the Promotions and Operation of the Company Site and Snap
Site
6.1 Snap and the Company will cooperate in good faith to
create an "implementation team," which will include an
account manager designated by Snap and an appropriate
representative of the Company, to oversee the creation and
delivery of the Promotions contemplated by this Agreement.
6.2 The Company will design any graphics and other materials
required for the Promotions and will supply digital copies
of such materials to Snap. Such materials will be designed
and delivered in accordance with Snap's technical and
editorial guidelines as defined in Exhibit B, as may be
changed from time to time and communicated by Snap to the
Company. Snap will provide reasonable assistance to the
Company in connection with the design and delivery of such
materials.
6.3 On each page of a Company Site to which Users are linked
from the Promotions, the Company will display a button or
other graphical link to be provided by Snap, which links
back to the default Snap Site. All such links on the
Company Sites will be displayed Above the Fold. Snap
agrees not to specifically target (separately from the
general database of Snap Users) any Users who access the
Snap Site through such links.
6.4 Both parties will be responsible for ensuring that each
URL provided to the other party for use as set forth in
this Agreement, takes the User to the appropriate area
within the respective site and that each party's site
functions with reasonable reliability and in a
commercially reasonable manner throughout the Term. In
particular, both parties agree that each party's
respective site will comply with the following performance
standards throughout the Term:
7
[*] Confidential treatment requested.
<PAGE>
6.4.1 Each party's site will be operational and fully
functional in all material respects (i.e. capable
of displaying information and conducting
transactions as contemplated in the ordinary
course of business) at least 97% of the time
during any 30 day period.
6.4.2 The average time required to start displaying the
HTML on a page of a party's site after a link
from the other party's shall not exceed a daily
average of three seconds, and the average time
required to deliver an entire page of a party's
site over the open Internet shall not exceed a
daily average of six seconds. For measurements
required in this Paragraph, both parties may
assume standard T1 connectivity to the Internet.
6.4.3 Without limiting the effect of Paragraphs 6.4.1
and 6.4.2 above, the Company shall provide to
Users coming to the Company Sites from the
Promotions at least the same level of service as
is offered to Users coming directly to such
Company Sites.
6.4.4 The Company Sites e shall not, to the best of the
Company's knowledge: (a) contain defamatory or
libelous material or material which discloses
private or personal matters concerning any
person, without such person's consent; (b) permit
to appear or be uploaded any messages, data,
images or programs which are illegal, contain
nudity or sexually explicit content or are, by
law, obscene, profane or pornographic; or (c)
permit to appear or be uploaded any messages,
data, images or programs that would knowingly or
intentionally (which includes imputed intent)
violate the property rights of others, including
unauthorized copyrighted text, images or
programs, trade secrets or other confidential
proprietary information, or trademarks or service
marks used in an infringing fashion.
6.4.5 If any of the performance standards set forth
above are not met by either party with respect to
that party's site, the other party may, after
notifying the violating party, remove any or all
links to such party's, at the non violating
party's sole discretion. If a party's site fails
to operate fully and functionally in any material
respect for any period of four or more
consecutive hours, even if otherwise in
compliance with the performance standards, the
other party may, after notifying the violating
party, remove any or all links to such violating
party's site, at the non-violating party's sole
discretion, until such time as the violating
party notifies the non-violating party that such
site has resumed acceptable operation. These
remedies are for each party's editorial purposes
and in no way limit either party's ability to
terminate this contract or pursue any other
remedies hereunder in the event the performance
standards set forth herein are not met.
8
<PAGE>
7. Termination.
7.1 The term of this Agreement (the "Term") will begin on the
date hereof and will end on the second anniversary of the
date hereof, unless otherwise terminated or extended as
provided in this Agreement.
7.2 If either party commits a material breach of its
obligations hereunder that is not cured within 30 days
after notice thereof from the non-breaching party, the
non-breaching party may terminate this Agreement at any
time by giving written notice of termination to the
breaching party (or ten days in the event of non-payment).
7.3 The provisions of Sections 12, 13 and 14 and any payment
obligations arising prior to termination will survive any
termination of this Agreement.
8. Reporting.
8.1 Within 30 days after the end of each calendar month during
the Term, Snap will provide to the Company standard
advertising reports, as generally offered by Snap, with
respect to the Promotions.
8.2 Within 30 days after the end of each calendar month during
the Term, the Company will provide to Snap a report
indicating (a) the number of Users who access any Company
Site by clicking on a link embedded within a Promotion
delivered by Snap hereunder, in the aggregate and for each
Company Site, and (b) the total revenues and gross profit
earned by the Company from sales made through the
Company's iBaby site to such Users. The Company will
obtain such data by tagging each User who accesses any
Company Site through a Promotion using a cookie or other
similar technology, as agreed upon by the parties.
9. User Data.
The Company will be the sole owner of any information that the
Company collects from Users through the Company Sites, and Snap
will be the sole owner of any information that Snap collects from
Users through the Snap Site. Notwithstanding the foregoing and
subject to the provisions of Section 14.8, each party will have the
unrestricted right and license to use any information provided by
the other party pursuant to Section 7.
10. Company Integration of Snap.
10.1 The Company will feature a Snap Box as a part of the front
page of each of the Company Sites and throughout the
Company Sites as appropriate, the design, size and
positioning of which will be mutually agreed upon by Snap
and the Company, provided that the Snap Box appear above
the fold. Snap will pay the Company for Snap Results Pages
as provided in Section 5.6, above.
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<PAGE>
10.2 The Snap Results Pages delivered to users as a result of a
query from Company's Snap Box will be co-branded edition
of the Snap Service located at www.snap.com.
10.3 On each page of a Snap Site to which Users are linked from
the Company Site, Snap will display a mutually agreed upon
button or other graphical link to be provided by the
Company, which links back to the default Company Site. All
such links on the Snap Site will be displayed Above the
Fold. Company agrees not to specifically target
(separately from the general database of Company Users)
any Users who access the Company Site through such links.
11. Trademark Licenses.
11.1 The Company hereby grants to Snap a non-exclusive,
royalty-free license, effective throughout the Term, to
use, display and publish the Company Marks solely within
the Promotions. Any use of the Company Marks by Snap must
comply with any reasonable usage guidelines communicated
by the Company to Snap from time to time. Nothing
contained in this Agreement will give Snap any right,
title or interest in or to the Company Marks or the
goodwill associated therewith, except for the limited
usage rights expressly provided above. Snap acknowledges
and agrees that, as between the Company and Snap, the
Company is the sole owner of all rights in and to the
Company Marks.
11.2 Snap hereby grants to the Company a non-exclusive, royalty
free license, effective throughout the Term, to use,
display and publish the Snap Marks solely within the
Company Sites as provided in Section 8 above. Any use of
the Snap Marks by the Company must comply with any
reasonable usage guidelines communicated to the Company by
Snap from time to time. Nothing contained in this
Agreement will give the Company any right, title or
interest in or to the Snap Marks or the goodwill
associated therewith, except for the limited usage rights
expressly provided above. The Company acknowledges and
agrees that, as between the Company and Snap, Snap is the
sole owner of all rights in and to the Snap Marks.
12. Responsibility for the Products.
The Company acknowledges and agrees that, as between the Company
and Snap, the Company will be solely responsible for any claims or
other losses associated with or resulting from the marketing or
operation of the Company Sites or the offer or sale of any Products
by the Company or through the Company Sites. Snap is not authorized
to make, and agrees not to make, any representations or warranties
concerning the Company Sites or the Products, except to the extent
(if any) contained within Promotions delivered to Snap by the
Company or approved by the Company.
13. Mutual Indemnification.
13.1 Indemnification by Snap. Snap shall indemnify and hold the
Company harmless from and against any costs, losses,
liabilities and expenses, including all court
10
<PAGE>
costs, reasonable expenses and reasonable attorney's fees
(collectively, "Losses") that the Company may suffer,
incur or be subjected to by reason of any legal action,
proceeding, arbitration or other claim by a third party,
whether commenced or threatened, arising out of or as a
result of any claims of infringement or misappropriation
of intellectual property rights, or arising from the
operation of Snap Site.
13.2 Indemnification by the Company. The Company shall
indemnify and hold Snap harmless from and against any
Losses that Snap may suffer, incur or be subjected to by
reason of any legal action, proceeding, arbitration or
other claim by a third party, whether commenced or
threatened, arising out of or as a result of (a) the use
of the Company Marks by Snap in accordance with this
Agreement; (b) any content provided by the Company to Snap
for display on the Snap Site; (c) the operation of the
Company Sites; or (e) the offer or sale of any Products by
the Company or through the Company Sites.
13.3 Indemnification Procedures. If any party entitled to
indemnification under this Section (an "Indemnified
Party") makes an indemnification request to the other, the
Indemnified Party shall permit the other party (the
"Indemnifying Party") to control the defense, disposition
or settlement of the matter at its own expense; provided
that the Indemnifying Party shall not, without the consent
of the Indemnified Party enter into any settlement or
agree to any disposition that imposes an obligation on the
Indemnified Party that is not wholly discharged or
dischargeable by the Indemnifying Party, or imposes any
conditions or obligations on the Indemnified Party other
than the payment of monies that are readily measurable for
purposes of determining the monetary indemnification or
reimbursement obligations of Indemnifying Party. The
Indemnified Party shall notify Indemnifying Party promptly
of any claim for which Indemnifying Party is responsible
and shall cooperate with Indemnifying Party in every
commercially reasonable way to facilitate defense of any
such claim; provided that the Indemnified Party's failure
to notify Indemnifying Party shall not diminish
Indemnifying Party's obligations under this Section except
to the extent that Indemnifying Party is materially
prejudiced as a result of such failure. An Indemnified
Party shall at all times have the option to participate in
any matter or litigation through counsel of its own
selection and at its own expense.
14. Miscellaneous.
14.1 Women's Channel. If, during the Tenn, Snap creates a
Women's Channel or a Women's resource center, Snap will
negotiate in good faith with the Company, for at least 15
days before negotiating with any third party, concerning
the terms on which the Company could provide content or
receive branding within such channel or resource center.
Should Snap and the Company agree on such terms then, as
part of that agreement, (i) content provided by Women.com,
Home Arts and Oxygen
11
<PAGE>
will not constitute, in the aggregate, more than 40% of
the total content provided within the Women's Channel or
Women's resource center, as the case may be; (ii) content
provided by Women.com, Home Arts and Oxygen will not
constitute individually more than 25% of the total content
in the Women's Channel or Women's resource center, and
(iii) promotions for Women.com, Home Arts and Oxygen will
not constitute, in the aggregate, more than 50% of the
total number of Promotions displayed within the Women's
Channel or Women's resource center, provided that each
company's promotions may not constitute more than 25% of
the total Promotions displayed within the Women's Channel
or Women's resource center; and (iv) the Company shall at
all times during the term of the agreement be the
preferred provider of content and promotions throughout
such Women's Channel.
14.2 LIMITATION OF DAMAGES. NEITHER PARTY WILL BE LIABLE FOR
ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES
ARISING OUT OF OR RELATED TO THIS AGREEMENT, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING
NEGLIGENCE), AND EVEN IF SUCH PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. FURTHER, EXCEPT FOR ANY
CLAIM FOR INDEMNIFICATION ARISING UNDER SECTION 13 ABOVE,
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR DAMAGES IN
EXCESS OF THE TOTAL PAYMENTS REQUIRED TO BE MADE UNDER
THIS AGREEMENT.
14.3 Assignment. Snap may not assign this Agreement, except (a)
in connection with the transfer of substantially all of
the business operations of Snap (whether by asset sale,
stock sale, merger or otherwise); (b) to an affiliate of
Snap; or (c) with the written permission of the Company,
which will not be unreasonably withheld. The Company may
not assign this Agreement, except with the written
permission of Snap, which will not be unreasonably
withheld or delayed.
14.4 Relationship of Parties. This Agreement will not be
construed to create a joint venture, partnership or the
relationship of principal and agent between the parties
hereto, nor to impose upon either party any obligations
for any losses, debts or other obligations incurred by the
other party except as expressly set forth herein.
14.5 Entire Agreement. This Agreement constitutes and contains
the entire agreement between the parties with respect to
the subject matter hereof and supersedes any prior oral or
written agreements. This Agreement may not be amended
except in writing signed by both parties. Each party
acknowledges and agrees that the other has not made any
representations, warranties or agreements of any kind,
except as expressly set forth herein.
14.6 Audit Rights. Each party will have the right to engage an
independent third party to audit the books and records of
the other party relevant to the quantification of the
Promotions, not more than once per year during the term of
this Agreement, and upon not less than thirty (15) days
written notice and during normal business hours, and the
other party will provide reasonable cooperation in
connection with any such audit. The party requesting the
audit will pay all expenses of the auditor
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<PAGE>
unless the audit reveals an underpayment by the other
party of more than 5%, in which case the other party will
reimburse all reasonable expenses of the auditor.
14.7 Applicable Law. This Agreement will be construed in
accordance with and governed by the laws of the State of
California, without regard to principles of conflicts of
law.
14.8 Confidentiality. In connection with the activities
contemplated by this Agreement, each party may have access
to confidential or proprietary technical or business
information of the other party, including without
limitation (a) proposals, ideas or research related to
possible new products or services; (b) financial
information; and (c) the material terms of the
relationship between the parties (collectively,
"Confidential Information"). Each party will take
reasonable precautions to protect the confidentiality of
the other party's Confidential Information, which
precautions will be at least equivalent to those taken by
such party to protect its own Confidential Information.
Except as required by law or as necessary to perform under
this Agreement, neither party will knowingly disclose the
Confidential Information of the other party or use such
Confidential Information for the benefit of any third
party. Each party's obligations in this Section with
respect to any portion of the other party's Confidential
Information shall terminate when the party seeking to
avoid its obligation under this Section can document that:
(i) it was in the public domain at or subsequent to the
time it was communicated to the receiving party
("Recipient") by the disclosing party (`Discloser")
through no fault of Recipient; (ii) it was rightfully in
Recipient's possession free of any obligation of
confidence at or subsequent to the time it was
communicated to Recipient by Discloser; (iii) it was
developed by employees or agents of Recipient
independently of and without reference to any information
communicated to Recipient by Discloser; (iv) it was
communicated by the Discloser to an unaffiliated third
party free of any obligation or confidence; or (v) the
communication was in response to a valid order by a court
or other governmental body, was otherwise required by law
or was necessary to establish the rights of either party
under this Agreement.
14.9 Press Release. Each party may issue a press release
concerning the business relationship contemplated in this
Agreement, provided that the other party has had a
reasonable opportunity to review and comment on its press
release, and agreed on the content of the release either
verbally or in writing. In addition, each party will
provide an appropriate quote from one of its senior
executive officers for use in the other party's release.
14.10 Illustrations. All Illustrations attached to the Exhibits
are for illustrative purposes only and shall not be deemed
to bind, obligate or restrict either party from making
reasonable changes in such party's discretion.
14.11 Attorney Fees. In any action or suit to enforce any right
or remedy under this Agreement or to interpret any
provision of this Agreement, the prevailing party shall be
entitled to recover its costs, including reasonable
attorneys' fees.
13
<PAGE>
14.12 Dispute Resolution. In the event that any dispute arises
hereunder, the parties agree that prior to commencing
litigation, arbitration, or any other legal proceeding,
each party shall send an officer of such party to
negotiate a resolution of the dispute in good faith at a
time and place as may be mutually agreed. Each officer
shall have the power to bind its respective party in all
material respects related to the dispute.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date first written above.
SNAP, LLC iVILLAGE, INC.
By: /s/ Edmund Sanctis By: /s/ Steve Elkes
--------------------------- ------------------------------
Name: Edmund Sanctis Name: Steve Elkes
--------------------------- ------------------------------
Title: C.O.O. Title: V.P. Business Affairs
--------------------------- ------------------------------
15
<PAGE>
Exhibit A
Keywords
babies
baby
baby products
baby store
babyname
babynames
birth
breast feeding
car seat
exercise
expecting
fitness
health
healthcare
healthy
maternity
menopause
mother
name
names
osteoporosis
parenting
parents
pregnant
pregnancy
pregnant
prevention
stroller
16
<PAGE>
Exhibit B
Snap Editorial Guidelines for Partner Content
(as of September 1998)
Editorial Suggestions
- ---------------------
Provide content that is inherently informative or useful in itself, rather
than strictly a promotion for content on your site. Feel free to include as
many links to your site as you want, but they should be related to the
content you are providing. An exception would be your logo link, which
should link to your site's main home page.
Editorial Requirements
- ----------------------
All content or other materials provided to Snap must adhere to Snap's
editorial guidelines. These guidelines include, without limitation, a
prohibition on direct links from the applicable site to pornographic or
illegal material, and a prohibition on the advertising of firearms or
pornographic products or services from within Snap. Snap prohibits any
obscene, indecent, or profane language. Snap requires that all content
should be factually correct.
Links in your content must only point to the site from which the content was
harvested. Links must take the user directly to the content which they
describe. For example, links must not lead users through advertisements on
the way to the content. No interstitial advertisements. No pop-up
advertisements.
Content must be relevant to the Topic. It must also be relevant to the point
and time. This does not mean that content must be updated at a particular
rate. However, whatever content is live at any given time must be completely
relevant. The content must include your brand, either as text or a graphic.
A logo graphic should contain the brand name and the ALT text for the
graphic must give the brand name.
The content linked to from your page must be free to Snap users, and initial
registration or subscription must not be required. However, you are free to
use content pages on your own site (not hosted by Snap) to up sell
subscription or registration-required content. (example: "For more
headlines, click here to subscribe.")
Advertisements within your content are not allowed. Your information must be
content, not an advertisement for your site or brand or any other
site/brand.
General Notes & Standards
- -------------------------
Snap is willing to discuss modifications to the policies stated in these
documents; however, all exceptions must be approved by the Snap Executive
Producer. Snap may change these Content Page specifications and requirements
at any time, with reasonable notice given to the Provider.
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<PAGE>
12/19/97 iVillage
ONLINE SERVICES AGREEMENT
This ONLINE SERVICES AGREEMENT, is made as of December 19, 1997, (the
"Effective Date"), with a launch date of February 1, 1998, or another date as
mutually agreed upon in good faith by the parties ("Launch Date") by and
between iVillage, Inc., a Delaware corporation having its principal offices at
170 Fifth Avenue, New York, New York 10010 ("iVillage"), and CHARLES SCHWAB &
CO., INC., a California corporation having its principal offices at 101
Montgomery Street, San Francisco, California 94104 ("Schwab").
WHEREAS, iVillage owns and operates a Web site on the Internet under
the name "Armchair Millionaire" or as such other name as iVillage may determine
(uniform resource locator http://www.armchairmillionaire.com) (the "Armchair
Site"), which is a financial community directed to the long-term investor, or
those seeking basic information on investing, and which is comprised of a
variety of areas dedicated to providing investment-related information.
WHEREAS, Schwab is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and desires to promote
its securities brokerage business by having certain promotions,
advertisements, and hyperlinks placed on the Armchair Site, and by sponsoring
the Brokerage and Mutual Fund areas on the Armchair Site during the term of
the Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and premises hereinafter provided, iVillage and Schwab agree as
follows:
1. Publication of Promotions and Advertisements and Establishment of
Sponsored Areas and Hyperlinks.
(a) During the term of the Agreement, Schwab shall be the exclusive
sponsor of the Brokerage and Mutual Fund areas on the Armchair Site
("Sponsorship Activities"). The Sponsorship Activities are more fully
described in Paragraphs l(a) and l(b) of Exhibit A to this Agreement.
(b) iVillage will publish promotions and advertisements detailed in
Exhibit A and establish one or more hyperlinks (the "Schwab Hyperlinks")
described in Exhibit A, pointing to Schwab's Web site or pages thereon
described on Exhibit A ("Schwab Site") where Schwab offers various products
and services relating to its securities brokerage and financial services
business.
(c) Subject to Section 3, iVillage may also disseminate or post on
any of its Web sites or otherwise, promotional, sales, marketing, advertising,
or other material or information (including, but not limited to, news
releases, press releases, advertising
1
<PAGE>
scripts, direct mail and E-mail correspondence, and display and online
advertising) referring to Schwab, its affiliates, or their respective products
or services (collectively, "Informational Material"). Informational Material
does not include editorial content prepared by, or at the direction of,
iVillage.
(d) iVillage will publish the Schwab Content described in Exhibit A
within the Armchair Site as mutually agreed upon in good faith by the
parties.
(e) Other than by engaging in the activities described in Sections 1
(a) and (b) above, iVillage and its employees will not (1) describe the Schwab
Services, excluding editorial content prepared by, or at the direction of,
iVillage (other than disseminating or posting Informational Material approved
in each case by Schwab pursuant to Section 3 below); (2) recommend or endorse
specific securities (other than by disseminating publications or information
prepared by third parties that are responsible for such content); or, directly
or indirectly, recommend or endorse specific broker-dealers (including, but
not limited, to ranking or rating brokerage companies or providing hyperlinks
to brokerage or mutual fund companies (excluding permitted advertisements),
unless approved by in advance by Schwab).
(f) iVillage and its employees will not become involved in the
financial services offered by Schwab, including (A) opening, maintaining,
administering, or closing customer brokerage accounts with Schwab; (B)
soliciting, processing, or facilitating securities transactions relating to
customer brokerage accounts with Schwab; (C) extending credit to any customer
for the purpose of purchasing securities through, or carrying securities
with, Schwab; (D) answering customer inquiries or engaging in negotiations
involving brokerage accounts or securities transactions; (E) accepting
customer securities orders, selecting among broker-dealers or routing orders
to markets for execution; (F) handling funds or securities of Schwab
customers, or effecting clearance or settlement of customer securities
trades; or (G) resolving or attempting to resolve any problems,
discrepancies, or disputes involving Schwab customer accounts or related
transactions.
2. Trademarks.
(a) iVillage grants Schwab a revocable, royalty-free,
non-transferable, non-exclusive right to display the trade or service name and
mark "iVillage or Armchair Millionaire" and related logos (collectively, the
"iVillage Marks") solely for the purposes of identifying and promoting iVillage
Web sites through which certain Schwab services may be made available;
provided, however, that (1) Schwab will not modify the iVillage Marks or use
them for any purpose other than as set forth above; (2) Schwab will not engage
in any action that adversely affects the good name, good will, image or
reputation of iVillage or its Web sites or associated with the iVillage Marks;
(3) Schwab will at all times use the appropriate trade or service mark notice
((TM), (SM) or (R), whichever is applicable) or such other notice as iVillage
may from time to time specify on any item or material bearing the iVillage
Marks; and (4) iVillage will have the right to review and
2
<PAGE>
approve in advance all materials to be disseminated electronically or
otherwise by Schwab, referring to iVillage, its affiliates, or their
respective products or services or containing the iVillage Marks, which
approval may be withheld by iVillage in its reasonable business discretion.
Except as otherwise provided by this Agreement, Schwab makes no representation
or warranty as to the extent or degree, if any, to which it will market,
advertise or promote the availability of certain of its services through
iVillage's Web sites.
(b) Notwithstanding the foregoing, iVillage does not have the right
to review and approve Schwab marketing materials or message content other than
the use of the iVillage Marks within such materials or messages.
(c) Schwab grants iVillage a revocable, royalty-free,
non-transferable, non-exclusive right to display the trade or service names and
marks "Schwab" and "Charles Schwab & Co., Inc." and related logos
(collectively, the "Schwab Marks") solely for the purposes of creating and
maintaining the Sponsorship Activities, the Schwab Hyperlinks and for
identifying and promoting those Schwab Services that may be made available
through iVillage Web sites; provided, however, that (1) iVillage will not
modify the Schwab Marks or use them for any purpose other than as set forth
above; (2) iVillage will not engage in any action that adversely affects the
good name, good will, image or reputation of Schwab or associated with the
Schwab Marks; (3) iVillage will at all times use the appropriate trade or
service mark notice ((TM), (SM) or (R), whichever is applicable) or such other
notice as Schwab may from time to time specify on any item or material bearing
the Schwab Marks; and (4) Schwab will have the right to review and approve in
advance all materials to be disseminated electronically or otherwise by
iVillage, referring to Schwab, its affiliates, or their respective products or
services or containing the Schwab Marks, which approval may be withheld by
Schwab in its reasonable business discretion. Any approval given by Schwab under
this Section 2(b) does not constitute an approval for purposes of Section 3
below.
(d) Notwithstanding the foregoing, Schwab does not have the right to
review and approve iVillage marketing materials or message content other than
the use of the Schwab Marks within such materials or messages.
3. Schwab Approval of Informational Material. iVillage acknowledges
that, as a registered broker-dealer and member of various securities
self-regulatory organizations, Schwab is subject to extensive regulation in
connection with its communications with the public. Accordingly, iVillage agrees
that, in addition to rights to approval in Sections 2(b) and 8 hereof, Schwab
will have the right to review and approve in advance, all Informational
Material. Without limiting the generality of the foregoing, this right includes
the right to review and mutually agree upon (a) any change in the placement of
Schwab's name or the Schwab Hyperlinks, (b) any Schwab sponsored content, and
(c) the placement of Schwab's name on any iVillage Web site screens or pages.
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4. Representations and Warranties. Schwab and iVillage each represent and
warrant with respect to itself as follows: (a) such party is duly organized,
validly existing, and in good standing under the laws of the state in which it
is incorporated, and has the power and authority to carry on its business as
now being conducted; (b) this Agreement has been duly executed and delivered
on behalf of such party and is a legal, valid, and binding obligation of such
party enforceable against it in accordance with the terms of this Agreement,
except (1) as the same may be limited by bankruptcy, insolvency,
reorganization, or other laws or equitable principles relating to or affecting
the enforcement of creditors' rights, and (2) that the availability of
equitable remedies including specific performance is subject to general
equitable principles applied at the discretion of a court; and (c) such party
owns full right, title and interest in or otherwise has the right to grant to
the other party the rights granted in Section 2 above, and the trade or
service names and marks subject to such grant do not, to such party's
knowledge, infringe any rights of a third party. iVillage represents, warrants
and agrees that (a) the content in the Armchair Site is and will remain lawful
and non defamatory and does and will not infringe any intellectual property or
personal right held by any person; and (b) the products and services offered
by iVillage to users are offered, sold or otherwise provided in compliance
with applicable laws in all material respects, (c) that its' entering into
this Agreement does not violate an agreement with or require the approval of
any third party. Schwab represents, warrants and agrees that (a) the content
it provides for posting in the Armchair Site is and will remain lawful and non
defamatory and does and will not infringe any intellectual property or
personal right held by any person; and (b) the products and services offered
by Schwab to users are offered, sold or otherwise provided in compliance with
applicable laws in all material respects.
5. Compensation. Subject to the terms and conditions of this Agreement,
Schwab will pay iVillage the following compensation, in equal bi-annual
installments, during the term of this Agreement:
(a) During the first year following the Launch Date [*], which is
comprised of a [*] set-up fee and a [*] sponsorship fee the first bi-annual
installment to be due and payable upon execution of this Agreement, and [*] of
which is nonrefundable under Sections 5(d) and (e) below;
(b) During the second year following the Launch Date, [*], which is
comprised of a [*] exclusivity fee, which is due and payable on the first
anniversary of the Launch Date, and a [*] sponsorship fee, [*] of which is
nonrefundable under Sections 5(d) and (e) below;
(c) During the third year following the Launch Date, [*], which is
comprised of a [*]
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[*] Confidential treatment requested.
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exclusivity fee, which is due and payable on the second anniversary of the
Launch Date, and a [*] sponsorship fee, [*] of which is nonrefundable under
Sections 5(d) and (e) below;
(d) If Schwab's Performance Objectives, as defined in Exhibit A, are
not met during the first or second year following the Launch Date, and Schwab
does not terminate the Agreement, Schwab will be entitled to a fee reduction
in the next year of the Agreement as set forth in Exhibit A.
(e) If Schwab's Performance Objectives are not met during either
the first or second year following the Launch Date and Schwab
terminates the Agreement, or if Schwab's Performance Objectives
are not met during the third year following the Launch Date and
the Agreement expires, iVillage shall pay to Schwab a cash
amount equal to the dollar amount of the fee reduction that
Schwab would have received in the next year if Schwab did not
terminate the Agreement or the Agreement did not expire. For a
payment that is owed at the end of the first or second year,
such cash payment shall be calculated on the ninetieth (90th)
day following the effective date of termination ("Calculation
Date") and shall be reduced by any additional Performance
Objectives that are achieved between the date that Schwab gives
notice of termination and the Calculation Date. For a cash
payment that is owed at the end of the third year of the
Agreement, such cash payment shall be calculated on the one
hundred and eightieth (180th) day following the expiration of
the Agreement ("third-year Calculation Date") and shall be
reduced by any additional Performance Objectives that are
achieved up until that date.
(f) Schwab and iVillage will discuss in good faith opportunities for
Schwab to benefit from [*] of gross advertising revenue collected in areas
containing content co-developed by the parties.
6. Term of Apreement; Termination.
(a) This Agreement will be effective beginning on the date hereof and
will expire on the three-year anniversary of the Effective Date of this
Agreement unless terminated sooner pursuant to this Section 6.
(B) Schwab may terminate the agreement, upon thirty (30) days notice
to iVillage, six months after the Launch Date if Schwab's Performance
Objectives for that time period are not met.
(c) Without cause and without breach or penalty, Schwab may terminate
the Agreement by giving notice to iVillage at least ninety (90) days prior to
each one-year
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[*] Confidential treatment requested.
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anniversary of the Effective Date of the Agreement. In addition, Schwab may
terminate the Agreement based upon not meeting its Performance Objectives in
the immediately preceding year, by giving notice to iVillage at least sixty
(60) days prior to each one-year anniversary of the Launch Date. If Schwab
terminates based upon not meeting its Performance Objectives, iVillage shall
provide cash compensation, to Schwab, if any, as indicated in Section 5(e) of
this Agreement.
(d) Notwithstanding any other provision of this Agreement to the
contrary, (1) either party will have the right to terminate this Agreement if
the other party breaches any representation, warranty, covenant or obligation
in this Agreement and fails to cure such breach within thirty (30) days after
written notice thereof from the non-breaching party; and (2) either party may
terminate this Agreement immediately, on written notice to the other party, if
(a) such other party becomes subject to a statutory disqualification under
applicable provisions of the Exchange Act or becomes subject to any proceeding
that might result in it being so disqualified; (b) such other party or any of
its affiliates registers as or acquires a broker-dealer; or (c) such other
party (i) applies for or consents to the appointment of, or the taking of
possession of its property by, a receiver, custodian, trustee or liquidator;
(ii) admits in writing its inability to pay its debts as they become due;
(iii) makes a general assignment for the benefit of creditors; (iv) is
adjudicated as bankrupt or insolvent; (v) files a voluntary petition in
bankruptcy or a petition or answer seeking reorganization, an arrangement with
creditors or to take advantage of any insolvency law or an answer admitting
the material allegations of a petition filed against it in any bankruptcy,
reorganization, arrangement or insolvency proceeding; or (vi) initiates an
action of dissolution or liquidation.
7. Indemnification.
(a) iVillage (referred to in this Section 7(a) as the "indemnifying
party") agrees to indemnify, hold harmless, reimburse and defend Schwab, and
Schwab's directors and officers (referred to in this Section 7(a) as the
"indemnified party"), from and against any claim, suit, action, or other
proceeding brought against the indemnified party arising out of or in
connection with (i) the indemnifying party's breach of any representation,
warranty, covenant or obligation in this Agreement; (ii) any grossly negligent
or wrongful act or omission of the indemnifying party with respect to the
subject matter of this Agreement; or (iii) a claim that any material, product,
information or data or service produced, distributed, offered or provided by
the indemnifying party (including, without limitation, any material presented
on any site on the Internet, produced, maintained or published by the
indemnifying party, but excluding hyperlinks to sites on the Internet
produced, maintained or published by a third party) infringes in any manner,
any copyright, patent, trademark, trade secret or any intellectual property
right of any third party. The indemnifying party will pay any and all costs,
damages, and expenses, including, but not limited to, reasonable attorneys'
fees and costs awarded against or otherwise incurred by the indemnified party
in connection with or arising from any such claim, suit, action or other
proceeding;
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(b) Schwab (referred to in this Section 7(b) as the "indemnifying
party") agrees to indemnify, hold harmless, reimburse and defend iVillage it
officers and directors (referred to in this Section 7(b) as the "indemnified
party"), from and against any claim, suit, action, or other proceeding brought
against the indemnified party arising out of or in connection with (i) the
indemnifying party's breach of any representation, warranty, covenant or
obligation in this Agreement; or (ii) a claim that any content, material,
product, information or data provided by the indemnifying party that is posted
on the Armchair Site (including any material presented on any site on the
Internet, produced, maintained or published by the indemnifying party, but
excluding hyperlinks to sites on the Internet produced, maintained or
published by a third party) infringes in any manner, any copyright, patent,
trademark, trade secret or any intellectual property right of any third party.
The indemnifying party will pay any and all costs, damages, and expenses,
including, but not limited to, reasonable attorneys' fees and costs awarded
against or otherwise incurred by the indemnified party in connection with or
arising from any such claim, suit, action or other proceeding;
(c) Whenever any claim for indemnification arises under this Section
7, the indemnified party will promptly notify indemnifying party of the
claim and, when known, the facts constituting the basis for such claim and the
amount or an estimate of the amount of the liability arising therefrom. At its
option, the indemnified party may defend itself against any claim brought
against it that is subject to indemnification under this Section 7, in which
case indemnifying party will pay all reasonable attorneys' fees and costs thus
far incurred but will no longer be obligated to defend the indemnified party
against such claim (but will still be obligated to indemnify, hold harmless,
and reimburse the indemnified party with respect to such claim as provided in
Paragraph (a) and (b) above). The indemnifying party will not be obligated to
indemnify the indemnified party with respect to any claim settled or
compromised by the indemnified party and with respect to which the indemnified
party has exercised the foregoing option to defend itself unless the
indemnifying party has consented to the settlement or compromise of such claim
in writing, which consent will not be unreasonably withheld or delayed. In
each case in which the indemnified party does not exercise the foregoing
option, the indemnified party may require the indemnifying party to defend the
former against the claim(s) and to bear all costs and fees incurred in doing
so. In such event, the indemnified party may participate in defense of the
claim(s) by retaining its own counsel, whose fees and costs it then will pay,
and whether or not the indemnified party elects to participate in the defense,
the indemnifying party may not settle or compromise such claim(s) in a manner
which adversely affects the indemnified party without the latter's written
consent beforehand, which consent will not be unreasonably withheld or
delayed.
8. Non-Solicitation of Schwab Customers; Confidentialily and Publicity.
(a) iVillage will not (1) target or solicit individual, identifiable
customers of Schwab or any group of such customers by direct mail, fax,
E-mail, online advertising, cookie or identification-based automatic routing
to non-Schwab Web sites, or by similar means on behalf of any person or entity
that may reasonably be deemed to be engaged in
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providing securities brokerage or financial information or services in
competition with Schwab (a "Schwab Competitor"); (2) sell, license, disclose,
distribute or transfer to any third party a list consisting of individuals
known to iVillage to be Schwab customers, or any aggregate financial or
demographic information about individuals known to iVillage to be Schwab
customers, that identifies the individuals as customers of Schwab, whether
expressly or by direct implication. Schwab acknowledges and agrees that
iVillage may solicit and advertise to visitors to its Web sites so long as
iVillage does not solicit or advertise to visitors selected based in whole or
in part on such visitors being customers of Schwab on behalf of any Schwab
Competitor.
(b) Neither party (as such, the "Receiving Party") shall disclose to
any third party (other than its accountants, attorneys or other agents who
have a need to know such information), or use other than as specified in this
Agreement, any confidential information disclosed by the other party (as such,
the "Disclosing Party"), including but not limited to any information relating
to the Disclosing Party's customers (including their identities or any
aggregate financial, demographic or other information about them).
(c) Neither party will, without the prior written consent of the
other party, (1) disclose to any third party (other than such party's
accountants, attorneys, or other agents who have a need to know such
information) the terms and conditions of this Agreement; or (2) make any
public announcement regarding the existence of this Agreement.
(d) The parties agree that a breach of this Section 8 would
cause irreparable injury not compensable solely in money damages.
9. Limitations on Liability. The liability of either party for damages or
alleged damages hereunder, whether in contract, tort or any other legal theory
is limited to, and will not exceed the amounts to be paid by Schwab to
iVillage hereunder; provided, however, that these limitations of liability
will not apply to claims related to either party's indemnity obligations under
Section 7 or for breaches or alleged breaches of Section 8 of this Agreement.
10. Service and Support. iVillage will regularly monitor and take
reasonable steps to maintain the operation and performance of the Armchair Site.
iVillage will use its reasonable efforts to support increasing numbers of users
on the Armchair Site including operating sufficient numbers of servers for
reasonably anticipated levels of user traffic. iVillage will make contact
persons directly available to Schwab for technical inquiries via E-mail or
telephone. In addition:
a) iVillage will make contact persons directly available to Schwab
for technical inquiries via phone and/or email, as noted in the Customer
Service Exhibit B, which is attached hereto;
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b) Any customer inquiries involving brokerage accounts or securities
transactions will not be transferred or forwarded from iVillage directly to
Schwab. iVillage will refer the customer to contact Schwab;
c) For customer email messages, iVillage shall reply to the customer
email within 24 hours, instructing the customer to send an email to Schwab or
telephone Schwab as noted in the Customer Service Exhibit;
d) For customer telephone calls, iVillage shall refer the customer to
telephone Schwab at the phone numbers noted in the Customer Service Exhibit;
e) Schwab will make contact persons directly available to iVillage for
customer support inquiries via phone, as noted in the Customer Service
Exhibit. iVillage shall not transfer any customers to Schwab on this telephone
number; it is solely for iVillage staff support;
f) Customer Service hours of operation will be as indicated in the
Customer Service Exhibit;
g) Upon request, iVillage shall make available to Schwab Training,
Training Documentation, or Technical Documentation such as Error Messages, for
Customer Support; and
h) iVillage shall provide reasonable advance notice to Schwab of any
browser compatibility changes.
11. Miscellaneous.
(a) This Agreement will be governed by and construed in accordance
with the substantive laws of the United States and the internal laws of State
of California. The headings of the sections are for convenience of reference
only and will not affect the meaning or operation of this Agreement. The terms
and conditions of this Agreement are subject to all applicable laws and
regulations which are currently in effect or which may become effective during
the term of this Agreement. If any provision of this Agreement is considered
void, voidable, illegal, or invalid for any reason, such provision will be of
no force and effect only to the extent that it is so declared void, voidable,
illegal, or invalid. All of the provisions of this Agreement not specifically
found to be so deficient will remain in full force and effect. The parties
hereto, their successors and permitted assigns consent to the jurisdiction of
the courts of the State of California in respect to any legal proceeding that
may result from a dispute as to the interpretation or breach of this
Agreement. Schwab and iVillage are each independent contractors, and this
Agreement will not be construed as creating a joint venture, partnership,
franchise, employment or agency relationship between iVillage and Schwab. Each
party acknowledges that the arrangements contemplated in this Agreement are
non-exclusive, except with respect to the subject matter of this Agreement,
and that each party may enter into arrangements
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<PAGE>
with third parties that are similar or identical to those contemplated in this
Agreement that are not in direct conflict this Agreement.
(b) The provisions of Sections 1(f), 3, 4, 7, 8 and 11 of this
Agreement will survive the termination or expiration of this Agreement.
(c) This Agreement (together with exhibits) constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes and replaces all prior or contemporaneous understandings,
negotiations, or agreements, written or oral, regarding such subject matter.
Any amendment or other modification of this Agreement will be effective only
if in writing and signed by both parties. No term or provision of this
Agreement may be waived except by a written instrument duly executed by the
party against whom such or waiver is sought to be enforced. This Agreement may
not be assigned by either party, without the other party's prior written
consent (which will not be unreasonably withheld). Any purported assignment in
violation of this Section will be void. This Agreement will bind and inure to
the benefit of the parties and their respective successors or permitted
assigns.
(d) All notices, requests, demands and other communications under
this Agreement will be in writing and will be deemed to have been duly
delivered if delivered by hand or sent by prepaid registered or certified mail
or by telecopy or electronic mail (confirmed by concurrent written notice sent
by first class U.S. mail) addressed as follows (or to such other address as
may be designated by a party, in writing, pursuant hereto):
If to Schwab: If to iVillage:
Charles Schwab & Co., Inc. iVillage, Inc.
101 Montgomery Street 170 Fifth Avenue
San Francisco, California 94104 New York, New York 10010
Fax (415) 636-0089 Fax (212) 604-1933
Attention: Pamela Saunders Attention: Robert Levitan
with a copy to: with a copy to:
Enterprise Counsel - Electronic Brokerage Vice President Finance/Operations
Attention: Colleen McCall Attention: Steve Elkes
(e) This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
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iVILLAGE, Inc. CHARLES SCHWAB & CO., Inc.
By: /s/ Steve Elkes By: /s/ Pamela Saunders
--------------- --------------------
Its: Its: Vice President
--------------- --------------------
Electronic Brokerage
Date: Date: 12/19/97
--------------- --------------------
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EXHIBIT A
Sponsorship Activities, Promotions, Advertisements and Hyperlinks
1. Sponsorship Activities
(a) iVillage grants Schwab exclusive sponsorship of the Brokerage center and
the Mutual Fund center on the Armchair Site (the "Sponsorship Areas").
This exclusive sponsorship grants Schwab exclusive advertising for
brokerage services for the term of this Agreement and exclusive mutual
fund advertising in the first year of this Agreement. Other mutual fund
advertising will be permitted in year two and three but will be limited
to mutual fund families that participate in the Schwab Mutual Fund
OneSource offering, and other mutual fund families as mutually agreed
upon in good faith by the parties.
(b) During the term of the exclusive sponsorship, iVillage will not post
hyperlinks on the Armchair Site to other brokerage or mutual fund
companies (excluding permitted advertising) nor will it post content that
contains a rating or ranking of brokerage companies. The exclusive
sponsorship also prohibits iVillage from building any co-developed content
with, or content links to brokerage and mutual fund competitors or
competitor-branded Web sites from the Armchair Site, except as mutually
agreed upon in good faith by the parties.
(c) iVillage will provide Schwab with a prominent presence on the Armchair
Site home page in addition to providing Schwab presence in banner
advertisements and content pages.
(d) In sponsored or co-developed content, iVillage will use its best efforts
to portray Schwab as a provider of unbiased investment information
through third-party resources and/or academic investment research data
developed by Schwab. iVillage will also post information on the Armchair
Site and other iVillage Web sites about Schwab's investor education
events, such as Schwab in-branch seminars.
(e) Throughout the term of this Agreement, use its best efforts iVillage will
provide survey research results and data on user online investing
behavior and preferences and user feedback on Schwab through community
user interaction on an aggregate and/or anonymous basis.
(f) iVillage will provide ongoing consultation to Schwab throughout the term
of the Agreement on effective community building tools and activities.
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2. Content Links
At Schwab's request, iVillage will provide links from the Sponsorship Areas to
content on Schwab's Web site. The links will be accessed through Armchair Site
pages listing services available at Schwab's Web site including brief
descriptions of those services. Links discussed for the launch of the Schwab
sponsorship include, but are not limited to, the Retirement Planner, the
College Planner, the Guide to Understanding Market Cycles, Asset Allocation
Strategies and selected mutual fund content on Mutual Fund OneSource Online
including a SchwabFunds content link. Other content links from the Sponsorship
Areas mutually agreed upon by both parties may be developed throughout the
term of the Agreement.
3. Content Development, Sharing and Review
(a) iVillage and Schwab agree to jointly develop new content to reside on the
Sponsorship Areas. iVillage will assume web development responsibility for any
newly created content as summarized below. Other content mutually agreed upon
by both parties may be developed by iVillage throughout the term of this
Agreement in the Sponsorship Areas. Content jointly developed by Schwab and
iVillage may also be made available at Schwab's Web site at Schwab's
discretion.
(i) Ask the Experts Content. Schwab will provide content to
iVillage in the form of weekly answers to popular investing
questions submitted by iVillage users. Answers to these
questions will be provided by Financial Advisors selected by
Charles Schwab, Schwab's Investment Products and Research staff
and the SchwabFunds Portfolio Management group.
(ii) Advisor Source Content. At Schwab's request, iVillage will
include content on the Armchair Site describing Schwab's
Advisor Source offering along with a brief profile of the
financial advisors participating in the program. This content
area may link to Schwab for more information about this
program.
(iii) Schwab Branch Seminars. At Schwab's request, iVillage agrees
to develop and post content summarizing online investing
seminars available at Schwab branch offices and other Schwab
hosted educational events.
(iv) Schwab Investment Products and Research. At Schwab's request,
iVillage agrees to develop and post content on Schwab's mutual
fund analytical information produced by the Investment
Products and Research staff including the online posting of
their newsletter.
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(b) In addition to Schwab-branded and Schwab/iVillage co-branded content,
Schwab has the right, but not the obligation, to review and approve in
advance all content that is to be posted in the Brokerage or Mutual Fund
Centers that could reasonably be attributed to Schwab. iVillage will
deliver such content to Schwab at least two business date in advance of
its scheduled posting date. If Schwab does not provide comments within
two business days after iVillage has delivered it, iVillage may post the
content. After content is posted, Schwab has the right, but not the
obligation, to request iVillage to modify or remove such content if
Schwab believes that such content could reasonably be attributed to it.
(c) In addition, Schwab has the right, but not the obligation, to request
that any allegedly offending content posted on the Armchair Site, other
than messages from users appearing on message boards or in chat rooms and
banner advertisements, be removed.
(i) If iVillage refuses to remove the allegedly offending content
and Schwab reasonably believes that such content could cause
Schwab to be viewed as violating any law or regulation or if
Schwab reasonably believes that such content incorrectly
suggests an affiliation between, or a Schwab-endorsement of, any
third party or that party's products or services, then Schwab
may immediately terminate this Agreement without breach or
penalty;
(ii) If iVillage refuses to remove the allegedly offending content
and the content is not subject to Paragraph 3(c)(i) of this
Exhibit A, but Schwab believes such content is outside the
scope of iVillage's Mission Statement with respect to the
Armchair Site, then Schwab may terminate the Agreement without
breach or penalty by giving ninety (90) days notice to
iVillage.
4. Live Events on the Armchair Site
(a) Subject to iVillage's consent (which shall not be unreasonably withheld),
iVillage will permit Schwab to host and/or sponsor live investment forums on
the Armchair Site. For those investment forums specifically developed and
hosted by Schwab, Schwab owns the right of all forum registration information
including email addresses of users requesting future Schwab forum
information.
(b) Schwab and iVillage may also jointly develop web-based investing courses
at the Armchair Site. Any courses developed by Schwab will be specifically
Schwab branded and courses developed by iVillage will be branded according to
their preference.
(c) Any live events jointly developed by Schwab and iVillage may also be made
available at Schwab's Web site at Schwab's discretion.
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5. Armchair Content Sharing for Schwab's Web Site
Without additional cost to Schwab, the parties will mutually agree in good
faith on selected content areas within the Armchair Site that will be placed
on a custom site that Schwab may link to from its Web site at its discretion.
Advertising and branding on the custom site will be limited to Schwab except
that Armchair Millionaire branding as it exists on the Armchair Site will be
permitted.
6. Reporting Requirements
So that Schwab may monitor market performance and make program adjustments,
iVillage will provide to Schwab timely and accurate reports every thirty (30)
days as follows:
(a) Total number of page views on a Schwab sponsored area;
(b) Number of "hyperlink clickthroughs" on Schwab content;
(c) Number of clickthroughs to Schwab from a banner advertisement; and
(d) iVillage will use its best efforts to provide any user feedback on
Schwab obtained from the message boards and chat areas on the
Armchair Site.
So that iVillage may monitor new Schwab account openings, Schwab will provide
to iVillage timely and accurate reports every thirty (30) days of new account
openings related to the Armchair Site. If iVillage reasonably believes that
such reports may be inaccurate, Schwab will permit iVillage to audit such
reports.
7. Advertising Impressions and Marketing Campaigns
(a) iVillage guarantees Schwab a minimum of [*] impressions
during each year of this Agreement on the Armchair Site delivered in
the form of promotional banner advertisements. These banner
impressions may appear in the Armchair Site or other iVillage Sites
as mutually agreed upon in good faith by the parties.
(b) iVillage will include Schwab in its print marketing campaigns and
online marketing activities as mutually agreed upon in good faith by
the parties.
8. Performance Objectives
(a) During the term of the Agreement, the parties' expect Schwab to
obtain the following number of new accounts ("Account Goals") a
result of the activities contemplated hereunder on the Armchair
Site:
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(i) [*] new accounts in the first year following the Launch Date;
(ii) [*] additional new accounts in the second year following the
Launch Date;
(iii) [*] additional new accounts in the third year following the
Launch Date;
(iv) [*] new accounts in the first six months following the Launch Date.
(b) If Schwab's Account Goals are not met Schwab shall be entitled to a fee
reduction or cash payment as follows:
<TABLE>
<CAPTION>
Unmet Account Goals Percentage Year One Year Two Year Three
- ------------------------------ -------- -------- ----------
<S> <C> <C> <C>
[*] percent $[*] $[*] $[*]
[*] percent $[*] $[*] $[*]
[*] percent $[*] $[*] $[*]
[*] percent $[*] $[*] $[*]
[*] percent $[*] $[*] $[*]
[*] percent $[*] $[*] $[*]
[*] percent $[*] $[*] $[*]
[*] percent $[*] $[*] $[*]
[*] percent $[*] $[*] $[*]
[*] percent $[*] $[*] $[*]
</TABLE>
(c) If iVillage owes Schwab a fee reduction or cash payment pursuant to
Section 5(d) or (e) of the Agreement:
(i) in excess of [*] for the first year of this Agreement, such amount may
be reduced by a maximum credit of [*] if iVillage delivers at least
30 million banner advertising impressions in the year preceding the
first-year Calculation Date;
(ii) in excess of [*] for the second year of this Agreement, such amount
may be reduced by a maximum credit of [*] if iVillage delivers at
least 30 million banner advertising impressions in the year preceding
the second-year Calculation Date;
(iii) in excess of [*] for the third year of this Agreement, such amount may
be reduced by a maximum credit of [*] if iVillage delivers at least 30
million banner advertising impressions in the year preceding the
third-year Calculation Date.
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[*] Confidential treatment requested.
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(d) If iVillage fails to deliver [*] impressions in any year
and the fee reduction or cash refund it owes to Schwab exceeds
the amount stated in Paragraph 8(c) of this Exhibit A for that year,
then iVillage shall be entitled to a partial credit of any fee
reduction or cash payment due to Schwab for actual impressions
delivered based upon a [*] cost per thousand impressions. iVillage is
not entitled to any credit against any fee reduction or cash payment
owed to Schwab if it delivers less than 18 million impressions in the
year preceding the Calculation Date.
(e) Any fee reduction or cash payment owed to Schwab may be further
reduced by [*]%, if Schwab is unable to demonstrate to iVillage that it can
accurately track online account opening activity at its Web site resulting from
clickthroughs to Schwab's Web site from the Armchair Site.
8. Schwab Promotional Activities
During the term of the Agreement, Schwab will provide promotional support for
the Armchair Site through a variety of online and off-line marketing
activities, such as customer collateral, online banner and links from other
interactive mediums.
17
[*] Confidential treatment requested.
<PAGE>
Exhibit B
Customer Service Exhibit
(1) iVillage Service Support Escalation:
In the event that Schwab Customer Service needs to escalate a question or
issue to iVillage, iVillage shall provide a staffed phone number for use by
the Schwab Help Desk. The Help Desk shall use this number for such issues as
escalating customer reports of iVillage outages or other issues. iVillage
shall respond with available information, including the status of any
technical issues, so that the Help Desk can alert Schwab Customer Reps.
Phone number: (iVillage to fill in)
------------------------------------
Hours of Operation:
-------------------------------
Pager number:
------------------------------------
Hours On Call:
-----------------------------------
(2) Schwab Customer Phone Calls and Email:
If a customer calls or emails iVillage an inquiry that pertains to any Schwab
accounts or services, or if a user calls or emails iVillage with an inquiry
regarding investing or brokerage activities, iVillage will refer the customer
or user to contact Schwab directly. iVillage shall not reply to the inquiry on
Schwab's behalf refer any user to another securities brokerage firm or other
investment services provider.
o Email: iVillage shall send a reply to the customer email within 24 hours,
instructing the customer to contact Schwab directly, and will include
Schwab Contact Information as appropriate.
o Phone: iVillage shall instruct customers to contact Schwab directly via
the appropriate Schwab Contact Information.
Schwab Contact Information:
o By Telephone:
o General Inquiries: For additional information on Schwab's products
and services, or to sign up your Schwab account for web access
through Schwab's Web site at www.schwab.com, please call our 24 hour
Customer Service: 1-800-435-4000
o U.S. Technical Support: For assistance with Schwab's Web site
(www.schwab.com) or software, please call
1-800-334-4455
Hours of Operation:
Mon. - Fri. 6am - 7pm PST
Sat. - Sun. 8am - 4:30pm PST
18
<PAGE>
o e.Schwab: For more information on e.Schwab, please call
1-800-e.Schwab (1-800-367-4922)
Hours of Operation:
Mon. - Fri. 6am - 7pm PST
Sat. - Sun. 8am - 4:30pm PST
o For customers outside of the U.S.: For general inquiries and
technical support for customers outside of the U.S., please call
1-602-852-3500
Hours of Operation:
Mon. - Fri. 9am - 6pm, EST
o By email
o Schwab customers may email Schwab Customer Service by logging on
to the Customer Center on the Schwab Web site at www.schwab.com
Web site. To set up your Schwab Account for Web access, please
call the General Inquiries phone number above. Customer emails
will be responded to within approximately 24 hours.
(3) Schwab Service Support:
If iVillage Customer Service needs to contact Schwab for assistance with
Customer Service, the iVillage Customer Service Escalation Contact Person may
call the Schwab Customer Service Help desk at 1-888-362-7778. This contact is
for iVillage to Schwab Customer Service use only; no customers shall be given
the number or transferred to Schwab on this number.
Phone number: 1-888-362-7778
Hours of Operation: Mon. - Fri. 6am - 7pm PST
Sat. - Sun. 8am - 4:30 pm PST
(4) Hours of Operation:
Schwab Customer Service Hours of Operation are as noted in section (2) above.
iVillage Customer Service Hours of Operation shall be:
Phone Support (Customers):
--------------------------
Email support (Customers):
--------------------------
Email response time goal: (e.g. will reply to emails
--------------------------
within 24 hours of receipt).
19
<PAGE>
ADDENDUM
--------
THIS ADDENDUM to that certain Online Services Agreement (Agreement")
dated December 19, 1997, by and between iVillage, Inc. ("iVillage") and Charles
Schwab & Co., Inc. ("Schwab") is made as of June 29, 1998, and is incorporated
into and made a part of the Agreement.
WHEREAS, in Exhibit A, Section 4(a) of the Agreement the parties
contemplated that subject to iVillage's consent, Schwab may sponsor and/or host
live Investment Forums ("Investment Forums") on the Armchair Site;
WHEREAS, Schwab wishes to commence the Investment Forums and iVillage
has agreed to allow Schwab to hold the Investment Forums on the Armchair Site
during the term of the Agreement.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS WITH RESPECT TO THE
INVESTMENT FORUMS ON THE ARMCHAIR SITE:
1. At least once each month, or more frequently if the parties mutually
agree to do so, iVillage shall provide to Schwab, without additional
charge, an online auditorium on the Armchair Site that will enable
Schwab to hold the Investment Forums" - -, which are live, moderated,
interactive events organized and sponsored by Schwab (the "Investment
Forums"). The online auditorium will accommodate a commercially
reasonable number of unique, concurrent attendees, subject to server
capacity and technological capabilities. Schwab shall have sole
discretion in selecting all Forum topics, guests and moderators subject
to iVillage's reasonable approval. Schwab, or a moderator selected by
Schwab, shall be entitled to host the Investment Forums. Unless
approved in advance by Schwab, iVillage will not display any
advertising in the Schwab event auditoriums. Schwab may post
promotional dynamic messages relating to its services within the Schwab
event auditorium during the Investment Forums. At the end of each
Forum, iVillage will display messages encouraging attendees to visit
the Investor Center on the Armchair Site, the Schwab site or other
sites designated by Schwab As between Schwab and iVillage, Schwab shall
own all content related to the Investment Forums, including but not
limited to, copyright or other intellectual property rights of all
prepared text, questions, answers or transcripts of the Investment
Forums ("Schwab Forum Content"), except that iVillage may make use of
reasonable excerpts of the Schwab Forum Content subject to Schwab's
reasonable approval.
2. The online auditorium technology platform supplied by iVillage to
Schwab will provide Schwab and its host the opportunity to field and
screen questions of attendees and attendees an opportunity to interact
with the host of the Investment Forums. iVillage also agrees to furnish
to online users, through download capabilities or otherwise, all
software and technical support needed to enable users to attend such
Investment Forums. iVillage will include on each user's "entry page" to
each Forum a release and disclosure, the wording of which will be
mutually agreed upon in good faith by the parties.
3. iVillage expects, but is not obligated, to promote the Investment
Forums on various areas of the Armchair Site, including, but not
limited to, the Investor Center, and on
<PAGE>
other iVillage Web sites. All such promotions will mention that the
Investment Forums are part of a series sponsored by Schwab and will
direct users to a page that describes the upcoming event(s) and
encourages users to download the software needed to enable users to
attend such Investment Forums.
4. iVillage will post and archive each Forum transcript on the Armchair
Site within two (2) business days after the transcript is provided by
Schwab and allow visitors to the Site to view the transcripts. iVillage
will also post a topical index of all Investment Forums and allow
visitors to view archived transcripts from prior Investment Forums;
5. So that Schwab may monitor market performance and make program
adjustments, iVillage will provide to Schwab timely and accurate
reports as follows:
(a) Total number of non-unique attendees at each Forum within five
(5) business days following the Forum;
(b) Total number of page views of each Forum transcript posted
after a Forum, with a breakdown by Forum event transcript
viewed;
(c) Total number of Forum "entry page" views, from the Investor
Center and any other areas where the Forum "entry page" is
linked.
6. During the term of the Agreement, iVillage will not permit any other
party to hold Investment Forums or other events on the Armchair Site if
such party is reasonably deemed to offer securities brokerage,
investing or mutual fund services in competition with Schwab. Further,
iVillage will not permit Investment Forums or events by any party on
topics related to securities brokerage, investing or financial services
during any portion of the time that Schwab is holding such an event on
the Armchair Site.
7. The terms and conditions of the Agreement remain in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Addendum as of the
date first above written.
iVillage, Inc. Charles Schwab & Co., Inc.
By: /s/ Steve Elkes By: Illegible
------------------------- --------------------------------------------
Its: V.P. Finance Its: VP Electric Brokerage Business Development
------------------------- --------------------------------------------
Date: 6/30/98 Date: 6/29/98
------------------------- --------------------------------------------
<PAGE>
ADDENDUM NO. 2
--------------
THIS ADDENDUM to that certain Online Services Agreement ("Agreement')
dated December 19, 1997, by and between iVillage, Inc. ("iVillage") and Charles
Schwab & Co., Inc. ("Schwab") is made as of June 29, 1998, and is incorporated
into and made a part of the Agreement.
WHEREAS, iVillage provides information related to planning for
educational expenses to visitors to its proprietary Web sites, including but not
limited to, its ParentSoup(Registered) Site (url:http://www.parentsoup.com)
("Content Areas");
WHEREAS, Schwab has developed and owns certain content and software
related to its College Saver(Trademark) Program, including, but not limited
to, its College Saver Online Planning Tool (the "CS Tool"). The CS Tool is
comprised of two elements: the Calculations (including assumptions) and the
Presentation;
WHEREAS, iVillage wishes to license the CS Tool for use by visitors to
its Content Areas and Schwab is willing to license use of the CS Tool to
iVillage for this purpose subject to the terms and conditions set forth below.
NOW THEREFORE, the parties agree as follows with respect to use of the
CS Tool on the Content Areas:
1. During the term of the Agreement, Schwab hereby grants iVillage a
worldwide, nonexclusive, revocable, nontransferable fully-paid up and
royalty-free license to use and distribute to end users of the Content
Areas the object code version of the CS Tool and to reproduce copies of
the CS Tool only to the extent necessary to accomplish the foregoing.
2. Subject to the terms set forth in Sections 1, 2 and 3 of the Agreement,
iVillage will include Schwab Marks in each Content Area in which the CS
Tool is used. Schwab shall have the right to approve the location of
the CS Tool and the Schwab Marks within the Content Areas.
3. iVillage may, in its discretion and at its own expense, change only the
Presentation element of the CS Tool to be consistent with the Content
Areas.
4. At is own expense, iVillage will perform updates to and modifications
of the Calculations element of CS Tool on the Content Areas as they are
provided by Schwab.
5. iVillage will promote the CS Tool and the Content Areas through
hyperlinks or banner advertisements from other areas of the iVillage
Web sites.
6. Any new accounts obtained by Schwab through the use of the CS Tool in
the Content Areas will be counted towards the Account Goals set forth
in paragraph 8 of Exhibit A to the Agreement.
<PAGE>
7. iVillage's reporting obligations as set forth in Section 6 of Exhibit A
of the Agreement shall also apply to end user use of the CS Tool in the
Content Areas.
8. The CS Tool, any Informational Material or Schwab Content that appears
in the Content Areas is Schwab's exclusive property and may not be
sold, licensed, copied, distributed or divulged, except as provided in
Section 1 of this Addendum or elsewhere in the Agreement, without
Schwab's prior written permission.
9. THE CS TOOL IS PROVIDED "AS IS," WITHOUT WARRANTY OF ANY KIND. TO THE
MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW, SCHWAB AND ITS SUPPLIERS
DISCLAIM ALL WARRANTIES, CONDITIONS AND REPRESENTATIONS, EXPRESS OR
IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE OR NONINFRINGEMENT.
10. Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Agreement.
11. The terms and conditions of the Agreement remain in full force and
effect.
IN )WITNESS WHEREOF, the parties have executed this Addendum as of the date
first above written.
iVillage, Inc. Charles Schwab & Co., Inc.
By: /s/ Steve Elkes By: Illegible
------------------------- --------------------------------------------
Its: V.P. Finance Its: VP Electric Brokerage Business Development
------------------------- --------------------------------------------
Date: 6/30/98 Date: 6/29/98
------------------------- --------------------------------------------
<PAGE>
Amendment Number One
to
Online Services Agreement
This First Amendment ("First Amendment") to that certain Online
Services Agreement dated December 19, 1997 ("Agreement"), by and between
iVillage, Inc. ("iVillage") and Charles Schwab & Co., Inc. ("Schwab") is made
effective as of December 19, 1997 ("Amendment Effective Date"), and is
incorporated into and made a part of the Agreement.
1. The following replaces subparagraphs 9c) and (d) of Paragraph 8
("Performance Objectives"), Exhibit A of the Agreement:
8. Performance Objectives
(c) If iVillage owes Schwab a fee reduction or cash payment pursuant to
Section 5(d) or (e) of the Agreement, a maximum rebate may apply:
(i) if iVillage delivers at least [*] banner
advertising impression in the year preceding the
first-year Calculation Date, the maximum rebate that
will be due to Schwab for unmet Account Goals is [*],
in the form of cash or credit.
(ii) If iVillage delivers at least [*] banner advertising
impressions in the year preceding the second-year
Calculation Date, the maximum rebate that will be due to
Schwab for unmet Account Goals is [*], in the form of
cash and credit.
(iii) if iVillage delivers at least [*] advertising
impressions in the year preceding the third-year
Calculation Date, the maximum rebate that will be due
to Schwab for unmet Account Goals is [*], in the form
of cash or credit.
(d) If iVillage fails to deliver [*] in any year and the fee reduction or
cash refund it owes Schwab exceeds the amount stated in Paragraph 8(c)
of this Exhibit A for that year, then iVillage shall be entitled to a
partial credit of any fee reduction or cash payment due to Schwab for
actual impressions delivered exceeding [*] based upon a [*] cost
per thousand impressions, up to a maximum fee reduction or cash payment
owed to Schwab of [*], with a limitation that the applied credit will
reduce the maximum fee reduction or cash payment owed to Schwab of [*].
iVillage is not entitled to any credit against any fee reduction or
cash payment owed to Schwab if it delivers less than [*] impressions in
the year preceding the Calculation Date.
2. Capitalized terms used but not defined herein shall having the meaning
ascribed to them in the Agreement.
[*] Confidential treatment requested.
<PAGE>
3. Except as amended herein, the remaining terms and conditions of the
Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the Amendment Effective Date.
iVILLAGE, INC. CHARLES SCHWAB & CO., INC.
By: /s/ Steve Elkes By: /s/ [ILLEGIBLE]
--------------------------- ---------------------------
Its: Vice President Its: VP Electric Brokerage
--------------------------- ---------------------------
Date: 6/29/98 Date: 6/29/98
--------------------------- ---------------------------
<PAGE>
November 11, 1998
Mr. Steven Lake
iVillage, Inc.
170 5th Avenue, 5th floor
New York, N.Y. 10010
Re: iVillage Purchase of NBC TV Advertising Inventory
Dear Mr. Lake:
This letter sets forth the agreement between the National Broadcasting
Company, Inc. ("NBC"), and iVillage, Inc. ("Advertiser") with respect to the
Advertiser's agreement to exchange equity in the Advertiser for the right to use
certain NBC Television ("NBC TV") advertising inventory. The terms and
conditions shall be as follows:
1. General Terms. NBC shall provide Advertiser with the use of
fifteen (15) and thirty (30) second advertising spots (each, a "Spot") to be
telecast on NBC TV reasonably spread over 36 months of the date of this
Agreement. All such Spots run by Advertiser shall be, as much as practicable,
broadcast nationally by NBC TV, and shall, at all times, be subject to NBC TV's
standard terms and conditions for such advertising which are described in' the
"Participating Sponsorship Agreement" attached hereto as Exhibit A (the
"Standard Terms") and which are made a part of this Letter Agreement in their
entirety; provided, however, that in the case of a conflict between the terms of
this Letter Agreement and terms of the Standard Terms, the terms of this Letter
Agreement shall govern. For purposes of the Standard Terms, Advertiser shall be
both the "Advertiser" and the "Agency" as such terms are used therein.
Advertiser acknowledges that the commercial material previously delivered to NBC
may be telecast by NBC TV on any Spot; provided, however, that it is understood
that if Advertiser supplies any new commercial material to NBC, Advertiser
instructs NBC to use such new material in lieu of the commercial material
previously delivered to NBC, and such new material complies with the standards
described in the Standard Terms, including NBC Advertising Standards, then NBC
will make reasonable commercial efforts to telecast such new material on all
Spots commencing 72 hours after receipt of such new material by NBC.
2. Spots. (a) NBC undertakes that Advertiser's Spots telecast
(i) prior to the first anniversary hereof shall have an aggregate value equal to
$3,500,000 (the "First Tranche") after the first anniversary and prior to the
second anniversary of the date hereof shall have an aggregate value equal to
$3,500,000 (the "Second Tranche") and (iii) on or after the second anniversary
and prior to the third anniversary of the date hereof shall have an aggregate
value equal to $3,500,000 (the "Third Tranche" and, collectively with the First
Tranche and the Second Tranche, the "Tranches"), with the value of each Spot
calculated at 85% of the gross market rate charged and agreed by NBC at such
time.
(b) The Spots shall be targeted, as much as commercially
reasonable (as determined by NBC), to maximize reach and frequency to women aged
2549. The Spots shall be telecast on the Dates, Days and Times determined by NBC
in its sole discretion (following reasonable consultation with Advertiser);
provided, however, that (i) the Spots telecast: by NBC
<PAGE>
TV shall be telecast primarily in primetime, (ii) notwithstanding anything to
the contrary contained herein, 25% of the value of any Tranche may, in NBC's
sole discretion, be telecast on Spots primarily promoting iVillage or any of its
brands or channels on Snap.com (provided that all such co-branded spots shall be
subject to Advertiser's consent, such consent not to be unreasonably withheld),
(iii) notwithstanding anything to the contrary contained herein, 5% of the value
of any Tranche may be placed in online advertising or promotion on any Internet,
world-wide-web or other service delivered via interactive delivery owned or
controlled by NBC, with the value for such online advertising or promotion
calculated at the market rate (less any agency commission) charged by such
service at such time.
3. Advertiser Stock. (a) Subject to the terms and conditions of this
Agreement and as consideration for NBC TV's telecast of the Spots pursuant
hereto, Advertiser agrees that within three (3) business days of its receipt of
a written notice from NBC confirming telecast or other delivery of the First
Tranche of advertising. Advertiser will issue, and NBC shall receive 1,166,667
shares of Series E Preferred Stock (the "Stock"), subject to adjustment in
accordance with the anti-dilution protections set forth in Exhibit B
("Anti-Dilution Adjustment") , (ii) the Second Tranche of advertising,
Advertiser will issue, and NBC shall receive, an additional 1,166,667 shares of
Stock, subject to Anti-Dilution Adjustment, and (iii) the Third Tranche of
advertising, Advertiser will issue, and NBC shall receive, 1,166,667 shares of
Stock, subject to Anti-Dilution Adjustment. NBC shall have the right to require
Company to issue stock for any Tranche of Spots: (x) at each six month
anniversary of the date hereof or (y) upon telecast or delivery of all Spots
required for any Tranche.
(b) NBC shall have the option, exercisable in its sole discretion,
to provide Advertiser with Spots in addition to the Spots included in the
Tranches ("Additional Spots") as follows:
(i) prior to the first anniversary of the date hereof, NBC may
telecast Additional Spots having an aggregate value of up to $5,000,000, in
which event Advertiser shall issue, and NBC shall receive, such number of shares
of Stock as shall equal the aggregate value of Additional Spots provided
pursuant to this Section 3(b)(i) divided by 4.15, subject to Anti-Dilution
Adjustment;
(ii) on or after the first anniversary and prior to the second
anniversary of the date hereof, NBC may telecast Additional Spots having an
aggregate value of up to $5,000,000, in which event, Advertiser shall issue, and
NBC shall receive, such number of shares of Stock as shall equal the aggregate
value of Additional Spots provided pursuant to this Section 3(b)(ii) divided by
5.15, subject to Anti-Dilution Adjustment;
(iii) on or after the second anniversary and prior to the
third anniversary of the date hereto NBC may telecast Additional spots having,
an aggregate value of up to $5,000,000, in which event Advertiser shall issue,
and NBC shall receive, such number of shares of Stock as shall equal the
aggregate value of Additional Spots provided pursuant to this Section 3(b)(iii)
divided by 6.15, subject to Anti-Dilution Adjustment.
(iv) NBC may exercise this right, in its sole discretion and
in, whole or in part, without prior notice to Advertiser, provided, however,
that NBC shall give Advertiser a
<PAGE>
report in writing within 10 business days after the end of each calendar quarter
setting forth the aggregate value of Additional Spots telecast by NBC in the
preceding quarter; and, provided, further, that following any Qualified Public
Offering (as such term is defined in Exhibit B) of Advertiser, such report shall
also include a written non-binding estimate of the Additional Spots that NBC
intends to telecast during the upcoming quarter. Any Additional Spots shall be
subject to the terms and conditions applicable to Spots and set forth in Section
2(b). The value of each Additional Spot shall be calculated at 85% of the gross
market rate charged and agreed by NBC at the time of telecast thereof. NBC shall
have the right to require the Company to issue Stock for any Additional Spots:
(x) at each six month anniversary 6f the date hereof or (y) upon telecast of all
Additional Spots in any twelve month period.
(c) The parties agree that no agency fees or other expenses may be
deducted by Advertiser in any way in connection with determining the number of
shares of Stock to be issued to NBC pursuant hereto at any time. Advertiser
acknowledges that NBC makes no guarantee regarding what the actual rating for
any particular Program will be. The parties agree that the delivery of the Stock
pursuant hereto constitutes full and complete payment to NBC for the
transactions and considerations contemplated hereby.
4. Stock Terms. (a) Advertiser shall issue the Stock, pursuant to
Section 3, to NBC upon the terms and conditions and pursuant to long-form
agreements regarding the issuance, sale and purchase of the Stock (a "Stock
Purchase Agreement") and regarding certain rights related to the ownership of
such Stock (a "Shareholders Rights Agreement") to be negotiated in good faith
between the parties hereto and subject to receipt; provided that, the rights
granted to NBC thereunder shall be no less favorable than those provided to any
purchaser of Series E Preferred Stock of Advertiser, the proposed terms for
which are set forth in Exhibit B. In addition to the rights granted to other
holders of Series E Preferred Stock (including, without limitation, the demand
registration rights, S-3 and piggyback registrations rights currently available
to stockholders of Advertiser), NBC shall also be entitled to one seat on the
Board of Directors of Advertiser until immediately prior to a Qualified Public
Offering of Advertiser and one additional demand registration right that may be
exercised by NBC, in its sole discretion, irrespective of whether the shares
registered pursuant to such demand right represent any given percentage & of the
issued and outstanding shares of Advertiser, but subject to all other terms and
condition applicable to Series E Preferred Stock (but with respect to the second
demand registration right Section 2(a)(i) of Advertiser's Registration Rights
Agreement shall not apply, (ii) with respect to Section 2(d) of Advertiser's
Registration Rights Agreement, NBC's shares of Stock will be included first
before any other shares of Advertiser's equity and (iii) such demand
registration right shall not be exercisable until 180 days after Advertiser's
initial public offering). Except as otherwise provided herein, the Stock being
offered to NBC shall be valued at the same price and shall have such terms and
conditions (including, without limitation, dilution, registration rights,
mandatory conversion, provisions) as are finally offered to purchasers of Series
E Preferred Stock of Advertiser; it being understood that (a) any warrants
finally offered to purchasers of Series E Preferred Stock shall also be offered
to NBC, (b) the number of shares of Stock delivered to NBC in accordance with
Section 3(a) or 3 b) shall be adjusted downward if the Original Issue Price (as
such term is defined in Exhibit B) is less the $3.00 and (c) following any.
Qualified Pub an Offering, NBC will receive common stock of Advertiser (on an as
converted basis) in lieu o the Stock. Subject to any relevant securities laws,
<PAGE>
rules and regulations, the Stock, as well as the equity acquired through
conversion thereof, will be freely transferable by NBC.
(b) If the parties have not agreed upon the final form of the
Stock Purchase Agreement and the Shareholders Right's Agreement (collectively,
the "Equity Agreements") by the date on which NBC has broadcast value of
$1,000,000, then the parties shall be required to negotiate terms of such
agreements for an additional ten (10) business days of, the parties are unable
to agree upon the terms of the option, which may be exercised in its sole
discretion, or a cash payment to NBC of $1,000,000 and (ii) terminating this
Agreement. If NBC chooses to require Advertiser to make sure cash payment, it
shall provide Advertiser written notice of its decision, and Advertiser shall
pay the required amount within two (2) business days of its receipt of such
notice. The parties intend to execute and close on the Equity Agreements within
30 days of the date hereof.
5. Distribution Arrangements. Subject to the execution of the Equity
Agreement and in addition to the other provisions of this Letter Agreement,
Advertiser agrees to pay NBC $1,000,000 for prominent placement of Advertiser on
NBC.com, which placement shall commence on 1 January 1999 and terminate on 31
December 1999. The payments for such placement shall be made in equal
installments on the first business day of each calendar quarter during 1999.
6. Representations and Warranties. NBC and Advertiser each represent
and warrant that this Letter Agreement has been duly authorized, executed and
delivered by such party and that this Letter Agreement constitutes the legal,
valid and binding obligations of such party, enforceable against it in
accordance with its terms.
7. Confidentiality. Neither party shall issue a press release or make
any statement to the general public concerning this Letter Agreement, the Spots,
the Additional Spots, or the existence thereof, without the express prior
written consent of the other; provided, however, that NBC agrees that Advertiser
may file this Letter Agreement with the Securities and Exchange Commission (the
"SEC") and/or describe this Letter Agreement in any registration statement filed
with the SEC, in each case if so required by the Securities Act of 1933 and
Securities Exchange Act of 1934, in each case, as amended, the rules and
regulations related thereto or any applicable state laws (the "Securities Laws")
a long as Advertiser agrees to use its best efforts to obtain confidential
treatment of the economic and other material terms hereof under the Securities
Laws and to consult with NBC during the process.
8. Termination. (a) This Letter Agreement shall terminate upon NBC's
receipt of the cash payment from Advertiser pursuant to the last sentence of
Section 4. Notwithstanding the foregoing, the terms contained in Sections 1, 2,
6, 7, 8, 9 and 10 shall survive the termination hereof. Notwithstanding any
other remedy available to NBC, in the event that Advertiser:
(i) does not satisfy, or caused to be satisfied, all of the
conditions precedent to any closing in accordance with the Equity Agreements
within fifteen (15) business days of Advertiser's receipt of written notice from
NBC confirming, the telecast or other delivery of advertising or promotion; or
<PAGE>
(ii) admits in writing its inability to pay its debts generally;
makes a general assignment for the benefit of creditors; has any proceeding
instituted by or against it seeking to Adjudicate it as bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, relief, or
composition of Advertiser or its debts under any law relating or reorganization
or relief of debtors, or seeking the entry of an order or appointment of a
receiver, trustee, or similar official for it or any substantial part of its
property; provided, in the case where such proceeding is involuntarily institute
an Advertiser, such proceeding remains undismissed after 30 days, then, in
either case, NBC shall have the right to terminate this Agreement and require
Advertiser to immediately pay NBC a cash amount equal to the value of the
advertising already telecast or delivered by NBC as of such termination, but for
which NBC has not received any Stock.
9. Miscellaneous. This Letter Agreement constitutes the entire
agreement and understanding of the parties relating to the subject matter hereof
and supersedes all prior and contemporaneous agreements, negotiations, and
understandings between the parties, both oral and written relating to the
subject matter hereof No waiver or modification of any provision of this Letter
Agreement shall be effective unless in writing and signed by both prices. Any
waiver by either party of any provision of this Letter Agreement shall not be
construed as a waiver of any other provision of this Letter Agreement, nor shall
such waiver operate as or be construed as a waiver of such provision respecting
any future event or circumstance. The terms of this Letter Agreement shall apply
to parties hereto and any of their successors or assigns. This Letter Agreement
may be executed in counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shah constitute one and the same
agreement.
10. Governing Law and Jurisdiction. This Letter Agreement shall be
governed by and construed under the laws of the State of New York applicable to
contracts fully performed in New York, without regard to New York conflicts. The
parties hereto irrevocably consent to and submit to the exclusive jurisdiction
of the federal and state courts located in the County of New York. The parties
hereto irrevocably waive any and all rights to trial by jury in any proceeding
arising out of or relating to this Agreement.
If you are in agreement with the above terms and conditions,
please indicate your acceptance by signing in the space provided below, and
return one original to me. This Letter Agreement shall be null and void if not
signed within two (2) days of the date set forth above.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ Martin J. Yudkourtz
--------------------------------------
Name: /s/ Martin J. Yudkourtz
------------------------------------
Title: /s/ President, NBC Interactive
-----------------------------------
<PAGE>
ACCEPTED AND AGREED:
IVILLAGE, INC.
By: /s/ Candice Carpenter
----------------------------------
Name: Candice Carpenter
--------------------------------
Title: CEO
-------------------------------
<PAGE>
EXHIBIT A
Participating Sponsorship Agreement - NBC Television Network
Part II
1. DEFINITIONS
"Advertiser" means the advertiser named in Part 1.
"Agency" means the advertising agency named in Part I (see also
paragraph 23).
"NBC" means NBC Television Network, a Division of National Broadcasting
Company, Inc.
"paragraph" all references to `paragraphs' by numbers apply to this
Part 11.
"participation" means a sponsorship unit which entitles Advertiser to
30 seconds of commercial time unless otherwise specified in Part I hereof.
"program" means the program(s) and/or event(s) described in Part I
intended for telecast in which Advertiser is a sponsor.
"Section" references to `Sections' by numbers apply to Part I of which
this Part 11 is a part (by attachment or by reference) and without which this
Part 11 shall be invalid.
"telecast" means the presentation and omission of any of the programs
described in Part I on one occasion to any or all stations.
The four digit numerals within parentheses at the conclusion of certain
paragraphs are internal NBC printing codes and are m a put of this agreement
Certain paragraphs are intentionally omitted for reasons of
inapplicability. (0491)
2. STATIONS
a. Stations Ordered. Stations ordered for Advertiser for the Program(s)
shall be the interconnected affiliated stations identified in the NBC TV Station
List and such other stations as NBC may elect to include in the Program's
station lineup, including delays, if any. NBC shall endeavor to make available
as many stations as possible. The status of availability of all ordered
stations, whether available or not, shall be included in the NBC TV Station List
which shall be furnished to Agency upon request
b. Station Lineup. Station lineup as used herein shall comprise all
stations which are available or may become available for the Program(s) on a
basis which is live or tape delayed.
c. Addition of Ordered Stations. Stations which are initially reported
unavailable but which become available for the telecast(s) on either a five or
tape delayed basis shall become part of Advertiser's station lineup effective
immediately.
<PAGE>
4. PACKAGE PRICE
The package price(s) indicated in Part I include all charges except the
applicable Integrated Networking Charge and other charges for special commercial
requirements. (0491)
5. INTEGRATED NETWORKING CHARGE
The Integrated Networking Charge listed in the current NBC Television Network
Commercial Integration Manual shall be applicable to each commercial insertion
up to and including 60 seconds in length. Announcements in excess of 60 seconds
will be billed at a proportionately higher charge. This production facilities
charge includes the services, as required, for program origination, videotaped
repeat network telecast(s), and satellite transmissions. Also included are the
normal insertions of tape commercials when originated from network control
points in New York and/or Burbank and the normal insertions of commercials into
delayed broadcasting tapes. Additional production charges may be made for
special commercial requirements in accordance with the NBC O&TS Rate Card. With
respect to late delivery of commercial material, charges and other conditions
will be in accordance with the NBC Television Network Commercial Integration
Manual. (0593)
6. PROGRAM
a. Supplier. The Program(s) set forth in Part I will be supplied by NBC
and NBC will furnish for such Program(s) all the necessary creative elements,
production facilities and services therefor and personnel and talent required
for the appropriate television presentation of the Program(s). Each program will
conform to NBC's programming and operating policies and technical standards.
(1089)
b. Production Facilities and Service. Production facilities and
services charges applicable to the Program(s) are included in the package price.
Agency will furnish all elements for and will bear all costs of the commercials.
To the extent feasible, NBC will provide, if requested, production facilities
and/or personnel for the production and presentation of commercials. Rates
therefor will be charged to Agency in accordance with the O&T'S Rate Card (or at
rates quoted upon request where such Rate Card rates do Dot apply). (0593)
Agency must deliver commercial material to NBC no later than 14 days
prior to the scheduled telecast and NBC shall insert such material into the
program(s) to be telecast. (0882)
7. AGENCY-FURNISHED MATERIAL
a. Furnishing and Submission. AU commercial announcements and talent
and material therefor and billboards where applicable (except as may be
furnished by NBC) and any other material furnished by Agency for the telecasts
are hereinafter collectively and individually referred to as Agency material.
Agency material must be furnished to NBC at least 14 days in advance of air
date. Agency warrants that it has obtained all necessary rights for the
performance and use of said agency material, including music performance. (0489)
b. Compliance With Standards. Agency material must conform to the
programming and operating policies of NBC, and the quality of recorded Agency
material must comply with
<PAGE>
NBC's technical standards, and shall not contain copy or material which
conflicts with product protection rights granted to others by NBC. NBC has the
continuing right to require Agency and Advertiser to edit and modify any and all
Agency material to the extent NBC deems necessary to conform to the public
interest and to the programming and operating policies of NBC. NBC reserves the
right to refuse to accept for telecasting or to refuse to telecast any Agency
material which does not in its judgment conform to the public interest or to
such policies and standards, or which in the reasonable opinion of NBC may
violate the rights of others. (0882)
c. Substitution by Agency. In the event of NBC's refusal to accept any
Agency material, Agency will substitute other material therefor acceptable to
NBC. The acceptance or rejection by NBC of any substitutes hereunder shall be
made by NBC in accordance with the requirements of paragraph 7b. (1062)
d. NBC Rights on Agency's Failure to Furnish. In the event Agency fails
to furnish any Agency material as herein provided, or in the event NBC
disapproves any Agency material and Agency fails to furnish substitutes therefor
satisfactory to NBC, NBC may, at its option, schedule promotional or public
service type announcements in place of Agency's regularly scheduled commercial
material without identification of Advertiser except as required by law or
administrative regulation. No such action on the part of NBC under this
paragraph shall relieve Agency of its obligation to make payments for all
charges as provided for hereunder. (0593)
9. INCREASES AND PROTECTION
NBC reserves the right to change production facilities and services
charges, including the Integrated Networking Charge, effective on such date as
announced by NBC to the trade. Any such change which results in an increase to
Advertiser will not apply until three months after the date upon which such
change is announced by NBC. (0593)
10. ADVERTISING AGENCY COMMISSION
The package price (s) set forth in Part I and the Integrated Networking
Charge include an advertising agency commission of 15%. (0489)
11. BILLING AND PAYMENT
All charges hereunder will be billed to Agency on the second business
day following the month of telecast(s) and shall be paid on or before the 15th
day of the billing month (or such earlier date as set forth by any special
payment terms or as designated in Part 1), it being agreed that time of payment
is of the essence. Notwithstanding disagreement between the parties as to
particular items of charge or credit as of the due date, all charges not
specifically and reasonably questioned by Agency shall be paid by such date.
NBC's obligations under this agreement are also conditioned upon full payment by
Agency of all obligations to NBC under preceding or concurrent agreements with
NBC for the same advertiser. (0491)
12. DAY AND TIME PERIOD OF SPONSORSHIP
Part I reflects the day, starting, time, program length and program to
be sponsored on a participating basis by Advertiser on the dates shown,
expressed in New York City Time (NYCT).
<PAGE>
Tune for the purpose of this paragraph is approximate. NBC reserves the right to
advance or delay the starting time shown and the further right to expand or
contract the program length indicated.
The program(s) hereunder are distributed across the country in various
configurations which utilize live and tape delay transmissions to stations.
Specific information with respect to such transmissions is available on request.
(0491)
14. COMMERCIAL ENTITLEMENT
Each date listed in Part I represents a 30-second participation for
commercial utilization in the program indicated, unless otherwise specified.
(0489)
15. COMMERCIAL POSITIONS
The placement and designation of commercial positions shall be
determined by NBC. NBC reserves the right to revise an, or alelements of the
commercial format in each of the programs hereunder to include changing of
commercial placement with in programs. In certain program series, NBC retains
the right to move within the same program a participation(s) from one day of the
week to another day of the same week. NBC reserves the further rights to format
the programs so as to accommodate an, combination of commercial elements and to
expand or contract any or all elements of the commercial format at any time to
meet the competitive forces of the industry. (0489)
16. CAST COMMERCIALS
Cast Commercials, including placement thereof, are subject to the
review and approval of NBC Advertising Standards and Sales Services. (0593)
17. PRODUCTS TO BE ADVERTISED
a. Protected Products. NBC will endeavor to avoid scheduling products
competitive or antithetical to single product commercials of at least 30 seconds
duration within the commercial interruption (i.e. pod) in which such commercial
is scheduled Such competitive or antithetical avoidance is known as product
protection. Product protection throughout this paragraph I, applies only to
other network advertisers obtained by the NBC Television Network.
Product protection will not be granted to commercials which are
multi-product 30-second commercials nor to any commercial of less than 30
seconds in length.
Changes in designation of protected products may be made only upon
receipt of NBC's approval Requests for such changes in designation must be
submitted to the NBC Television Network Sales Department not less than 14 days
prior to the desired date of such change(s).
b. Exclusive Basis Products. In certain programs, some products may be
established as exclusive basis products which entitle such products to broader
product protection than that which is indicated in subparagraph `a' above. The
products (if any) granted such exclusivity and the extent of the product
protection granted thereby is specified in Part 1.
<PAGE>
c. Non-Exclusive Basis Products. Advertiser's products other than
protected products may be advertised hereunder on a nonexclusive basis providing
NBC's approval has been obtained in advance in writing. The advertising of
nonexclusive basis products is subject to discontinuance on 24 hours notice in
the event the advertising of such nonexclusive basis products conflicts with
product commitments made by NBC to others.
d. Other Products. Products other than protected and NBC approved
nonexclusive basis products may not be advertised on any program hereunder.
Commercials for such other products may be removed or deleted by NBC without
prior notice and Advertiser will not be relieved of its obligation for any of
the charges hereunder by reason of such removal or deletion.
e. Nature of Approval. Approvals referred to above in this paragraph 17
must be obtained in writing from NBC. Approval of products or commercial
material for compliance with NBC's Advertising Standards, while ultimately
required under paragraph 7, does not constitute NBC's approval under this
paragraph 17. (0593)
18. BILLBOARDS
Certain programs provide billboards. The billboard is a brief
announcement identifying the sponsor or partial sponsor of a program It is not
intended for use as a commercial announcement. If so indicated in Part 1,
Advertiser shall be allowed a billboard of the type and duration specified
therein. Such billboard will consist of visual and/or audio material acceptable
to NBC. Placement of billboards shall be designated by NBC and may be scheduled
adjacent to billboards and/or commercials of other sponsors in the program.
(0489)
19. LEAD-INS
Lead-in copy of a transitional nature may be used in certain types of
programs. Such copy must be limited to five seconds in length and must be devoid
of commercial sell and comparative references. The program host or other
individual designated by NBC shall be made available for lead-ins. In no event
may lead-ins be used separately from the commercial it was intended to be lead
into, nor combined to form a longer lead-in. (0489)
20. AGENCY TERMINATION RIGHTS
If so provided in Part 1. Agency shall have the right to terminate a
portion of Advertiser's sponsorship, effective with the termination dates shown
in Part 1, on prior written notice to NBC as provided therein. (0593)
21. PROGRAM SUBSTITUTION AND TRANSFER
a. Program Substitution. Except as set forth in paragraphs 21c and 21d
hereof, NBC may substitute another program for any program hereunder. In such
even Advertiser's participation(s) will be scheduled by NBC in a replacement
program(s) provided such replacement program(s):
i. is(are) of comparable quality with comparable demographics,
<PAGE>
ii. is(are) available to advertisers on a participation basis,
iii. is(are) comparably priced, and
iv. present(s) Do product or scheduling conflicts
c. Daytime Programs (Monday through Friday 9:00 am 4:30 pm NYCT). NBC
has the right to change the time period; and/or discontinue telecasting any or
all of its Daytime Programs on reasonable prior notice. In the event of such
discontinuance or time period change, Advertiser's participation(s) so affected
will be transferred to a mutually agreeable substitute program(s) where
available.
d. Unique Programs. The provisions of this paragraph 21 are not
applicable to unique programs such as major sporting events, major award
presentation programs, and coverage of a special news event. (0593)
22. IMPOSSIBILITY OF AGENCY PERFORMANCE
In the event Agency is unable or fails to supply agency material, NBC
may, at its option, in addition to any other remedies which may be available to
it terminate this agreement forthwith, and upon such termination, Agency,
Advertiser, and NBC will be relieved of further liability hereunder except with
respect to obligations incurred or arising out of telecasts made prior to such
termination. (0489)
24. PREEMPTION
a. General. NBC reserves the right to preempt all or any portion of
any telecast of any of the programs hereunder in order to telecast events or
programs of public importance, news reports, political programs, sports events,
special programs, or special events. NBC agrees that in the event of such
preemption as much advance notice as is practicable will be given to Agency. la
the event of a preemption involving the elimination of Advertiser's
participation(s), NBC will be relieved of its obligation to telecast
Advertiser's participations hereunder and Agency will be relieved from paying
any charges hereunder for the participation(s) so eliminated unless Advertiser's
participations are rescheduled as may be provided for elsewhere herein.
b. Partial Political NBC also reserves the right to preempt the last
five minutes of any telecast preceding an election day generally observed
throughout a majority of the United States. In the event of such five minute
preemption which does not affect Advertiser's participation(s), the affected
program will be edited to the required length at NBC's expense and there shall
not be any adjustment in any of the charges hereunder to Agency. (0489)
25. NETWORK FAILURE TO TELECAST
In the event NBC fails to present over its network facilities any
telecast hereunder because of unavailability of technical facilities, defect or
breakdown of equipment or transmission facilities, labor dispute, government
action, the unforeseen absence of a principal performance, or any cause beyond
the control of NBC, whether of a similar or dissimilar nature, NBC's liability
therefor shall be limited solely to cancellation of all charges to Agency
hereunder
<PAGE>
for such affected telecast and such failure to telecast shall not constitute a
breach of this agreement. (0489)
26. LOSS OF SPONSORSHIP/AUDIENCE DEFICIENCY
For the purpose of determining loss, each participation shall be
treated as a complete and separate sponsorship. Where sprit 30-second
commercials, three contiguous announcements is a 60-second commercial, and
15-second commercials are utilized, each component shall be deemed a complete
and separate sponsorship.
If NBC fails to carry all or any part of Advertiser's commercial to the
extent that the substance of the commercial announcement is lost on the entire
station lineup, NBC will negotiate in good faith for a make good. (0491)
If NBC' fails achieve agreed upon audience delivery, NBC will negotiate
in good faith and deliver a make good no later than by the end of the calendar
year following the end of a broadcast season. (0196)
27. INDEMNIFICATION AND DEFENSE
a. NBC Obligation. NBC agrees to indemnify and bold harmless
Advertiser, Agency and their respective directors, officers, agents and
employees against and from any and all claims, liability, loss and damage,
including reasonable attorney's fees, caused by or arising wholly or in part out
of the telecasting of NBC material hereunder and to defend at its own expense
any litigation instituted by others against any of them resulting therefrom.
b. Agency Obligation. Agency agrees to indemnify and hold harmless
NBC, the stations over which the Sponsored telecasts are carried and their
owners, the package producer of the program (if any involved) and the talent
thereof and the other advertisers in the program and their agencies, and their
respective directors, officers, agents and employees against and from any and
all claims, liability, loss and damage, including reasonable attorneys' fees,
caused by or arising wholly or in part out of the telecasting of Agency material
hereunder and to defend at its own expense any litigation instituted by others
against any of them resulting therefrom. (1062)
c. Distinction. For the purposes of this paragraph 27 only, Agency
material (see paragraph 7a) shall be deemed to include ad lib acts or utterances
of personnel furnished by Agency or Advertiser, and NBC material shall be deemed
to include material furnished by NBC as referred to in paragraph 6 and ad lib
acts and utterances of personnel furnished by NBC and material furnished by
other agencies or advertisers for the telecasts. NBC's acceptance or approval of
Agency material will not affect Agency's obligation for defense and
indemnification hereunder. (0489)
d. Control of Litigation. The indemnitor hereunder shall have full
control of the defense of such litigation and may settle, compromise or adjust
the same, provided, however, that the indemnitee, upon relieving the indemnitor
in writing of the obligations imposed hereunder for defense and indemnification,
shall have the right, if it so elects, to conduct such litigation at its own
expense by its own counsel.
<PAGE>
e. Notice and Duration. The following obligations for defense and
indemnification shall be imposed only if (1) the indemnitee sends to the
indemnitor timely written notice of first service of process upon the indemnitee
and a timely written request to be deemed the litigation (such notice and
request shall be deemed timely if given within a reasonable length of time after
receipt of service by the indemnitee and a reasonable length of time prior to
the date by which first response to such process is legally required,
considering all the circumstances, and (2) while such litigation is pending, the
indemnitee upon request shall furnish to the indemnitor all relevant facts and
documentary material in the former's possession or under its control and shall
make its employees or other persons under its control with knowledge of relevant
facts available to the indemnitor for consultation and as witnesses at their
customary places of business. The indemnity right and defense obligations
hereunder shall survive the termination or expiration of this agreement and of
Agency's status as advertising agency for Advertiser. (1062)
29. ABSENCE, INCAPACITY, OR DEATH
The temporary or sudden absence for any reason, or death, of any
regular principal performer, including but not limited to newscasters and
sportscasters, on the program(s) hereunder will be accommodated for as NBC deems
appropriate, by substitution of a performer of comparable statute or, if
practicable, by writing out of the character portrayed or by substitution of
another comparable program. (1089)
30. USE OF NAME AND LIKENESS
Except for programs which consist of motion picture films, NBC hereby
authorizes Agency and Advertiser to use and license others to use daring the
term hereof the title of the Program(s) and the name, sobriquet biography and
likeness of regular featured performers in the Program(s) for informative
purposes and to advertise and publicize the network and the Program(s) through
tune-in advertising either alone or in conjunction with the advertising of the
protected products of Advertiser as designated hereunder. Names, sobriquets,
biographies and likenesses of the regular featured performers will not be used
without the prior written approval of NBC. No such use shall be for advertising
(except as specifically above stated) or merchandising use nor for an express or
implied endorsement of any product or service except upon the written permission
of the person involved and NBC. No such use in connection with the Program(s)
hereunder may continue beyond the termination of Advertiser's sponsorship in any
such Program(s) or of the participation of such characters or persons in the
Program(s), and Agency will take all reasonable steps to require discontinuance
of utilization of any previously released display material involving any such
use within 30 days after such termination. (0489)
For a sports program, the reference to featured performers is to the
announcers furnished by NBC and not to any participant in the sporting event.
For programs which consist of motion picture films, the NBC
authorization within this paragraph 30 shall be limited to the title of the
program and shall not apply to the title of a specific motion picture nor to any
of the featured performers of the motion picture film. (0465)
31. RIGHTS AND RESTRICTIONS ON USE OF TELECASTS
<PAGE>
NBC tiny use or license to be used all or any part of the programs hereunder by
or for the Armed Services and for telecasting in connection with documentary
programs. Neither Agency nor Advertiser will authorize anyone to telecast or to
utilize for any commercial purposes, other than for telecasts hereunder, the
actual telecasts made by NBC, or any part of such telecasts, including material
supplied by Agency, whether such other use of the actual telecasts be by means
of tape or film" except for recording of Agency material specifically authorized
and released in accordance with applicable NBC policy. Nothing herein contained
shall prevent Agency from making subsequent use of Agency material (as
distinguished from telecasts by NBC of such material). (1185)
32. MATERIAL AND PROPERTY OF AGENCY OR ADVERTISER
Material or property (other than recorded commercial material) finished
by Agency or Advertiser for use on or in connection with the telecasts hereunder
must be removed from NBC areas at Agency's expense within six days after the
date of program performance, and if not so removed, Agency will be billed and
will pay storage charges effective commencing the day following the date of
program performance. All recorded commercial material which has not been
telecast for a period of 45 days will be destroyed. If Advertiser submits a
written request to NBC to return such recorded commercial material prior to the
expiration of the 45 day period, NBC will endeavor to comply at Agency's
expense. Agency and Advertiser hereby release NBC from any liability arising out
of damage to or loss of any material or property furnished by Agency or
Advertiser for use on or in connection with telecasts hereunder except for
damage or loss caused by the demonstrable negligence of NBC or its employees. In
no event will NBC be responsible for damage to or loss of any such material or
property left with NBC for any extended period except such material or property
so left pursuant to written agreement of the parties specifically identifying
the same. Unless otherwise agreed to in writing, NBC retains title to all
scenery, props, costumes and other material furnished by NBC. (0489)
NBC will be under notability with respect to the handling or forwarding
of audience mad addressed to NBC or the stations listed in the Station List
intended for use by or for the benefit of Agency or Advertiser. (0672)
33. PARTIES
This agreement is entered into for Advertiser by Agency as Advertiser's
agent Agency represents and warrants that it is the duty authorized agent of
Advertiser for the purposes of this agreement and the matters contemplated
hereby and that its arrangements with Advertiser specifically contemplate the
placement of the advertising herein provided and the servicing thereof and the
allowance of agency commission as herein provided. It is understood that Agency
functions as paying agent for Advertiser hereunder and in no sense as an agent
or representative of NBC and that Advertiser will continue to be obligated for
all payments due to NBC hereunder until the actual receipt thereof by NBC.
(1062)
If at any time during the term hereof Agency ceases to be the
advertising agency for Advertiser, the then rights and duties of Agency herein
shall, subject to the provisions of paragraph 27 hereof, inure to the benefit of
and be binding on any other advertising agency, acceptable to NBC as to
financial responsibility, designated by Advertiser in writing to NBC
<PAGE>
therefor. If this agreement is executed by Advertiser rather than its
advertising agency, or if at any time daring the term hereof Agency ceases to be
the advertising agency for Advertiser. and if NBC has not exercised its right of
termination under paragraph 22, and Advertiser has not designated to NBC in
writing another advertising agency similarly acceptable, the term "Agency" shall
mean "Advertiser." (0489)
34. NOTICES
Notices to Agency and NBC hereunder shall be given by personal
delivery, postpaid mail, or overnight courier service to the Agency at its
address and to the person if any, shown in Part I and to NBC at 30 Rockefeller
Plaza, New York, New York 10112, attention of President, Sales, Television
Network. The date of such personal delivery, mailing, or delivery to courier
service shall be deemed the date of service. (0196)
35. GENERAL PROVISIONS
This agreement is made subject to all Federal, State and Municipal laws
and regulations now or hereafter in force and is not assignable in whole or in
part, except as otherwise herein specifically provided, without the consent of
NBC and shall be govemed by the laws of the State of New York, excluding all
principles of referral to the laws of other jurisdictions Which might otherwise
be applicable under doctrines of conflicts of laws. Agency and Advertiser
represent and warrant that this agreennt represents a sponsorship arrangement
exclusively between NBC and Advertiser and that no subordinate arrangement or
other sale or exchange has taken place or will take place between Advertiser and
any other person or entity. Waiver of rights resillting from breach of any
provision hereof shall not be deemed to constitute a waiver of rights resulting
from any previous or succeeding breach of the same or any other provision.
Except as herein otherwise specifically provided, this agreement constitutes the
entire Agreement between the parties relating to the subject matter hereof and
may not be changed, modified, renewed, extended or discharged except by an
agreement in writing, signed by the party against whom enforcement of the
chance, modification, renewal, extension or discharge is sought. (0593)
<PAGE>
JOINT ACTIVITIES AGREEMENT
This Joint Activities Agreement (the "Agreement")is made and entered
into as of September __, 1997 (the "Effective Date") by and between Intuit
Inc., a Delaware corporation ("Intuit") and iVillage Inc., a Delaware
corporation ("iVillage").
RECITALS
A. Intuit and iVillage desire jointly to develop, launch and maintain
an interactive online financial education and planning service (such service
to be referred to herein as "Armchair Millionaire") and to conduct certain
other business related to such activities.
B. Each of Intuit and iVillage desires to provide certain services
relating to the development, launch and maintenance of Armchair Millionaire,
on the terms and subject to the conditions set forth herein.
AGREEMENT
The parties hereto agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined in
this Agreement will have the following meanings, respectively:
1.1 "Advertising Revenue" means the sum of the aggregate
amounts billed for the license or sale of any Advertising Rights, less the sum
of: (a) amounts allocable to any credits granted for unused Advertising
Rights, (b) agency, camera-ready art and other discounts actually provided,
(c) refunds, rebates, make goods and similar credits, (d) applicable taxes;
(e) a three percent (3%) reserve for bad debts; and (f) amounts billed for
production services actually performed in connection with the license or sale
of Advertising Rights; provided, that (i) the amount billed for media portion
of such license or sale must be at or above the prevailing rate and (ii)
iVillage notifies Intuit in writing of the relative amounts proposed to be
billed for production and media, respectively, and Intuit does not object to
such amounts before the end of the second business day following receipt of
such written notice.
1.2 "Advertising Rights" means any advertising, sponsorship,
linking and similar promotional rights sold or licensed in connection with the
Quicken Financial Network version of Armchair Millionaire.
1.3 "Affiliate" of any party means any entity that controls,
is controlled by or is under common control with such party. For purposes of
this definition, "control" will mean the possession, directly or indirectly,
of a majority of the voting power of such entity (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
1.4 "Armchair Millionaire Content" means all materials, data
or other information owned or licensed by iVillage and displayed from time to
time in Armchair Millionaire.
1.5 "Confidential Information" means any information of a
party disclosed to the other party in the course of this Agreement, which is
identified as, or should be reasonably understood to be, confidential to the
disclosing party, including, but not limited to, know-how, trade secrets, data,
technical processes and formulas, source code, product designs, sales, cost
and other unpublished
<PAGE>
financial information, product and business plans, projections, marketing
data and this Agreement and all exhibits hereto. "Confidential Information"
will not include information which: (a) is known or becomes known to the
recipient directly or indirectly from a third-Party source other than one
having an obligation of confidentiality to the providing party; (b) is or
becomes publicly available or otherwise ceases to be secret or confidential,
except through a breach of this Agreement by the recipient; or (c) is or was
independently developed by the recipient without use of or reference to the
providing party's Confidential Information, as shown by evidence in the
recipient's possession.
1.6 "Exclusive Carriage Period" means the period commencing
on the Launch Date and continuing for a period of ten (10) months thereafter,
during which Intuit will have the exclusive right to feature Armchair
Millionaire on the Quicken Financial Network.
1.7 "Financial Content" means content, channels and services
relating to personal finance, small businesses, tax, general business news and
similar topics, and includes, without limitation:
o stock and mutual fund quotes, rates and portfolio
management;
o online banking;
o online financial services;
o billpay;
o online bill Presentment;
o non-bank branded bill payment;
o tax filing and information;
o small business lending;
o payroll information or services;
o retirement planning tools;
o checkbook management (personal finance and small business
accounting);
o investments;
o account data (such as investment portfolios, bank
accounts, credit card accounts, loan accounts, insurance
accounts and frequent flyer accounts);
o credit cards and smart cards;
o electronic wallets;
o financial planning tools;
o personal finance, small business and tax news, research
and information, (including listings, databases, rates,
quotes and charts);
o financial education;
o financial chat, forums and bulletin boards;
o decision making and comparison tools (such as programs,
applets and calculators);
o financial marketspaces including insurance, mortgage,
equity and mutual fund trading and small business
lending;
o financial advice from experts; and
o reviews and listings of financial WWW sites and services.
1.8 "Guaranteed Page Views" will mean the Page Views that
either Intuit or iVillage commits to deliver during the term of this
Agreement, as set forth in Exhibit-A hereto.
1.9 "Intellectual Property Rights" means all intellectual
property rights arising under statutory or common law, whether or not
perfected, including, without limitation, all (a) United States and foreign
patents, patent applications and other patent rights, including, without
limitation,
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divisions, continuations, renewals, reissues and extensions of any of the
foregoing, (b) rights associated with works of authorship including
copyrights, copyright applications, copyright registrations and moral rights,
(c) Confidential Information, (d) any right analogous to those set forth in
this definition, and (e) any other proprietary rights relating to intangible
property.
1.10 "Intuit Brand Features" means Intuit's trademarks, trade
names, service marks, service names and distinct brand elements that appear in
Intuit Properties from time to time and are protected under U.S. copyright law
or as to which Intuit has established trademarks or trade dress rights and any
modifications to the foregoing that may be created during the Term.
1.11 "Intuit Brand Guidelines" means the guidelines for use
of the Intuit Brand Features, which may be prescribed by Intuit from time to
time during the Term.
1.12 "Intuit Financial Content" I means Financial Content
provided by Intuit for inclusion in Armchair Millionaire (either directly or
through Links out of Armchair Millionaire), including, without limitation, the
Intuit Online Software Applications.
1.13 "Intuit Online Software Applications" means the online
software applications and tools described in Exhibit B hereto.
1.14 "Intuit Properties" means all properties, ventures and
services worldwide marketed under the Intuit Brand Features, including,
without limitation, that service currently known as "Quicken Financial
Network," and all other properties, ventures and services in which Intuit owns
a fifty percent (50%) or greater interest during the Term.
1.15 "iVillage Brand Features" means iVillage's trademarks,
trade names, service marks, service names and distinct brand elements that
appear in the iVillage Properties from time to time and are protected under
U.S. copyright law or as to which iVillage has established trademarks or trade
dress rights and any modifications to the foregoing that may be created during
the Term.
1.16 "iVillage Brand Guidelines" means the guidelines for
use of the iVillage Brand Features, which may be prescribed by iVillage from
time to time during the Term.
1.17 "iVillage Properties" means all properties, ventures and
services worldwide marketed under the iVillage Brand Features, including,
without limitation, those services currently known as "About Work,"
"Better Health," "Parent Soup," and "Vices and Virtues," and all properties,
ventures and services in which iVillage owns a fifty percent (50%) or greater
interest during the Term.
1.18 "Launch Date" means the date on which Armchair
Millionaire becomes publicly available for general viewing on the WWW,
currently anticipated to be October 13, 1997.
1.19 "Link" means a URL hidden behind a formatting option
that may take the form of a colored item of text (such as a URL description),
logo or image, and which allows a user to automatically move to or between WWW
pages, WWW sites or within a WWW document.
1.20 "Page Views" means any page(s) on the Armchair
Millionaire site that is (are) viewed by a user(s) on which any advertisement
or promotion is contained.
1.21 "Quicken Financial Network" means the Intuit Property
located at http://www.quicken.com, as modified from time to time throughout
the Term.
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1.22 "Site Specification Book" means the site specification
document to be prepared by iVillage for the Quicken Financial Network version
of the Armchair Millionaire, including a complete site topology map,
functionality definitions and explanations, navigation standards and templates
and flow charts of information paths.
1.23 "Term" means the term of this Agreement as provided in
Section 7.
1.24 "URL" means Universal Resource Locator, which provides
a unique Internet protocol address for accessing a WWW page.
1.25 "WWW" means the World Wide Web, a system for accessing
and viewing text, graphics, sound and other media via the collection of
computer networks known as the Internet.
2. Funding Commitments. iVillage and Intuit will participate in the
funding of expenses associated with the development, launch and maintenance of
Armchair Millionaire, as contemplated in this Section 2.
2.1 iVillage Commitment. iVillage will fund a minimum of
[*] during the period beginning on the Effective Date and ending on the
date that is ten (10) months following the Launch Date to fund expenses
associated with the development, launch and operation of Armchair Millionaire
during that period. Except to the extent provided in Sections 2.2 and 7.5
below, iVillage will be solely responsible for the funding of all operating
costs of Armchair Millionaire (x) in excess of [*] for the period
beginning on the Effective Date and ending the date that is ten (10) months
following the Launch Date and (y) for the period following the date that is
ten (10) months following the Launch Date.
2.2 Intuit Commitment. Intuit will fund an aggregate of
[*] for expenses associated with the development, launch and operation of
Armchair Millionaire, such sum to be paid in three (3) installments of
[*] as follows: (a) ten (10) days following the approval by Intuit of the
Site Specification Book in accordance with Section 3.1 below, (b) the later of
the ten (10) days following the Launch Date or three (3) months following the
date on which the payment contemplated in clause (a) is due and (c) the later
of three (3) months following the Launch Date or six (6) mouths following the
date on which the payment contemplated in clause (a) is due.
3. Service Commitments. iVillage and Intuit will provide services
associated with the development, launch and maintenance of Armchair Millionaire
as contemplated in this Section 3. In providing these service, each of
iVillage and Intuit will use efforts at least as diligent as those used in the
provision of similar services for the iVillage Properties or the Intuit
Properties, as the case may be.
3.1 Site Development and Launch. Subject to the terms and
conditions of this Agreement, iVillage will use its best efforts (a) to develop
and deliver the Site Specification Book within five (5) business days
following the Effective Date; which Site Specification Book shall be subject
to the written approval of Intuit, which shal1 not be withheld unreasonably,
and (b) to launch the Armchair Millionaire on or before October 13, 1997. If
iVillage fails to perform as contemplated in the previous sentence, Intuit
shall provide written notice of such failure to iVillage describing in
reasonable detail the circumstances underlying such failure, and iVillage
shall have a period of fifteen (15) days following the date of such written
notice to correct the deficiencies. The failure by iVillage to perform in
accordance with the procedure set forth in this Section 3.1 shall constitute a
material breach of this Agreement as contemplated in Section 7.3. hereof.
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3.2 Content. iVillage will (a) develop and manage, and have
sole editorial authority concerning, content and programming presented in
Armchair Millionaire; (b) develop editorial concepts and "point of view," and
design the "look and feel" of Armchair Millionaire, including all templates
and icons; and (c) ensure that the content and programming presented in
Armchair Millionaire is dynamic, timely and relevant; provided, that (x)
Intuit and iVillage will cooperate to establish common technology platforms
and technical specifications and (y) Intuit and iVillage will establish
reasonable standards and practices (including design templates and content
guidelines) to be observed throughout the Quicken Financial Network version of
Armchair Millionaire.
3.3 Hosting, Personnel and Facilities. iVillage will
(a) provide and manage all servers, telecommunications, facilities maintenance
and operations related to the delivery of Armchair Millionaire over the WWW,
(b) provide appropriate software development services to construct site and
community building databases, and (c) provide all technical, support sales,
administrative and management personnel, facilities, equipment, supplies and
services as are necessary to develop, launch and maintain Armchair Millionaire
as contemplated by this Agreement. Notwithstanding the foregoing, however,
Intuit will provide and manage all servers, telecommunications, facilities
maintenance, operations and technical support related to the delivery of, or
access to, the Intuit Financial Content (other than Intuit Financial Content
provided directly on the Armchair Millionaire site).
3.4 Carriage and Promotion. Commencing on the Launch Date
and continuing throughout the Term, (a) iVillage will (i) provide prominent
placement of Links to Armchair Millionaire, and (ii) place advertising banners
promoting Armchair Millionaire on all appropriate iVillage Properties
(currently understood to include "ParentSoup" and "AboutWork"), in a manner
that is reasonably acceptable to Intuit, with the intention of increasing
traffic to Armchair Millionaire and (b) Intuit will (i) provide prominent
placement of a Link to Armchair Millionaire on the "Community" homepage of
the Quicken Financial Network and (ii) include within the Quicken Financial
Network excerpts of Armchair Millionaire Content, together with Links to
Armchair Millionaire, in a manner that is reasonably acceptable to iVillage,
with the intention of increasing traffic to Armchair Millionaire. In addition,
during the Exclusive Carriage Period, Armchair Millionaire will be
"co-branded," featuring only the Armchair Millionaire Brand Features and the
Intuit Brand Features in equal prominence throughout the site. Following the
Exclusive Carriage Period, the Intuit Brand Features will be displayed
throughout Armchair Millionaire at least as prominently as the brand features
of any third party (other than Intuit or iVillage).
3.5 Advertising Sales Representative. During the Term,
iVillage will serve as the exclusive advertising sales representative for
Advertising Rights and will use its best efforts to sell such Advertising
Rights on Armchair Millionaire and to collect amounts owed by advertisers with
respect to such sales. To the extent that Intuit sells any Advertising Right
during the Term, it will obtain the consent of, and will coordinate its
selling effort with, iVillage.
3.6 Advertising Sales Guidelines. The parties hereby agree
to mutually determine form time to time, (a) standards, policies and guidelines
with regard to the acceptance of advertisements and advertising clients on
Armchair Millionaire and (b) pricing applicable to the sale of Advertising
Rights on Armchair Millionaire. The sale by iVillage or Intuit of Advertising
Rights will be subject to such standards, policies. guidelines, price rates
and procedures, and either iVillage or Intuit may reject any proposed
advertisement or advertising client that is determined not to meet such
standards, policies and/or guidelines. Further, each sale of Advertising
Rights hereunder will be subject to the proposed advertiser's agreement to be
bound by the standard advertising sales agreement as agreed to by the parties
hereto and then in effect.
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3.7 Commission. As compensation for services under Section
3.5 above, iVillage and Intuit will be entitled to receive a commission (the
"Commission") of [*]% of the Advertising Revenue from their respective sales of
Advertising Rights on Armchair Millionaire. Such Commission will be calculated
and paid in the manner and at the time prescribed in Section 4.2 below.
3.8 Intuit Online Software Application. Subject to the
terms and conditions of this Agreement, Intuit will use its best efforts to
permit the integration of Intuit's Online Software Applications in Armchair
Millionaire, which integration is assumed to be accomplished by Linking
Armchair Millionaire to the version of such Intuit Online Software
Applications made generally available on the Quicken Financial Network.
4. Payments.
4.1 Revenue Sharing. During the Term, Intuit will be
entitled to receive [*]%, and iVillage will be entitled to receive [*]%, of all
Advertising Revenue (net of any Commission) until an aggregate of $[*] of
Advertising Revenue has been collected, and Intuit will be entitled to receive
[*]%, and iVillage will be entitled to receive [*]%, of all Advertising Revenue
(net of any Commission) in excess of $[*]. In the event that Intuit exercises
the option contemplated in Section 7.5 hereof to subsidize the operating costs
of Armchair Millionaire in any renewal term, then Intuit will be entitled to
receive [*]%, and iVillage will be entitled to receive [*]%, of all Advertising
Revenue (net of any Commission) in any Intuit fiscal quarter (October 31,
January 31, April 30, July 31) until an amount equal to the aggregate amount
contributed by iVillage in the previous Intuit fiscal quarters in such renewal
term has been recovered. Thereafter, until the end of such renewal term, Intuit
will be entitled to receive [*]%, and iVillage will be entitled to receive [*]%,
of all Advertising Revenue (net of Commission).
4.2 Payment and Reporting. The allocation of Advertising
Revenue described in the Section 4.1 will be determined at the end of each
Intuit fiscal quarter, and iVillage will make payment within thirty (30) days
after the end of such quarter. iVillage will provide to Intuit, together with
its payment (or, if no payment is due for any applicable quarter, within
thirty (30) days after the end of such quarter), a report in reasonable detail
setting forth the calculation of the amounts payable.
4.3 Audit Rights. Intuit will have the right, at its own
expense, to direct an independent certified public accounting firm to inspect
and audit all of the accounting and sales books and records of iVillage that
are relevant to either (a) the performance by iVillage of its funding
commitment, as defined in Section 2.1 above, (b) Advertising Revenue arising
out of or associated with Armchair Millionaire or, (c) the operating costs
arising out of or associated with Armchair Millionaire, but only in the event
that Intuit exercises this option contemplated in Section 7.5 hereof, provided
that (w) any such inspection and audit will be conducted during regular
business hours in such a manner as not to interfere with normal business
activities; (x) in no event will audits be made hereunder more frequently than
once each calendar year; (y) if any audit should disclose an underpayment,
iVillage will immediately provide such funding or pay such amount to Intuit,
as appropriate; and (z) the reasonable fees and expenses relating to any audit
which reveals an underpayment in excess of ten percent (10%) of thc amount
owing or an over-allocation of operating expense in excess of ten percent
(10%) of the amount actually incurred, will be borne entirely by iVillage.
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5. Additional Agreements.
5.1 Intuit Media Purchase Commitment. Intuit will purchase,
during the three (3) months following the Launch Date, an aggregate of at least
$[*] in banner advertisements relating to Armchair Millionaire on the iVillage
Properties, at a price equal to $40 per thousand Page Views.
5.2 Traffic Targets. Each of Intuit and iVillage will
deliver the number of Guaranteed Page Views set forth on Exhibit A hereto
during the ten (10) months following the Launch Date. Intuit and iVillage will
negotiate in good faith to establish Ouaranteed Page View commitments for the
twelve (12) months following the first anniversary of the Launch Date, which
commitments will be attached to this Agreement as a replacement Exhibit A. If
the number of Page Views delivered either by Intuit or iVillage is not at
least [*]% of the number of Guaranteed Page Views in any period, then the party
responsible for the deficiency will provide to Armchair Millionaire "make goods"
or similar advertising credits having a value equal to the aggregate value of
the deficiency (determined by multiplying the number of Page Views that comprise
the deficiency by S.034).
5.3 Exclusivity.
5.3.1 During the Exclusive Carriage Period, Intuit
will have the exclusive right (a) to feature Armchair Millionaire Content on
the Quicken Financial Network, and iVillage will not permit any third party to
display all or any portion of the Armchair Millionaire Content, without the
prior approval of Intuit, and (b) to provide Financial Content for Armchair
Millionaire, and iVillage will not permit any third party Financial Content, nor
Links to any third party Financial Content, to appear in Armchair Millionaire,
without the prior approval of Intuit.
5.3.2 Following the Exclusive Carriage Period and
continuing until the completion of the Term, neither iVillage nor its
Affiliates will use or display the Intuit Financial Content on any other WWW
site that may feature the Armchair Millionaire Content or any portion thereof.
5.3.3 During the Term, neither iVillage nor any of its
Affiliates will (a) provide any Armchair Millionaire Content or any personal
finance product or service to Yahoo!, Inc. or any of its Affiliates, or (b)
without the prior approval of Intuit, which will not be withheld unreasonably,
provide any Financial Content or any personal finance product or service to,
or use any Financial Content or any personal finance product or service
developed by, Microsoft Corporation or any of its Affiliates; provided, that
iVillage and its Affliates shall be permitted to distribute Financial Content
and financial products and services (x) using the "Active Desktop"
distribution functionality incorporated in the Internet Explorer WWW browser
distributed by Microsoft Corporation or (y) as a component part of the
"Women's Network" distributed on the Microsoft Network (MSN). It is understood
and agreed that it will not be deemed unreasonable for Intuit to refuse to
permit iVillage to provide any Financial Content or any personal finance
product or service to, or use any Financial Content or any personal finance
product or service developed by or for, the Microsoft Money, Microsoft
Investor and Microsoft Money Insider WWW sites, and any enhancements,
modifications, extensions, combinations or private label versions of all or
any portion thereof that may occur from time to time during the Term.
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6. Licenses and Ownership.
6.1 Grant of License by iVillage. iVillage hereby grants to
Intuit during the term of this Agreement a non-exclusive, royalty-free,
worldwide license under all of iVillage's Intellectual Property Rights to use,
modify, reproduce, publicly display, publicly perform, distribute and transmit
(a) the iVillage Brand Features in the Intuit Properties, in connection with
the distribution, marketing and promotion of Armchair Millionaire, subject in
each case to compliance with the iVillage Brand Guidelines, and (b) the
Armchair Millionaire Content, or any portion thereof, in the Intuit
Properties; provided, however, that (i) the primary purpose of this use is to
drive traffic to the Armchair Millionaire site and (ii) Intuit shall not by
this license display the Armchair Millionaire Content in such a manner as to
recreate the Armchair Millionaire site in its entirety within the Intuit
Properties.
6.2 Grant of License by Intuit. Intuit hereby grants to
iVillage a nonexclusive, royalty-free, worldwide license under all of Intuit's
Intellectual Property Rights (a) to use, modify, reproduce, publicly display,
publicly perform, distribute and transmit the Intuit Brand Features in
Armchair Millionaire (in the manner described in this Agreement), in
connection with the distribution, marketing and promotion of Armchair
Millionaire, subject in each case to compliance with the Intuit Brand
Guidelines and (b) to use, reproduce, publicly display and transmit the Intuit
Financial Content provided by Intuit for inclusion in the Armchair
Millionaire site.
6.3 Ownership.
6.3.1. Armchair Mi11ionaire Brand and Content. As
between Intuit and iVillage, (a) iVillage will have full and exclusive right,
title and ownership interest in and to the iVillage Brand Features, the
Armchair Millionaire Content (other than the Intuit Financial Content), the
Armchair Millionaire Brand Features and the Intellectual Property Rights
therein and (b) Intuit will have full and exclusive right, title and
ownership interest in and to Intuit Brand Features, the Intuit Financial
Content and the Intellectual Property Rights therein.
6.3.2 Customer Database. Intuit and iVillage will
jointly own all right, title and interest in and to the customer database for
Armchair Millionaire and all information regarding users of Armchair
Millionaire included therein. Without the prior written consent of the other
party hereto, neither party will sell, or other authorize any third party to
use, any portion of the customer database for Armchair Millionaire or any
information regarding users of Armchair Millionaire included therein. Intuit
and iVillage will collaborate to develop a mutually acceptable policy
concerning the dissemination of information from the customer database.
7. Term and Termination
7.1 Term. This Agreement will commence on the Effective Date
and, subject to earlier termination pursuant to Sections 7.2 or 7.3 below,
will continue thereafter through and including the date that is ten (10)
months following the Launch Date (the "Initial Term"), subject to automatic
extension at the sole option of Intuit for a series of one (1) year terms
thereafter. Intuit will provide written notice of its intent to exercise its
option to extend the term of this Agreement within thirty (30) days of the
expiration of the initial term or any renewal term (each, a "Renewal Notice
Date"). Notwithstanding the foregoing, however, iVillage shall not be
obligated to continue to perform its obligations under this Agreement in any
renewal term if the sum of the aggregate amounts billed for the license or
sale of any Advertising Rights during the period beginning on the Launch Date
or the first day of the applicable renewal term, as the case may be, and
ending on the date that is thirty (30) days prior to
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the applicable Renewal Notice Date (and annualized to derive a pro forma gross
revenue projection for the Initial Term or the renewal term, as the case may
be) is less than $[*]. Upon termination, all rights and obligations of
each party hereto will cease as of the date of termination and any amounts
owed hereunder (other than the funding commitments contemplated in Section 2
hereof) will be paid in full, subject to Section 7.4 below; provided, however,
that rights and obligations set forth in Sections 7, 8, 9 and 10 will survive
the termination of this Agreement.
7.2 Automatic Termination. This Agreement will also
terminate automatically and effective immediately upon the earlier to occur of:
(a) the dissolution or liquidation of Intuit or
iVillage; or
(b) the appointment of a trustee in bankruptcy for
Intuit or iVillage, an assignment of assets for the benefit of Intuit's or
iVillage's creditors or the adjudication of bankruptcy with respect to Intuit
or iVillage.
7.3 Termination for Breach. In the event that either Intuit
or iVillage commits any material breach under this Agreement and such breach is
not cured within fifteen (15) days following receipt of written notice thereof
from the other party hereto, such other party will have the right (but not the
obligation) to terminate this Agreement. If Intuit shall terminate this
Agreement pursuant to this Section 7.3, iVillage shall refund to Intuit, within
ten (10) days following the effective date of such termination, all funds
actually paid by Intuit to iVillage pursuant to Section 2.2 above, net of
Advertising Revenue actually received by Intuit pursuant to Section 4.1 above,
and such refund shall be the sole and exclusive legal remedy of Intuit for
damages resulting from or relating to this Agreement, through the date of
termination (it being understood that Intuit shall nonetheless have the right
to pursue any equitable remedy available to it with respect to a breach of
Section 8.4 or 9 hereof).
7.4 Continuing Obligations to Pay Commissions.
Notwithstanding any termination of this Agreement, the terms of Section 4
above will survive with respect to all Advertising Revenue collected by
iVillage following the effective date of termination in respect of orders
secured prior to the effective date of termination,
7.5 Intuit Option. If, pursuant to Section 7.1 above, Intuit
should exercise its option to extend the Term, and iVillage should determine
to discontinue or terminate operation of the Armchair Millionaire site rather
than commit to such extension, then iVillage shall promptly deliver written
notice of such determination to lntuit, and Intuit shall have the right,
exercisable for a period of sixty (60) days following the date of such notice
(during which period iVillage will continue to operate the Armchair
Millionaire), to obligate iVillage to continue operation of the Armchair
Millionaire site for the applicable renewal period; provided that Intuit
commits to fund up to an amount equal to the difference between
(x) seventy-five percent (75%) of the projected annual operating costs for
Armchair Millionaire (as defined in Exhibit C hereto and amended annually by
mutual consent of iVillage and Intuit) for such renewal period and (y) the
annual operating costs that iVillage determines in good faith that it will be
able to recoup during such renewal period. Such sum will be paid in cash on a
quarterly basis, within thirty (30) days following the conclusion of any
Intuit fiscal quarter in the renewal period with respect to which the option
is exercised,
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8. Limitation of Liability and Indemnity.
8.1 Representations and Warranties. Each party represents
and warrants to the other party that such party has the full corporate right,
power and authority to enter into this Agreement and to perform the acts
required of it hereunder; and the execution of this Agreement by such party,
and the performance by such party of its obligations and duties hereunder, do
not and will not violate or contravene any applicable law or regulation or any
agreement to which such party is a party or by which it is otherwise bound,
and when executed and delivered by such party, this Agreement will constitute
the legal, valid and binding obligation of such party, enforceable against
such party in accordance with its terms. In addition, (a) iVillage represents
and warrants to Intuit that it is the owner of all right, title and interest
in and to, or is the exclusive licensee with right to use, reproduce,
distribute and sell as contemplated in this Agreement, the iVillage Brand
Features, the Armchair Millionaire Brand Features and the Armchair Millionaire
Content (other than the Intuit Financial Content), and that the iVillage Brand
Features, the Armchair Millionaire Brand Features and the Armchair Millionaire
Content (other than the Intuit Financial Content), do not and will not
infringe on or violate any Intellectual Property Right of any third party, or
violate any applicable law, regulation or third party right when included in a
manner consistent with this Agreement, and (b) Intuit represents and warrants
to iVillage that it is the owner of all right, title and interest in and to, or
is the exclusive licensee with right to use, reproduce, distribute and sell as
contemplated in this Agreement, the Intuit Brand Features and the Intuit
Financial Content, and that the Intuit Brand Features and the Intuit Financial
Content do not and will not infringe on or violate any Intellectual Property
Right of any third party, or violate any applicable law, regulation or third
party right when included in a manner consistent with this Agreement. In the
event that any party becomes aware of any such infringement (or alleged
infringement) or violation, such party will promptly notify the other party
and shall provide all information relating to such matters as such other party
may reasonably request.
8.2 Limitation of Liability. EXCEPT AS PROVIDED IN THIS
SECTION 8, UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
(EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES),
ARISING FROM ANY PROVISION OF THIS AGREEMENT, SUCH AS, BUT NOT LIMITED TO,
LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS.
8.3 No Additional Warranties. EXCEPT AS EXPRESSLY SET FORTH
IN SECTION 8.1 ABOVE, NEITHER PARTY MAKES, AND EACH PARTY HEREBY
SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, REGARDING THE PRODUCTS AND SERVICES CONTEMPLATED BY THIS AGREEMENT,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR NON-INFRINGEMENT AND IMPLIED WARRANTIES ARISING FROM COURSE OF
DEALING OR COURSE OF PERFORMANCE.
8.4 iVillage Obligation to Defend. Subject to the
limitations set forth below, iVillage, at its own expense, will defend, or at
its option settle, any claim, suit or proceeding against Intuit and pay any
final judgment entered or settlement against Intuit in any such claim, suit or
proceeding, to the extent that such claim, suit or proceeding is based upon
(a) the infringement of any trademark or service mark rights by the iVillage
Brand Features; or (b) the infringement or misappropriation of any patent,
copyright or trade secret or the violation of any third party right or any
third party claim resulting from the dissemination or use of any Armchair
Millionaire Content (other than the Intuit Financial Content) on any Intuit
Property; or (c) the failure by iVillage to comply with the
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requirements of law or regulations that are applicable to Armchair Millionaire
from time to time. iVillage will have no obligation to Intuit pursuant to this
Section 8.3 unless: (x) Intuit gives iVillage prompt written notice of the
claim, suit or proceeding and cooperates reasonably with iVillage; and (y)
iVillage is given the right to control and direct the investigation,
preparation, defense and settlement of the claim, suit or proceeding.
8.5 Intuit Obligation to Defend. Subject to the limitations
set forth below, Intuit, at its own expense, will defend, or at its option
settle, any claim, suit or proceeding against iVillage and pay any final
judgment entered or settlement against iVillage in any such claim, suit or
proceeding, to the extent that such claim, suit or proceeding is based upon
(a) the infringement of any trademark or service mark rights by the Intuit
Brand Features; or (b) the infringement or misappropriation of any patent,
copyright or trade secret or the violation of any third party right or any
third party claim resulting from the dissemination or use of the Intuit
Financial Content on Armchair Millionaire; or (c) the failure by Intuit to
comply with the requirements of law or regulations that are applicable to
Intuit Financial Content from time to time. Intuit will have no obligation to
iVillage pursuant to this Section 8.4 unless: (x) iVillage gives Intuit prompt
written notice of the claim, suit or proceeding and cooperates reasonably
with Intuit; and (y) Intuit is given the right to control and direct the
investigation, preparation, defense and settlement of the claim, suit or
proceeding.
8.6 Options. If either party receives notice of an alleged
infringement, it will have the right, at its sole option, (a) to obtain the
right for the other party to continue use of the allegedly infringing
software, system, content or brand feature, as applicable, or (b) to replace
or modify the allegedly infringing software, system, content or brand feature,
as applicable, so that it is no longer infringing but retains equivalent
functionality and value, or (c) to remove the allegedly infringing content.
8.7 EXCLUSIVE REMEDIES. THE RIGHTS AND REMEDIES SET FORTH IN
THIS SECTION 8 CONSTITUTE THE ENTIRE OBLIGATIONS AND THE EXCLUSIVE REMEDIES
OF THE PARTIES CONCERNING INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES OR THIRD PARTY CLAIMS.
9. Confidentiality.
9.1 The parties recognize that, in connection with the
performance of this Agreement each of them may disclose to the others its
Confidential Information. The party receiving any Confidential Information
agrees to maintain the confidential status of such Confidential Information
and not to use any such Confidential Information for any purpose other than the
purpose for which it was originally disclosed to the receiving party, and not
to disclose any of such Confidential Information to any third party. No party
will disclose the others' Confidential Information to its employees and agents
except on a "need-to-know" basis.
9.2 The parties acknowledge and agree that each may
disclose Confidential Information: (a) as required by law or the rules of the
National Association of Securities Dealers, Inc. or any applicable securities
exchange; (b) to their respective directors, officers, employees, attorneys,
accountants and other advisors, who are under an obligation of
confidentiality, on a "need-to-know" basis; (c) to investors or joint venture
partners, who are under an obligation of confidentiality, on a
"need-to-know" basis; or (d) in connection with disputes or litigation between
the parties involving such Confidential Information and each party will
endeavor to limit disclosure to that purpose and to ensure maximum application
of all appropriate judicial safeguards (such as placing documents under seal).
In
-11-
<PAGE>
the event a party is required to disclose Confidential Information as required
by law, such party will, to the extent practicable, in advance of such
disclosure, provide the disclosing party with prompt notice of such
requirement. Such party also agrees, to the extent legally permissible, to
provide the disclosing party, in advance of any such disclosure, with copies
of any information or documents such party intends to disclose (and, if
applicable, the text of the disclosure language itself) and to cooperate with
the disclosing party to the extent the disclosing party may seek to limit such
disclosure.
10. Miscellaneous.
10.1 Notices. Except as otherwise provided herein, any
notice or other communication to be given hereunder will be in writing and
will be (as elected by the party giving such notice): (a) personally
delivered; (b) transmitted by postage prepaid registered or certified
airmail, return receipt requested; (c) transmitted by electronic mail via
the Internet with receipt being acknowledged by the recipient by return
electronic mail (with a copy of such transmission concurrently transmitted by
postage prepaid registered or certified airmail, return receipt requested);
(d) transmitted by facsimile (with a copy of such transmission by postage
prepaid registered or certified airmail, return receipt requested); or (e)
deposited prepaid with a nationally recognized overnight courier service.
Unless otherwise provided herein, all notices will be deemed to have been duly
given on: (x) the date of receipt (or if delivery is refused, the date of
such refusal) if delivered personally, by electronic mail, facsimile or by
courier; or (y) three (3) days after the date of posting if transmitted by
mail. Notice hereunder will be directed to a party at the address for such party
as set forth on the signature page of this Agreement. Either party may change
its address for notice purposes hereof on written notice to the other party
pursuant to this Section 10.1.
10.2 Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had all
signed the same document. All counterparts wi1l be construed together and will
constitute one agreement.
10.3 No Assignment. Neither party will transfer or assign any
rights or delegate any obligations hereunder, in whole or in part, whether
voluntarily or by operation of law, without the prior written consent of the
other party. Any purported transfer, assignment or delegation by either party
without the appropriate prior written approval will be null and void and of no
force or effect. Notwithstanding the foregoing, each party will have the right
to assign this Agreement to any successor of such party by way of merger or
consolidation or the acquisition of all or substantially all of the business
and assets of the assigning party relating to the Agreement; provided,
however, that the trademark, logo, tradename or other identifying information
of any such successor entity shall not be included in Armchair Millionaire, or
in any advertising, marketing or promotional material of any kind relating to
Armchair Millionaire, without the prior written consent of the other party to
this Agreement.
10.4 Headings. Sections, titles or captions in no way define,
limit, extend or describe the scope of this Agreement nor the intent of any of
its provisions.
10.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
-12-
<PAGE>
10.6 Entire Agreement. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof, and
supersedes all prior and/or contemporaneous agreements or understandings,
written or oral, between the parties with respect to the subject matter
hereof.
10.7 Governing Law. This Agreement will be governed by and
interpreted under the laws of the State of California, without giving effect
to applicable conflicts of law principles.
10.8 Amendment. This Agreement may not be amended or
modified by the parties in any manner, except by an instrument in writing
signed on behalf of each of the parties to which such amendment or
modification applies by a duly authorized officer or representative.
10.9 Waiver. Any of the provisions of this Agreement may be
waived by the party entitled to the benefit thereof. Neither party will be
deemed, by any act or omission, to have waived any of its rights or remedies
hereunder unless such waiver is in writing and signed by the waiving party,
and then only to the extent specifically set forth in such writing. A waiver
with reference to one event will not be construed as continuing or as a bar to
or waiver of any right or remedy as to a subsequent event.
10.10 Recovery of Costs and Expenses. If either party to
this Agreement brings an action against the other party to enforce its rights
under this Agreement, the prevailing party will be entitled to recover its
costs and expenses, including, without limitation, attorneys' fees and costs
incurred in connection with such action, including any appeal of such action.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers or representatives as
of the Effective Date.
Intuit Inc.
By: Jay H. O'Connor
---------------------------------
Its: Director
---------------------------------
Address: 2535 GARCIA AVE.
----------------------------
MOUNTAIN VIEW, CA 92043
--------------------------------------
--------------------------------------
Fax: (415) 944-6436
-------------------------------
email: [email protected]
-------------------------------
iVillage Inc.
By: Steve Elkes
---------------------------------
Its: Vice President
---------------------------------
Address: 170 Fifth Ave.
----------------------------
New York, NY
--------------------------------------
--------------------------------------
Fax: (212) 604-9133
-------------------------------
email: [email protected]
-------------------------------
-14-
<PAGE>
EXHIBIT A
Guaranteed Page Views
<TABLE>
<CAPTION>
Growth
Rate Month 3 Month 4 Month 5 Month 6 Month 7 Month 8
<S> <C> <C> <C> <C> <C> <C> <C>
Intuit Media Buy [*]% [*] [*]
iVillage [*]% [*] [*] [*] [*] [*] [*]
Intuit [*]% [*] [*] [*] [*] [*] [*]
From WWW links [*] [*] [*] [*] [*] [*]
subtotal [*] [*] [*] [*] [*] [*]
*Repeat traffic [*] [*] [*] [*] [*] [*]
TOTAL [*] [*] [*] [*] [*] [*]
Ad Inventory-pp [*] [*] [*] [*] [*] [*] [*]
per visit
Percent Ads sold [*] [*]% [*]% [*]% [*]% [*]% [*]%
out
Averge CPM $[*] $[*] $[*] $[*] $[*] $[*] $[*]
(Gross)
Total revenue $[*] $[*] $[*] $[*] $[*] $[*]
<CAPTION>
Month 9 Month 10 Month 11 Month 12 TOTAL
<S> <C> <C> <C> <C> <C>
Intuit Media Buy [*]
iVillage [*] [*] [*] [*] [*]
Intuit [*] [*] [*] [*] [*]
From WWW links [*] [*] [*] [*] [*]
subtotal [*] [*] [*] [*] [*]
*Repeat traffic [*] [*] [*] [*] [*]
TOTAL [*] [*] [*] [*] [*]
Ad Inventory-pp [*] [*] [*] [*] [*]
per visit
Percent Ads sold [*]% [*]% [*]% [*]% [*]%
out
Averge CPM $[*] $[*] $[*] $[*] $[*]
(Gross)
Total revenue $[*] $[*] $[*] $[*] $[*]
</TABLE>
*[*]% of bought/[*]% of previous months traffic repeat
[*] Confidential treatment requested.
<PAGE>
EXHIBIT B
Intuit Online Software Applications
The Intuit Online Software Applications to be integrated into
Armchair Millionaire on the terms and subject to the conditions of Section 3.8
of the Agreement shall consist exclusively of the following:
1. retirement planning tool;
2. glossary function; and
3. introductory portfolio management tool.
<PAGE>
EXHIBIT C
Armchair Millionaire Operating Costs
TOTAL: $[*]
OVERHEAD SUBTOTAL: $[*]
- - Off-line marketing $[*]
- - Banner creation $[*]
- - Contest Administration $[*]
- - Ad trafficking $[*]
STAFF/FREELANCE SUBTOTAL: $[*]
- - Executive Producer $[*]
- - Managing Producer $[*]
- - Benefits, travel & entertainment $[*]
- - Copy editor/editorial assistant (freelance) $[*]
- - Community Manager (freelance) $[*]
- - Editorial contributions and community leaders (freelance) $[*]
SITE HOSTING SUBTOTAL: $[*]
- - Hosting/Webmastering (database and message board maintenance, site traffic
data) $[*]
- - Server/Installation $[*]
- - Database licensing (Dynamic page generation, Membership database, Ad
management) $[*]
COST OF SALES SUBTOTAL: $[*]
- - Five Percent ([*]%) of gross advertising revenue (Projected at S[*])
[*] Confidential treatment requested.
<PAGE>
July 14, 1998
Mr. Lewis Schiff
Executive Producer
Armchair Millionaire
iVillage
170 Fifth Avenue
New York, NY 10010
Lewis:
Pursuant to Section 7.1 of the "Joint Activities Agreement" between Intuit and
iVillage dated September, 1997, this letter serves as written notice of Intuit's
intent to exercise its option to renew the term of the Agreement.
Sincerely,
/s/ Jay O'Connor
Jay O'Connor
Director
cc: Steve Elkes, iVillage
<PAGE>
[FOUNDERS]
FORM OF NON-COMPETITION, NON-DISCLOSURE AND
ASSIGNMENT OF INVENTIONS AGREEMENT
WITH
iVILLAGE INC.
In consideration of my employment or continued employment, as the
case may be, with iVillage Inc., a Delaware corporation (the "Company"), and
the compensation received by me from the Company from time to time, I hereby
agree with the Company as follows:
1. ACKNOWLEDGMENT. I understand and acknowledge that:
(a) The Company is engaged in a continuous program of
research, design, development, production, publishing, marketing and servicing
with respect to its business and as part of my employment by the Company I am
(or may be) expected to make new contributions and inventions of value to the
Company.
(b) My employment may create a relationship of confidence and
trust between me and the Company with respect to certain information
applicable to the business of the Company or the business of any client,
customer, or business partner of the Company, which may be made known to me by
the Company or by any client, customer, or business partner of the Company, or
learned by me during the period of my employment.
(c) The Company possesses and will continue to possess
information that has been created, discovered or developed by, or otherwise
become known to, the Company (including, without limitation, information
created, discovered, developed or made known by me during the period of or
arising out of my employment by the Company, whether before or after the date
hereof) as to which property rights have been or may be acquired by or
assigned or otherwise conveyed to the Company, which information has
commercial value in the business in which the Company is engaged and may be
treated by the Company as confidential.
2. COMMITMENT TO COMPANY. During the period of my employment by the
Company, I will devote substantially all of my business time, energy and
attention to the business and affairs of the Company.
3. WORKS FOR HIRE. I acknowledge that all right, title and interest I
obtain in all works of authorship, designs, computer programs, copyrights and
copyright applications,
-1-
<PAGE>
inventions, discoveries, developments, know-how, systems, processes, formulae,
patent and patent applications, trade secrets, new products, internal reports
and memoranda, strategies, and marketing plans conceived, devised, developed,
written, reduced to practice, or otherwise created or obtained by me in
connection with my employment by the Company (the "Intellectual Property") are
regarded as "works for hire". I hereby transfer and assign to the Company all
right, title, and interest to the Intellectual Property. Promptly after I
obtain knowledge of any Intellectual Property, I will disclose it to the
Company. Upon request of the Company and at its cost, I will execute and
deliver all documents or instruments and take all other action as the Company
may deem reasonably necessary to transfer all right, title, and interest in
any Intellectual Property to the Company; to vest in the Company good, valid
and marketable title to such Intellectual Property; to perfect, by
registration or otherwise, trademark, copyright and patent protection of the
Company with respect to such Intellectual Property; and otherwise to protect
the Company's trade secrets and proprietary interest in such Intellectual
Property.
4. DOCUMENTATION. In the event of the termination of my employment
for any reason, I will deliver to the Company all documents, notes, drawings,
blueprints, formulae, specifications, computer programs, data and other
materials of any nature pertaining to any Intellectual Property or to my work
with the Company, and will not take any of the foregoing or any reproduction
of any of the foregoing that is embodied in a tangible medium of expression.
5. CONFIDENTIALITY. At all times, both during my employment by the
Company and after its termination, I will keep in strict confidence and will
not disclose any confidential or proprietary information relating to the
business of the Company, or any client, customer, or business partner of the
Company, to any person or entity, or make use of any such confidential or
proprietary information for my own purposes or for the benefit of any person
or entity, except as may be necessary in the ordinary course of performing my
duties as an employee of the Company.
6. RESTRICTIVE COVENANT. I hereby acknowledge and recognize that I
may possess confidential information and that the business of the Company is
highly competitive. Accordingly, I hereby agree that I will not, during the
Competitive Period, (i) become directly and materially involved in activities
contributing to the design or marketing of a Protected Channel (as defined
below) developed or produced by a Competitive Business (as defined below),
whether such involvement shall be as an employer, officer, director, owner,
employee, partner or other participant, (ii) assist others in any involvement
in any Competitive Business in the manner described in the foregoing clause (i),
or (iii) induce employees of the Company or its affiliates or subsidiaries to
terminate their employment with the
-2-
<PAGE>
Company or such affiliate or subsidiary or involve themselves in any
Competitive Business in the manner described in the foregoing clause (i).
"Competitive Period" means the period of my employment by the Company and in
the event that my employment with the Company is terminated (A) for any reason
whatsoever other than any termination by the Company without cause, for an
additional period of twelve months following such termination, or (B) by the
Company without cause, (x) if the Company agrees to pay my base salary then in
effect for six months following such termination, for an additional period of
twelve months following such termination, and (y) if I deliver an Election
Notice in accordance with the Stockholders' Agreement dated the date hereof
among the Company, myself, and its other stockholders, an additional period
(to be added to any twelve-month period under clause (x)) equal to the shorter
of twelve months and the period between such termination and the next
anniversary of the date hereof. "Competitive Business" means and includes any
business located in the United States of America that develops or produces any
online channel the content of which is substantially similar to any online
channel produced or under active development by the Company during my
employment or at the time of such termination (a "Protected Channel");
provided, however, if the Qualified Capital Financing has not been completed
prior to September 19, 1996, and the Board of Directors of the Company
determines that the Company will not produce any online channel other than the
Parenting Channel, then Competitive Business means any such business that
develops or produces any online channel the content of which is substantially
similar to the content of the Parenting Channel. "Qualified Capital Financing"
means any issuance by the Company in one transaction or a series of related
transactions of shares of its preferred stock after September 19, 1995, for an
aggregate cash purchase price of at least $1,500,000.
I understand that the foregoing obligation is not meant to prevent me
from earning a living or fostering my career. It does intend, however, to
prevent any Competitive Business from gaining any unfair advantage from my
knowledge of confidential information.
7. OTHER AGREEMENTS. I represent and warrant that my execution and
delivery of this Agreement and the performance of all the terms of this
Agreement do not and will not breach any agreement to keep in confidence
proprietary information acquired by me in confidence or trust. I have not
entered into and shall not enter into any agreement, either written or oral,
in conflict with this Agreement. I represent that I have not brought and will
not bring with me to the Company or use at the Company any materials or
documents of an employer or a former employer that are not generally available
to the public, unless express written authorization from such employer for
their possession and use has been obtained. I also understand that I am not to
breach any obligation of confidentiality that I have to any employer or
-3-
<PAGE>
former employer and agree to fulfill all such obligations during the period of
my affiliation with the Company.
8. REMEDIES. I acknowledge that a remedy at law for any breach or
threatened breach of the provisions of this Agreement would be inadequate and
therefore agree that the Company shall be entitled to injunctive relief in
addition to any other available rights and remedies in case of any such breach
or threatened breach; provided, however, that nothing contained herein shall
be construed as prohibiting the Company from pursuing any other remedies
available for any such breach or threatened breach.
9. ASSIGNMENT. This Agreement and the rights and obligations of the
parties hereto shall bind and inure to the benefit of any successor or
successors of the Company by reorganization, merger or consolidation or
otherwise and any assignee of all or substantially all of its business and
properties, but neither this Agreement nor any rights or benefits hereunder
may be assigned by me.
10. INTERPRETATION. It is the desire and intent of the parties that
the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated to be invalid or unenforceable, such provision
shall be deemed amended to delete therefrom the portion thus adjudicated to
be invalid or unenforceable, such deletion to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
adjudication is made. In addition, if any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively
broad as to duration, geographical scope, activity or subject, it shall be
construed by limiting and reducing it so as to be enforceable to the extent
compatible with the applicable law as it shall then appear.
11. NOTICES. Any notice which a party is required or may desire to
give pursuant to this Agreement shall be given by personal delivery or
registered or certified mail, return receipt requested, addressed to me at my
address of record with the Company and addressed to the Company at its
principal office, or at such other place as either party may from time to time
designate in writing. The date of personal delivery or the date of mailing any
such notice shall be deemed to be the date of delivery thereof.
12. WAIVERS. If either party shall waive any breach of any provision
of this Agreement, such party shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
-4-
<PAGE>
14. NO EMPLOYMENT AGREEMENT. I acknowledge that this Agreement does
not constitute an employment agreement and agree that this Agreement shall be
binding upon me regardless of whether or not my employment shall continue for
any length of time hereafter and whether or not my employment is terminated
for any reason whatsoever by the Company or me or both.
15. COMPLETE AGREEMENT; AMENDMENTS; PRIOR AGREEMENTS. The foregoing
is the entire agreement of the parties with respect to the subject matter
hereof and may not be amended, supplemented, cancelled or discharged except by
written instrument executed by both parties. This Agreement supersedes all
prior agreements between the parties with respect to the matters covered
hereby.
Date: 9/19/95 Name:
-------------------------- --------------------------
--------------------------
Signature
Accepted and agreed to as of
the date above written by
iVillage Inc.
By:
--------------------------
<PAGE>
AMENDMENT NO. 1 dated as of ___________, to the
Non-Competition, Non-Disclosure and Assignment of
Inventions Agreement dated September 19, 1995 (the
"Agreement"), between iVILLAGE INC., a Delaware
corporation (the "Company") and ___________ (the
"Executive") .
The parties desire to amend the Agreement in certain respects with
respect to the non-competition covenant contained therein and to provide for
severance arrangements for the Executive, as hereinafter set forth. All
capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Agreement.
NOW THEREFORE, pursuant to Section 15 of the Agreement, the
undersigned hereby amend the Agreement as follows:
(a) The definition of "Competitive Period" in Section 6 of the
Agreement is hereby amended and restated as follows:
"'Competitive Period', means (i) the period of my
employment by the Company and an additional period
of following the termination of my employment by
the Company for any reason and (ii) if I deliver
the Election Notice in accordance with the Amended
and Restated Stockholders' Agreement dated as of
May 6, 1996, an additional period (to be added to
the period provided for in clause (i)) equal to the
shorter of twelve months and the period between
such termination and the next anniversary of the
date hereof."
(b) Section 14 of the Agreement is hereby amended and restated as
follows:
"NO EMPLOYMENT AGREEMENT; SEVERANCE. I acknowledge
that this Agreement does not constitute an
employment agreement and agree that this Agreement
shall be binding upon me regardless of whether or
not my employment shall continue for any length of
time hereafter and whether or not my employment is
terminated for any reason whatsoever by the Company
or me or both. It is, however, understood and
agreed by the Company that if my employment by the
Company is terminated without cause, the Company
shall pay me as severance and in consideration of
my complying with my post-employment obligations
<PAGE>
under Section 6 hereof, an amount equal to my base
salary then in effect for twelve months following
such termination, payable on the same basis as my
base salary was paid prior to such termination."
(c) Except as amended as provided herein, the Agreement shall remain
in full force and effect in accordance with its terms.
(d) This Amendment shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed wholly therein (without giving effect to principles of conflicts of
laws).
(e) This Amendment may be executed in any number of counterparts, and
each such counterpart shall be deemed to be an original instrument, but all
such counterparts shall constitute one agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
No. 1 as of the date first written above.
iVILLAGE INC.
By:
----------------------------
Name:
Title:
----------------------------
<PAGE>
under Section 6 hereof, an amount equal to my base
salary then in effect for twelve months following
such termination, payable on the same basis as my
base salary was paid prior to such termination."
(c) Except as amended as provided herein, the Agreement shall remain
in full force and effect in accordance with its terms.
(d) This Amendment shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed wholly therein (without giving effect to principles of conflicts of
laws).
(e) This Amendment may be executed in any number of counterparts, and
each such counterpart shall be deemed to be an original instrument, but all
such counterparts shall constitute one agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this Amendment
No. 1 as of the date first written above.
iVILLAGE INC.
By:
-------------------------------
Name:
Title:
/s/ Nancy Evans
--------------------------------
Nancy Evans
<PAGE>
===============================================================================
STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York, Inc.
===============================================================================
Agreement of Lease, made as of this ________________ day of August 1995,
between 170 FIFTH ASSOCIATE, INC, having an office at 55 Fifth Avenue, 17th
Floor, New York, NY party of the first part, hereinafter referred to as OWNER,
and
iVILLAGE, INC.
party of the second part, hereinafter referred to as TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner all
of the fourth (4th) floor
in the building known as 170 Fifth Avenue in the Borough of Manhattan, City of
New York, for the term of Six (6) Years (or until such term shall sooner cease
and expire as hereinafter provided) to commence on the 1st day of SEPTEMBER
nineteen hundred and ninety five, and to end on the 31st day of AUGUST Two
thousand and one both dates inclusive, at an annual rental rate set forth at the
RIDER;
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner or such other place as Owner may
designate, without any set off or deduction whatsoever, except that Tenant shall
pay the first __ monthly installment(s) on the execution hereof (unless this
lease be a renewal).
In the event, at the commencement of the term of this lease, or thereafter,
Tenant shall be in default in the payment of rent to Owner pursuant to the terms
of another lease with Owner or with Owner's predecessor in interest, Owner may
at Owner's option and without notice to Tenant add the amount of such arrears to
any monthly installment of rent payable hereunder and the same shall be payable
to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent Occupancy
1. Tenant shall pay the rent as above and as hereinafter provided at the RIDER.
2. Tenant shall use and occupy demised premises for Advertising and Media
Services and for no other purpose.
Tenant Alterations:
3. Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written consent. Subject to the prior written consent of
Owner, and to the provisions of this article, Tenant at Tenant's expense, may
make alterations, installations, additions or improvements which are
non-structural and which do not affect utility services or plumbing and
electricity lines, in or to the interior of the demised premises by using
contractors or mechanics first approved by Owner. Tenant shall, before making
any alterations, additions, installations or improvements, at its expense,
obtain all permits, approvals and certificates required by any governmental or
quasi governmental bodies and (upon completion) certificates of final approval
thereof and shall deliver promptly duplicates of all such permits, approvals and
certificates to Owner and Tenant agrees to carry and will cause Tenant's
contractors and sub-contractors to carry such workman's compensation, general
liability, personal and property damage insurance as Owner may require. If any
mechanic's lien is filed against the demised premises, or the building of which
the same forms a part, for work claimed to have been done for, or materials
furnished to, Tenant, whether or not done pursuant to this article, the same
shall be discharged by Tenant within thirty days thereafter, at Tenant's
expense, by filing the bond required by law. All fixtures and all paneling,
partitions, railings and like installations, installed in the premises at any
time, either by Tenant or by Owner in Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be surrendered with the
demised premises unless Owner, by notice to Tenant no later than twenty days
prior to the date fixed as the termination of this lease, elects to relinquish
Owner's right thereto and to have them removed by Tenant, in which event the
same shall be removed from the premises by Tenant prior to the expiration of the
lease, at Tenant's expense. Nothing in this Article shall be construed to give
Owner title to or to prevent Tenant's removal of trade fixtures, moveable office
furniture and equipment, but upon removal of any such from the premises or upon
removal of other installations as may be required by Owner, Tenant shall
immediately and at its expense, repair and restore the premises to the condition
existing prior to installation and repair any damage to the demised premises or
the building due to such removal. All property permitted or required to be
removed, by Tenant at the end of the term remaining in the premises after
Tenant's removal shall be deemed abandoned and may, at the election of Owner,
either be retained as Owner's property or may be removed from the premises by
Owner, at Tenant's expense.
Maintenance and [ILLEGIBLE]
4. Tenant shall, throughout the term of this lease, take good care of the
demised premises and the fixtures and [ILLEGIBLE] which arise out of any work,
labor, service or equipment done for or supplied to Tenant or any subtenant or
arising out of the installation, use or operation of the property or equipment
of Tenant or any subtenant. Tenant shall also repair all damage to the building
and the demised premises caused by the moving of Tenant's fixtures, furniture
and equipment. Tenant shall promptly make, at Tenant's expense, all repairs in
and to the demised premises for which Tenant is responsible, using only the
contractor for the trade or trades in question, selected from a list of at least
two contractors per trade submitted by Owner. Any other repairs in or to the
building or the facilities and systems thereof for which Tenant is responsible
shall be performed by Owner at the Tenant's expense. Owner shall maintain in
good working order and repair the exterior and the structural portions of the
building, including the structural portions of its demised premises, and the
public portions of the building interior and the building plumbing, electrical,
heating and ventilating systems (to the extent such systems presently exist)
serving the demised premises. Tenant agrees to give prompt notice of any
defective condition to the premises for which Owner may be responsible
hereunder. There shall be no allowance to Tenant for diminution of rental value
and no liability on the part of Owner by reason of inconvenience, annoyance or
injury to business arising from Owner or others making repairs, alterations,
additions or improvements in or to any portion of the building or the demised
premises or in and to the fixtures, appurtenances or equipment thereof. It is
specifically agreed that Tenant shall not be entitled to any setoff or reduction
of rent by reason of any failure of Owner to comply with the covenants of this
or any other article of this Lease. Tenant agrees that Tenant's sole remedy of
law in such instance will be by way of an action for damages for breach of
contract. The provisions of this Article 4 shall not apply in the case of fire
or other casualty which are dealt with in Article 9 hereof.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to be cleaned from the outside in violation of Section 202 of
the Labor Law or any other applicable law or of the Rules of the Board of
Standards and Appeals, or of any other Board or body having or asserting
jurisdiction.
Requirements of Law, Fire Insurance, Floor Loads:
6. Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter, Tenant, at Tenant's sole cost and expense, shall
promptly comply with all present and future laws, orders and regulations of all
state, federal, municipal and local governments, departments, commissions and
boards and any directon of [ILLEGIBLE]
<PAGE>
of use or manner of use of the premises or the building (including the use
permitted under the lease). Nothing herein shall require Tenant to make
structural repairs or alterations unless Tenant has, by its manner of use of the
demised premises or method of operation therein, violated any such laws,
ordinances, orders, rules, regulations or requirements with respect thereto.
Tenant may, after securing Owner to Owner's satisfaction against all damages,
interest, penalties and expenses, including, but not limited to, reasonable
attorney's fees, by cash deposit or by surety bond in an amount and in a
company satisfactory to Owner, contest and appeal any such laws, ordinances,
orders, rules, regulations or requirements provided same is done with all
reasonable promptness and provided such appeal shall not subject Owner to
prosecution for a criminal offense or constitute a default under any lease or
mortgage under which Owner may be obligated, or cause the demised premises or
any part thereof to be condemned or vacated. Tenant shall not do or permit any
act or thing to be done in or to the demised premises which is contrary in law,
or which will invalidate or be in conflict with public liability, fire or other
policies of insurance at any time carried by or for the benefit of Owner with
respect to the demised premises or the building of which the demised premises
form a part, or which shall or might subject Owner to any liability or
responsibility to any person or for property damage. Tenant shall not keep
anything in the demised premised except as now or hereafter permitted by the
Fire Department, Board of Fire Underwriters, Fire Insurance Rating Organization
or other authority having jurisdiction, and then only in such manner and such
quantity so as not to increase the rate for fire insurance applicable to the
building, nor use the premises in a manner which will increase the insurance
rate for the building or any property located therein over that in effect prior
to the commencement of Tenant's occupancy. Tenant shall pay all costs, expenses,
fines, penalties, or damages, which may be imposed upon Owner by reason of
Tenant's failure to comply with the provisions of this article and if by reason
of such failure the fire insurance rate shall, at the beginning of this lease or
at ant time thereafter, be higher than it otherwise would be, then Tenant shall
reimburse Owner, as additional rent hereunder, for that portion of all fire
insurance premiums thereafter paid by Owner which shall have been charged
because of such failure by Tenant. In any action or proceeding wherein Owners
and Tenant are parties, a schedule or "make-up" of rate for the building or
demised premises issued by the New York Fire Insurance Exchange, or other body
making fire insurance rates applicable to said premises shall be conclusive
evidence of the facts therein stated and of the several items and charges in the
fire insurance rates then applicable to said premises. Tenant shall not place a
load upon any floor of the demised premises exceeding the floor load per square
foot area which it was designed to carry and which is allowed by law. Owner
reserves the right to prescribe the weight and position of all safes, business
machines and mechanical equipment. Such installations shall be placed and
maintained by Tenant, at Tenant's expense, in settings sufficient, in Owner's
judgement, to absorb and prevent vibration, noise and annoyance.
Subordination:
7. This lease is subject and subordinate to all ground or underlying leases and
to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals, modifications
consolidations, replacements and extensions of any such underlying leases and
mortgages. This clause shall be self-operative and no further instrument of
subordination shall be required by any ground or underlying lessor or by any
mortgagee, affecting any lease or the real property of which the demised
premises are a part. In confirmation of such subordination, Tenant shall execute
promptly any certificate that Owner may request.
Property--Loss, Damage, Reimbursement, Indemnity:
8. Owner or its agents shall not be liable for any damage to property of Tenant
or of others entrusted to employees of the building, nor for loss of or damage
to any property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees. Owner
or its agents will not be liable for any such damage caused by other tenants or
persons in, upon or about said building or caused by operations in construction
or any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorneys fees, paid,
suffered or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or licensees. Tenant's
liability under this lease extends to the acts and omissions of any sub-tenant,
and any agent, contractor, employee, invitee or licensee of any sub-tenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be [ILLEGIBLE] date when
the premises shall have been repaired and restored by Owner, subject to Owner's
right to elect not to restore the same as hereinafter provided. (d) If the
demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, specifying a date for the
expiration of the lease, which date shall not be more than 60 days after the
giving of such notice, and upon the days specified in such notice the term of
this lease shall expire as fully and completely as if such date were the date
set forth above for the termination of this lease and Tenant shall forthwith
quit, surrender and vacate the premises without prejudice however, to Landlord's
rights and remedies against Tenant under the lease provisions in effect prior to
such termination, and any rent owing shall be paid up to such date and any
payments of rent made by Tenant which were on account of any period subsequent
to such date shall be returned to Tenant. Unless Owner shall serve a termination
notice as provided for herein, Owner shall make the repairs and restorations
under the conditions of (b) and (c) hereof, with all reasonable expedition,
subject to delays due to adjustment of insurance claims, labor troubles and
causes beyond Owner's control. After any such casualty, Tenant shall cooperate
with Owner's restoration by removing from the premises as promptly as reasonably
possible, all of Tenant's salvageable inventory and movable equipment,
furniture, and other property. Tenant's liability for rent shall resume five (5)
days after written notice from Owner that the premises are substantially ready
for Tenant's occupancy. (e) Nothing contained hereinabove shall relieve Tenant
from liability that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, each party shall look first to any insurance in
its favor before making any claim against the other party for recovery for loss
or damage resulting from fire or other casualty, and to the extent that such
insurance is in force and collectible and to the extent permitted by law. Owner
and Tenant each hereby releases and waives all right of recovery against the
other or any one claiming through or under each of them by way of subrogation or
otherwise. The foregoing release and waiver shall be in force only if both
releasors' insurance policies contain a clause providing that such a release or
waiver shall not invalidate the insurance. If, and to the extent, that such
waiver can be obtained only by the payment of additional premiums, then the
party benefitting from the waiver shall pay such premium within ten days after
written demand or shall be deemed to have agreed that the party obtaining
insurance coverage shall be free of any further obligation under the provisions
hereof with respect to waiver of subrogation. Tenant acknowledges that Owner
will not carry insurance on Tenant's furniture and/or furnishings or any
fixtures or equipment, improvements, or appurtenances removable by Tenant and
agrees that Owner will not be obligated to repair any damage thereto or replace
the same. (f) Tenant hereby waives the provisions of Section 227 of the Real
Property Law and agrees that the provisions of this article shall govern and
control in lieu thereof.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in the event, the term of this lease shall cease and terminate from the date
of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease and assigns to Owner, Tenant's entire
interest in any such award.
Assignment, Mortgage, Etc.:
11. Tenant, its heirs, distributees, executors, administrators, legal
representatives, successors and assigns, expressly covenants that it shall not
assign, mortgage or encumber this agreement, nor underlet, or suffer or permit
the demised premises or any part thereof to be used by others, without the prior
written consent of Owner in each instance. Transfer of the majority of the stock
of a corporate Tenant shall be deemed an assignment. If this lease be assigned,
or if the demised premises or any part thereof be underlet or occupied by
anybody other than Tenant, Owner may, after default by Tenant, collect rent from
the assignee, under-tenant or occupant, and apply the net amount collected to
the rent herein reserved, but no such assignment, underletting, occupancy or
collection shall be deemed a waiver of this covenant or the acceptance of the
assignee, under-tenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Owner to an assignment or underletting shall not in
any wise be construed to relieve Tenant from obtaining the express consent in
writing of Owner to any further assignment or underletting.
Electric Current:
12. Rates and conditions in respect to submetering or rent, inclusion, as the
case may be, to be added in RIDER attached hereto. Tenant covenants and agrees
that at all times its use of electric current shall not exceed the capacity of
existing feeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The change at any time of the character of
electric service shall in no wise make Owner liable or responsible to Tenant,
for any loss, damages or expenses which Tenant may sustain. SEE RIDER
Access to Premises:
13. Owner or Owner's agents have the right (but shall not be obligated) to enter
the demised premises in any emergency at any time, and, at other reasonable
times, to examine the same and to make such repairs, replacements and
improvements as Owner may deem necessary and reasonably desirable to the demised
premises or to any other portion of the building or which Owner may elect to
perform. Tenant shall permit Owner to use and maintain and replace pipes and
conduits in and through the demised premises and to erect new pipes and conduits
therein provided they are concealed within the walls, floor or ceiling/ Owner
may during the [ILLEGIBLE]
<PAGE>
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants. If Tenant is not present to open and permit an entry into the premises,
Owner or Owner's agents may enter the same whenever such entry may be necessary
or permissible by master key or forcibly and provided reasonable cause is
exercised to safeguard Tenant's property, such entry shall not render Owner or
its agents liable therefor, nor in any event shall the obligations of Tenant
hereunder be affected. If during the last month of the term Tenant shall have
removed all or substantially all of Tenant's property therefrom, Owner may
immediately enter, alter, renovate or redecorate the demised premises without
limitation or abatement of rent, or incurring liability to Tenant for any
compensation and such act shall have no effect on this lease or Tenant's
obligations hereunder.
Vault, Vault Space, Area:
14. No Vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder, anything contained
in or indicated on any sketch, blue print or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding Owner makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, not shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in violation
of the certificate of occupancy issued for the building of which the demised
premises are a part. Tenant has inspected the premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner's work, if any. In
any event, Owner makes no representation as to the condition of the premises and
Tenant agrees to accept the same subject to violations, whether or not of
record.
Bankruptcy:
16. (a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by Owner by the sending of a written notice to Tenant
within a reasonable time after the happening of any one of more of the following
events: (1) the commencement of a case in bankruptcy or under the laws of any
state naming Tenant as the debtor; or (2) the making by Tenant of an assignment
or any other arrangement for the benefit or creditors under any state statute.
Neither Tenant nor any person claiming through or under Tenant, or by reason of
any statute or order of court, shall thereafter be entitled to possession of the
premises demised but shall forthwith quit and surrender the premises. If this
lease shall be assigned in accordance with its terms, the provisions of this
Article 16 shall be applicable only to the party then owning Tenant's interest
in this lease.
(b) it is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%)) per annum. If such premises or any
part hereof be relet by the Owner for the unexpired term of said lease, or any
part thereof, before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re let during the term of the re letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if the
demised premises become vacant or deserted; or if any execution or attachment
shall be issued against Tenant or any of Tenant's property whereupon the demised
premises shall be taken or occupied by someone other than Tenant; or if this
lease be rejected under ss. 235 of Title 11 of the U.S. Code (bankruptcy code);
or if Tenant shall fail to move into or take possession of the premises within
fifteen (15) days after the commencement of the term of this lease, then, in any
one or more of such events, upon Owner serving a written __ days notice upon
Tenant specifying the nature of said default and upon the expiration of said
________, if Tenant shall have failed to comply with or remedy such default, or
if the said default or omission complained of shall be of a nature that the same
cannot be completely cured or remedied within said ______ day period, and if
Tenant shall not have diligently commenced during such default within such five
___ period, and shall not thereafter with reasonable diligence and in good
faith, proceed to remedy or cure such default, then Owner may serve a written __
days' notice of cancellation of this lease upon Tenant, and upon expiration of
said ___ days this lease and the term thereunder shall end and expire as fully
and completely as if the expiration of such [ILLEGIBLE].
(2) If the notice provided for in (1) hereof shall have been given, and the
term shall expire as aforesaid, or if Tenant shall make default in the payment
of the rent reserved herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein required, then and in
any of such events Owners may without notice, re enter the demised premises
either by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other occupant of demised
premises and remove their effects and hold the premises as if this lease had not
been made, and Tenant hereby waives the service of notice of intention to re
enter or to institute legal proceedings to that end. If Tenant shall make
default hereunder prior to the date fixed as the commencement of any renewal or
extension of this lease, Owner may cancel and terminate such renewal or
extension agreement by written notice.
Remedies of Owner and Waiver of Redemption:
18. In case of any such default, re entry, reparation and/or dispossess by
summary proceedings or otherwise, (a) the rent shall become due thereupon and be
paid up to the time of such re entry, dispossess and on expiration; (b) Owner
may re let the premises or any part or parts thereof, either in the name of
Owner or otherwise, for a term or terms, which may at Owner's option be less
than or exceed the period which would otherwise have constituted the balance of
the term of this lease and may grant concessions or free rent or charge a higher
rental than that in this lease, and/or (c) Tenant or the legal representatives
of Tenant shall also pay Owner as liquidated damages for the failure of Tenant
to observe and perform said Tenant's covenants herein contained, any deficiency
between the rent hereby reserved and/or covenanted to be paid and the net
amount, if any, of the rents collected on account of the lease or leases of the
demised premises for each month of the period which would otherwise have
constituted the balance of the term of this lease. The failure of Owner to re
let the premises or any part or parts thereof shall not release or affect
Tenant's liability for damages. In computing such liquidated damages there shall
be added to the said deficiency such expenses as Owner may incur in connection
with re letting, such as legal expenses, attorneys' fees, brokerage, advertising
and for keeping the demised premises in good order or for preparing the same for
re letting. Any such liquidated damages shall be paid in monthly installments by
Tenant on the rent day specified in this lease and any suit brought to collect
the amount of the deficiency for any month shall not prejudice in any way the
rights of Owner to collect the deficiency for any subsequent month by a similar
proceeding. Owner, in putting the demised premises in good order or preparing
the same for re rental may, at Owner's option, make such alterations, repairs,
replacements, and/or decorations in the demised premises as Owner, in Owner's
sole judgement, considers advisable and necessary for the purpose of re letting
the demised premises, and the making of such alterations, repairs, replacements,
and/or decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Owner shall in no event be liable in any way
whatsoever for failure to re let the demised premises, or in the event that the
demised premises are re let, for failure to collect the rent thereof under such
re- letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws in the event of Tenant
being evicted or dispossessed for any cause, or in the event of Owner obtaining
possession of demised premises, by reason of the violation by Tenant of any of
the covenants and conditions of this lease, or otherwise.
Fees and Expenses
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, then, unless otherwise
provided elsewhere in this lease, Owner may immediately or at any time
thereafter and without notice perform the obligation of Tenant thereunder. If
Owner, in connection with the foregoing or in connection with any default by
Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs
any obligations for the payment of money, including but not limited to
attorney's fees, in instituting, prosecuting or defending any action or
proceeding, then Tenant will reimburse Owner for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred by
reason of Tenant's default shall be deemed to be additional rent hereunder and
shall be paid by Tenant to Owners within five (5) days of rendition of any bill
or statement to Tenant therefor. If Tenant's lease term shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by Owner as damages.
Building Alterations and Management:
20. Owner shall have the right at any time without the same constituting an
eviction and without incurring liability to Tenant therefore to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the building and
to change the name, number or designation by which the building may be known.
There shall be no allowance to Tenant for diminution of rental value and no
liability on the part of Owner by reason of inconvenience, annoyance or injury
to business arising from Owner or other Tenants making any repairs in the
building or any such alterations, additions and improvements. Further more,
Tenant shall not have any claim against Owner by reason of Owner's imposition of
such controls of the manner of access to the building by Tenant's [ILLEGIBLE]
<PAGE>
it is erected or the demised premises, the rents, leases expenses of operation
or any other matter or thing affecting or related to the premises except as
herein expressly set forth and no rights, easements or licenses are acquired by
Tenant by implication or otherwise except as expressly set forth in the
provisions of this lease. Tenant has inspected the building and the demised
premises and is thoroughly acquainted with their condition and agrees to take
the same "as is" and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
End of Term:
22. Upon the expiration or other termination of the term of this lease, Tenant
shall quit and surrender to Owner the demised premises, broom clean, in good
order and condition, ordinary wear and damages which Tenant is not required to
repair as provided elsewhere in this lease excepted, and Tenant shall remove all
its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of this lease or any renewal thereof, falls on Sunday, this lease shall
expire at noon on the preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
Quiet Enjoyment:
23. Owner covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of the lease including, but not limited to, Article 31,
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure to Give Possession:
24. If the Owner is unable to give possession of the demised premises on the
date of the commencement of the term hereof, because of the holding-over or
retention of possession of any tenant, undertenant or occupants or if the
demised premises are located in a building being constructed, because such
building has not been sufficiently completed to make the premises ready for
occupancy or because of the fact that a certificate of occupancy has not been
procured or for any other reason, Owner shall not be subject to any liability
for failure to give possession on said date and the validity of the lease shall
not be impaired under such circumstances, nor shall the same be construed in any
wise to extend the term of this lease, but the rent payable hereunder shall be
abated (provided Tenant is not responsible for Owner's inability to obtain
possession) until after Owner shall have given Tenant written notice that the
premises are substantially ready the Tenant's occupancy. If permission is given
to Tenant to enter into the possession of the demised premises or to occupy
premises other than the demised premises prior to the date specified as the
commencement of the term of this lease, Tenant covenants and agrees that such
occupancy shall be deemed to be under all the terms, covenants, conditions and
provisions of this lease, except as to the covenant to pay rent. The provisions
of this article are intended to constitute "an express provision to the
contrary" within the meaning of Section 223-a of the New York Real Property Law.
No Waiver:
25. The failure of Owner to seek redress for violation of, or to insist upon the
strict performance of any covenant or condition of this lease or of any of the
Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation. The receipt by Owner of rent
with knowledge of the breach of any covenant of this lease shall not be deemed a
waiver of such breach and no provision of this lease shall be deemed to have
been waived by Owner unless such waiver be in writing signed by Owner. No
payment by Tenant or receipt by Owner of a lesser amount than the monthly rent
herein stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement of any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Owner may accept such check or payment without prejudice to
Owner's right to recover the balance of such rent or pursue any other remedy in
this leases provided. No act or thing done by Owner or Owner's agents during the
term hereby demised shall be deemed an acceptance of a surrender of said
premises, and no agreement to accept such surrender shall be valid unless in
writing signed by Owner. No employee of Owner or Owner's agent shall have any
power to accept the keys of said premises prior to the termination of the lease
and the delivery of keys to any such agent or employee shall not operate as a
termination of the lease or a surrender of the premises.
Waiver of Trial by Jury:
26. It is mutually agreed by and between Owner and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other (except for personal injury or property damage) on any matters whatsoever
arising out of or in any way connected with this lease, the relationship of
Owner and Tenant, Tenant's use of or occupancy of said premises, and any
emergency statutory or any other statutory remedy. It is further mutually agreed
that in the event Owner commences any summary proceeding for possession of the
premises, Tenant will not interpose any counterclaim of whatever nature or
description in any such proceeding including a counterclaim under Article 4.
[ILLEGIBLE] unable to fulfill any of its obligations under this lease or to
supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repair, additions,
alterations or decorations or is unable to supply or is delayed from so doing by
reason of strike or labor troubles or any cause whatsoever including, but not
limited to, government preemption in connection with a National Emergency or by
reason of any rule, order or regulation of any department or subdivision thereof
of any government agency or by reason of the conditions of supply and demand
which have been or are affected by war or other emergency.
Inability to Perform:
27. This Lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment or
fixtures if Owner is prevented or delayed from so doing by reason of strike or
labor troubles or any cause whatsoever including, but not limited to, government
preemption in connection with a National Emergency or by reason of any rule,
order or regulation of any department or subdivision thereof of any government
agency or by reason of the conditions of supply and demand which have been or
are affected by war or other emergency.
Bills and Notices:
28. Except as otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or tendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
Services Provided by Owners:
29. SEE RIDER
Captions:
30. The Captions are inserted only as a matter of convenience and for reference
and in no way define, limit or describe the scope of this lease nor the intent
of any provisions thereof.
Definitions:
31. The term "office", or "offices", wherever used in this lease, shall not be
construed to mean premises used as a store or stores, for the sale or display,
at any time, of goods, wares or merchandise, of any kind, or as a restaurant,
shop, booth, bootblack or other stand, barber shop, or for other similar
purposes or for manufacturing. The term "Owner" means a landlord or lessor, and
as used in this lease means only the owner, or the mortgagee in possession, for
the time being of the land and building (or the owner of a lease of the building
or of the land and building) of which the demised premises form a part, so that
in the event of any sale or sales of said land and building or of said lease, or
in the event of a lease of said building, or of the land and building, the said
Owner shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner, hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term
"business days" as used in this lease shall exclude Saturdays (except such
portion thereof as is covered by specific hours in Article 29 hereof), Sundays
and all days observed by the State or Federal Government [ILLEGIBLE]
<PAGE>
Adjacent Excavation-Shoring:
32. If an excavation shall be made upon land adjacent to the demised premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person shall deem necessary to
preserve the wall or the building of which demised premises form a part from
injury or damage and to support the same by proper foundations without any claim
for damages or indemnity against Owner, or diminution or abatement of rent.
Rules and Regulations:
33. Tenant and Tenant's servants, employees, agents, visitors, and licensees
shall observe faithfully, and comply strictly with, the Rules and Regulations
and such other and further reasonable Rules and Regulations as Owner or Owner's
agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit the
question of the reasonableness of such Rule or Regulation for decision to the
New York office of the American Arbitration Association, whose determination
shall be final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional Rule or Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice, in
writing upon Owner within thirty (30) days after the giving of notice thereof.
Nothing in the lease contained shall be construed to impose upon Owner any duty
or obligation to enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its servants,
employees, agents, visitors or licensees.
Security:
34. Tenant has deposited with Owner the sum of $14,600.00* as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or and other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in re-letting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Owner. In the
event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for the return of said security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
Estoppel Certificate:
35. Tenant, at any time, and from time to time, upon at lease 10 days' prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any
other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), stating the dates to which the rent and additional
rent have been paid, and stating whether or not there exists any default by
Owner under this Lease, and, if so, specifying each such default.
Successors and Assigns:
36. The covenants, conditions and agreements contained in this lease shall bind
and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns.
- ----------
* Space to be filled in or deleted.
SEE RIDER ANNEXED HERETO
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
170 FIFTH ASSOCIATES, INC.
Witness for Owner: By:
-------------------------------------
- ------------------------------------ ----------------------------------------
iVILLAGE, INC.
Witness for Tenant: By:
-------------------------------------
- ------------------------------------ ----------------------------------------
ACKNOWLEDGMENTS
CORPORATE OWNER CORPORATE TENANT
STATE OF NEW YORK, ss. STATE OF NEW YORK, ss.
County of County of
On this ____ day of ___________, On this ____ day of ___________,
19__, before me personaly came 19__, before me personaly came
______________________________________ ______________________________________
to me known, who being by me duly to me known, who being by me duly
sworn, did depose and say that he sworn, did depose and say that he
resides in __________________________ resides in __________________________
that he is the ___________________ of that he is the ___________________ of
_____________________________________ _____________________________________
the corporation described in and the corporation described in and
which executed the foregoing which executed the foregoing
instrument, as OWNER; that he knows instrument, as TENANT; that he knows
the seal of said corporation; that the seal of said corporation; that
the seal affixed to said instrument the seal affixed to said instrument
is such corporate seal; that it was is such corporate seal; that it was
so affixed by order of the Board of so affixed by order of the Board of
Directors [ILLEGIBLE] Directors [ILLEGIBLE]
<PAGE>
GUARANTY
FOR VALUE RECEIVED, and in consideration for, and as an inducement to Owner
making the within lease with Tenant, the undersigned guarantees to Owner,
Owner's successors and assigns, the full performance and observance of all the
covenants, conditions and agreements, therein provided to be performed and
observed by Tenant, including the "Rules and Regulations" as therein provided,
without requiring any notice of non-payment, non-performance, or non-observance,
or proof, or notice, or demand, whereby to charge the undersigned therefor, all
of which the undersigned hereby expressly waives and expressly agrees that the
validity of this agreement and the obligations of the guarantor hereunder shall
in no wise be terminated, affected or impaired by reason of the assertion by
Owner against Tenant of any of the rights or remedies reserved to Owner pursuant
to the provisions of the within lease. The undersigned further covenants and
agrees that this guaranty shall remain and continue in full force and effect as
to any renewal, modification or extension of this lease and during any period
when Tenant is occupying the premises as a "statutory tenant". As a further
inducement to Owner to make this lease and in consideration thereof, Owner and
the undersigned covenant and agree that in any action or proceeding brought by
either Owner or the undersigned against the other on any matters whatsoever
arising out of, under, or by virtue of the terms of this lease or of this
guarantee that Owner and the undersigned shall and do hereby waive trial by
jury.
Dated: 19
------------------------------------------------------ ------------------
- --------------------------------------------------------------------------------
Guarantor
- --------------------------------------------------------------------------------
Witness
- --------------------------------------------------------------------------------
Guarantor's Residence
- --------------------------------------------------------------------------------
Business Address
- --------------------------------------------------------------------------------
Firm Name
STATE OF NEW YORK )
) ss.:
COUNTY OF )
On this _____ day of __________________________, 19__, before me personally came
________________________________________________________________________________
to me known and known to me to be the individual described in, and who
executed the foregoing Guaranty and acknowledged to me that he executed the
same.
______________________________
Notary
[GRAPHIC] IMPORTANT - PLEASE READ [GRAPHIC]
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE
IN ACCORDANCE WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant of by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for
any purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in an manner offensive or
objectionable to Owner or other occupants of the building by reason of noise,
odors, and/or vibrations, or interfere in any way with other Tenants or those
having business therein, nor shall any animals or birds be kept in or about the
building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls
of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability, and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the demised premises or the building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or
other similar floor covering, so that the same shall come in direct contact with
the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof. Each Tenant must, upon the termination of his Tenancy,
restore to Owner all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss of any
keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during the hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease or which these Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited and
each Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building between the hours
of 6 P.M. and 8 A.M. and at all hours on Sundays, and legal holidays all persons
who do not present a pass to the building signed by Owner. Owner will furnish
passes to persons for whom any Tenant requests same in writing. Each Tenant
shall be responsible for all persons for whom he requests such pass and shall be
liable to Owner for all acts of such persons.
11. Owner shall have the right to prohibit any advertising by any Tenant
which in Owner's opinion, tends to impair the reputation of the building or its
desirability as a as a building for offices, and upon written notice from
owner, Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible or explosive fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odors to penetrate in or
emanate from the demised premises.
13. If the building contains central air conditioning and ventiation,
Tenant agrees to keep all windows closed at all times and to abide by all rules
and regulations issued by the Owner with respect to such services. If Tenant
requires air conditioning or ventilation after the usual hours, Tenant shall
give notice in writing to the building superintendent prior to 3 P.M. in the
case of services required on week days, and prior to 3 P.M. on the day prior in
the case of after hours services requested on weekends or on holidays.
14. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or fixtures into or out of the building without Owner's prior written
consent. Is such safe, machinery, equipment, bulky matter or fixtures requires
special handling, all work in connection therewith shall comply with the
Administrative Code of the City of New York and all other laws and regulations
applicable thereto and shall be done during such hours as Owner may designate.
================================================================================
TO
================================================================================
STANDARD FORM OF
OFFICE (SEAL)
LEASE
Real Estate Board of New York, Inc.
Copyright 1983. All rights Reserved
[ILLEGIBLE] in whole or in part prohibited.
================================================================================
19
.......Checked by ..............................................................
.......Approved by .............................................................
================================================================================
<PAGE>
RIDER ANNEXED TO LEASE DATED AUGUST 21, 1995
BETWEEN 170 FIFTH ASSOCIATES, INC., AS OWNER,
and
iVILLAGE, INC., AS TENANT
of all of the 4th floor at the building known as
170 Fifth Avenue, New York, NY
RIDER PROVISIONS PREVAIL:
If and to the extent that any of the provisions of this Rider conflict or
are otherwise inconsistent with any of the preceding printed provisions of this
Lease, or of any rules and regulations connected with this Lease (whether or not
such inconsistency is expressly noted in this Rider), the provisions of this
Rider shall prevail. Unless otherwise indicated, capitalized terms shall have
the meaning assigned to them at Paragraph 37 hereof (Rider Paragraph reference
numbers ("R._") correspond to paragraphs of the standard form, above.)
SUPPLEMENTAL TO STANDARD FORM
R.1.1 Rent:
A. Fixed Annual Rent. The Fixed annual Rent which Tenant agrees to pay
hereunder shall be as follows:
- --------------------------------------------------------------------------------
Lease
Year Rent/year Rent/month Period
- --------------------------------------------------------------------------------
1 $ 87,600.00 $ 7,300.00 September 1, 1995 -- August 31, 1996
- --------------------------------------------------------------------------------
2 $ 91,104.00 $ 7,592.00 September 1, 1996 -- August 31, 1997
- --------------------------------------------------------------------------------
3 $ 94,748.16 $ 7,895.68 September 1, 1997 -- August 31, 1998
- --------------------------------------------------------------------------------
4 $ 98,538.09 $ 8,211.51 September 1, 1998 -- August 31, 1999
- --------------------------------------------------------------------------------
5 $ 102,479.61 $ 8,539.97 September 1, 1999 -- August 31, 2000
- --------------------------------------------------------------------------------
6 $ 106,578.79 $ 8,881.57 September 1, 2000 -- August 31, 2001
- --------------------------------------------------------------------------------
Plus a prorated rental of $243.33 per day for each day between occupancy
(approximately August 23. 1995) and September 1, 1995.
B. Intentionally Deleted.
-1-
<PAGE>
C. Additional Rent:
Tenant shall pay any and all Additional Rent which may become due and
payable under any of the terms, covenants and conditions of this Lease.
All costs, charges and expenses which Tenant assumes, agrees or may become
obligated to pay pursuant to this Lease shall be deemed Additional Rent, and in
the event of non-payment thereof, Owner shall have all of the rights and
remedies with respect thereto as is herein provided for in the case of
non-payment of Fixed Rent.
R.1.2. REAL ESTATE TAXES:
A. If the Taxes for any Tax Year shall be greater than the Base Tax (as
defined at Paragraph 37 hereof), whether as a result of increases in rates or
assessments or otherwise, Tenant shall pay as Additional Rent for such Tax year
a sum equal to EIGHT and 19/00 (8.19%) PERCENT (herein "Tenant's Share") of the
amount by which the Taxes for such Tax Year exceed the Base Tax (Tenant's Share
of such annual excess hereinafter called the "Tax Payment"). (For so long as
Tenant is not in continuing default hereunder, Tenant shall pay only seventy
five (75%) percent of the Tax Payment described above). Should this Lease
commence or terminate prior to the expiration of a Tax Year, such Tax Payment
shall be prorated accordingly. So long as the Tax Payment underlying any needed
adjustment accrues during the Term, then Tenant's obligation to pay Additional
Rent, and Owner's obligation to make any refund adjustment pursuant to Paragraph
B, below (as the case may be) shall survive termination of this Lease. If the
Taxes for any portion of a Tax Year or the Base Tax Year shall be reduced as a
result of a contest and/or certiorari proceeding before the taxing authority,
Tenant's Share of Owner's costs and expenses of obtaining such reduction and of
any retroactive adjustment in the amount of any Tax Payment previously accruing,
shall be added to and be deemed part of the Taxes for such Tax Year, and become
due with the next monthly installment of Fixed Rent, (or within thirty (30) days
after tender of a statement therefor, if the adjustment arises after Expiration
or earlier Termination of the Lease). Payment of Additional Rent for any Tax
Payment due from Tenant shall be made as and subject to the conditions herein
provided. Any net credit to Tenant arising from said reduction of Taxes shall be
offset against Tenant's Prospective obligations for Tax Payments.
B. Owner shall be under no obligation to contest the Taxes or the assessed
valuation of the Real Property for any Tax year (or to refrain from contesting
the same), and may settle any such contest on such terms as Owner in its sole
judgment considers proper. If Owner shall receive a refund for any Tax Year for
which a Tax Payment shall have been made by Tenant pursuant to Subpart A, above,
Owner shall advise Tenant and shall repay to Tenant, with reasonable promptness,
Tenant's Share of such refund after deducting from such refund Tenant's Share of
the costs and expenses (including reasonable experts' and attorneys fees) of
obtaining such refund. If the assessment for the Base Tax Year shall be reduced
from the amount originally imposed after Owner shall have rendered a comparative
statement to Tenant (as provided in Paragraph C below) with respect to any Tax
year affected by such reduction, Owner shall advise Tenant of same, and the
amount of the Tax Payment shall be adjusted retroactively in accordance with
such chance and Tenant, on Owner's demand, shall pay Tenant's Share of the
increase in Additional Rent resulting from such adjustment.
-2-
<PAGE>
C. After the Taxes for a given Tax Year become known Owner may at any time
during or after such Tax Year, render to Tenant a comparative statement showing
the amount of the Tax Payment, if any, due from Tenant for such Tax Year,
indicating thereon in reasonable detail the computation of such Tax Payment. The
appropriate installment of the Tax Payment shown on such comparative statement
shall be payable in full concurrently with the installment of Fixed Rent then or
next due, or if such statement shall be rendered at or after the termination of
this Lease, then within thirty (30) days after Owner's rendition of such
statement. Whenever so requested, but not more often than once a year, Owner
will furnish Tenant with a reproduced copy of the most recent bill for Taxes
affecting the Real Property.
D. Owner's failure during the Lease term to prepare and deliver any notice,
comparative statement or bill, or Owner's failure to make a demand, shall not in
any way cause Owner to forfeit or surrender Owner's right to collect any
Additional Rent which may have become due during the term of this Lease under
this Article, and Tenant's liability for same (together with interest at FIVE
PERCENT (5%) from the time of Owner's payment) shall survive the termination of
this Lease.
R.3 TENANT CHANCES:
A. All renovations, additions, installations, improvements and/or
alterations of any kind or nature in the Demised Premises (herein "Tenant's
Changes"), as well as the schematic and final plans therefor and the
contractor(s) proposed to conduct said work, shall require the prior written
consent of Owner thereto not to be unreasonably withheld or needlessly delayed.
(Should any contractor be selected which is not on Owner's approval list, a
supervisory fee of up to FIFTEEN PERCENT (15%) of Owner's estimate of the cost
of such works, may be assessed, at Owner's discretion.)
B. In no event shall Owner be required to consent to any Tenant's Changes
which might adversely affect the physical condition or operation of any part of
the Building or would adversely affect the proper functioning of the mechanical,
electrical, sanitary or other service systems of the Building. At the time
Tenant requests Owner's written consent to any Tenant's Change, Tenant shall
deliver to Owner plans and specifications at a level of detail reasonably
adequate for Building Department and/or other affected agency review and
reasonably satisfactory to Owner therefor. Tenant shall pay to Owner any
reasonable fees or expenses incurred by Owner in connection with Owner's
submitting such plans and specifications, if it so chooses, to an architect or
engineer selected by Owner for review or examination in an amount equal to the
lesser of FIVE THOUSAND DOLLARS ($5,000.00) or five percent (5%) of Owner's
estimate of the cost of Tenant Changes. Owner's approval of any plans or
specifications shall not relieve Tenant of responsibility for the legal
sufficiency and technical competency of said plans and of the changes to be
effected pursuant thereto. Tenant, before commencement of any Tenant's Changes,
shall:
(1) obtain the necessary consents, authorizations and licenses from
all federal, state and/or municipal authorities having jurisdiction
over such work;
(2) furnish to Owner certificate(s) of adequate Worker's Compensation
Insurance covering any contractors, subcontractors or other persons
who will perform Tenant's Changes for Tenant;
(3) in the case of Tenant's Changes having an estimated value
exceeding FIVE THOUSAND DOLLARS ($5,000.00), a performance bond,
securing completion of such work for Owner's benefit; and
-3-
<PAGE>
(4) furnish to Owner an original policy of public liability insurance
covering Owner in an amount and through insurance carriers reasonably
satisfactory to Owner for injuries or damages to person and property
(in no event more than THREE MILLION ($3,000,000) DOLLARS, combined
single limit). Such policy shall be maintained at all times during the
progress of Tenant's Changes and until completion thereof, and shall
provide that no cancellation shall be effective unless ten (10) days'
prior written notice has been given to Owner.
C. Tenant agrees to indemnify and hold Owner harmless from and against:
(1) any and all bills for labor performed and equipment, fixtures and
materials furnished to Tenant;
(2) any and all liens, bills or claims therefor' against the Demised
Premises or the Real Property; and
(3) all losses, damages, costs, expenses, suits and claims whatsoever
in connection with Tenant's Changes.
The cost of Tenant's Changes shall be paid for in cash or its equivalent,
so that the Demised Premises and the Real Property shall at all times be free of
liens for labor and materials supplied or claimed to have been supplied.
D. Tenant, at its expense, shall cause any Tenant's Changes consented to by
Owner to be performed in compliance with all applicable requirements of
insurance bodies having jurisdiction and in such manner as not to interfere
with, delay or impose any additional expense upon, the Owner and/or other
tenants, employees or contractors at the Building, in the maintenance or
operation of any portion of the Building and so as to maintain harmonious labor
relations in the building.
E. Subject to Owner's approval of the Tenant's plans, contractors and all
other arrangements for Tenant's Changes, Owner shall complete the improvements
described at the Work Letter annexed hereto as Exhibit "2". Except for such
work, the Demised Premises are delivered and accepted "as is". Owner represents
that the existing fixtures and equipment on the Demised Premises (if any are
particularly identified in Exhibit "2"), are in reasonable working condition as
of the execution hereof.
G. Tenant shall contribute $5,000.00 upon exectuion hereof toward the Owner
cost of the Work Letter.
R.4 MAINTENANCE AND REPAIRS:
A. Following completion of initial Work Letter items, Tenant, at Tenant's
own cost and expense, shall install, maintain and keep in good order and repair,
or replace as necessary, all plumbing fixtures, ventilating equipment and all
other fixtures in the demised premises, from the wall surface outward, as well
as its air conditioning unit and other facilities (including, e.g., behind any
dropped ceilings or within walls) serving the Demised Premises alone. Owner
shall be responsible for repair and maintenance of items installed directly by
Owner or its own agents. Tenant may obtain a Maintenance Contract from an owner-
approved Air Conditioner Contractor to maintain the existing air conditioning
systems in or serving the Demised Premises throughout the term of the Lease, or
Tenant may otherwise arrange for its repair and maintenance at Tenant's sole
cost. A copy of any pre-paid Maintenance contract (if Tenant elects to employ
same) will be furnished to Owner within twenty (20) days following execution of
the Lease. Owner, upon payment by Tenant of a FIVE PERCENT (5%) surcharge shall
allocate the cost of Tenant's maintenance contract between or among Tenant and
other tenant(s) now or hereafter sharing the use, enjoyment and operation of
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<PAGE>
the air conditioning equipment serving its floor(s), and all affected tenants
shall be responsible for its operation and control, as well as the maintenance
cited above; provided, however, that Owner may intervene when it deems
appropriate for reasons of Building maintenance, repair or similar necessity.
Owner shall have no obligation to maintain, replace or install any fixtures or
equipment unless the need for such repair is occasioned by Owner's gross
negligence or willful misconduct.
B. Owner shall be authorized to arrange for all necessary structural
repairs and for changes and/or alterations that Owner may deem appropriate to
the Demised Premises, (including, without limitation, the exterior walls,
downspouts, gutters, roof and the sewer and water lines located outside of the
Demised Premises). Owner shall not be required to incur any additional expense
for work to be done at times other than regular business hours and days, or any
other unusual cost or expense, but Owner shall endeavor to minimize interference
with Tenant's use and occupancy.
C. Except as otherwise provided herein, Tenant agrees, at Tenant's cost and
expense, to keep and maintain the Demised Premises and each and every part
thereof in good repair, order and condition and to make all ordinary repairs
thereto, (of a kind not affecting the baic structure of the Building, except as
otherwise provided herein) including any to the fixtures and equipment therein
and the appurtenances thereto (including without limitation, the doors and door
frames, window glass, entrances, interior walls and partitions, and the
components of the lighting, emergency lighting, exit signage, electrical, air
conditioning equipment including any of the foregoing and/or any affected pipes,
lines, ducts, wires, conduits and other fixtures and facilities within the
Demised Premises, installed by or for Tenant at the Demised Premises.
R.5 CLEANING:
Tenant, at its expense, and in a manner reasonably satisfactory to Owner,
shall cause the Demised Premises, including the exterior and interior of the
windows thereof, to be kept clean. Tenant shall, at Tenant's expense, arrange
for refuse separation, and on a daily basis, remove all Tenant's rubbish and
trash (in authorized containers) to such area of the Building as Owner shall
designate, and Owner will arrange for removal of same from the Building. Owner
shall arrange for periodic vacuuming of the Demised Premises, per customary
frequency. Tenant shall regularly, at Tenant's expense, but using such
contractor as Owner may from time to time designate or reasonably approve, clean
the interior and exterior of the windows in the Demised Premises, but in no case
less than two (2) times yearly. To the extent that any other such services are
transferred during the term and at Owner's option, to Building-wide service
regimens by Owner's employees and/or Owner-designated contractors, Tenant agrees
to participate in same upon payment of its share of Owner's charges therefor.
R.6 COMPLIANCE WITH LAW:
A. Notwithstanding anything contained to the contrary elsewhere in this
Lease, Tenant acknowledges (1) with respect to any alterations made within the
Demised Premises, subsequent to the initial Work Letter items to be approved by
Owner hereunder; or (2) with respect to changes in law or regulation enacted
hereafter; that it shall be Tenant's responsibility and obligation to comply
with all fire safety requirements and controls imposed by Local Laws 5 and 16 of
the City of New York,(as same now exist or may hereafter be amended), as well as
with any and all other laws, rules and regulations of the City of New York or of
any governmental agency or department thereof (hereafter, "Requirement") having
jurisdiction with respect to the Demised Premises (including, without
limitation, any affecting partitioning or layout; exit signs; telephone,
telecommunications or public address systems; fire alarms, sprinklers,
extinguisher or command
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systems; electrical outlets, conduits, controls or wiring, and any additions to
the Building electrical system; and plumbing or HVAC systems). Tenant further
acknowledges and agrees that, if Owner shall have performed Work Letter items,
any Tenant's Changes or other installation or alteration work for Tenant
pursuant to Tenant's request, Owner's sole responsibility with respect thereto
shall be limited to the workmanlike manner of such installation or alteration
and its consistency with Tenant's plans, but that it is the responsibility of
Tenant and Tenant's architect to verify the legality of Tenant's plans relative
to any Requirements for any such installation or alteration (i.e., Tenant shall
be responsible for the drawing of plans in compliance with law and the obtaining
of all permits relating thereto including, without limitation, all necessary
approvals and sign-offs, that may now or subsequently be required by law. Owner
shall bear no responsibility in this regard for Tenant's state of awareness
respecting additions to or changes in Requirements arising during the Term).
Modification(s) of any such installation or alteration made within the Demised
Premises, shall be solely the responsibility of Tenant at Tenant's sole cost and
expense and Owner shall have no obligation or duty with respect thereto. Any of
the foregoing work required of Tenant shall be performed by Tenant in accordance
with and subject to all applicable provisions of this Lease and any
Requirements.
B. Tenant acknowledges that the Certificate of Occupancy for the Building
limits the permitted occupancy levels of the Building to twenty (20) persons for
this floor, unless specific legal requirements for expanding such occupancy are
met. Accordingly, Tenant agrees that the Demised Premises shall be improved for,
and that its operation upon the Demised Premises shall require and entail,
occupancy by no more than twenty (20) persons, except with the prior written
consent of Owner, and that Owner may freely withhold consent, inter alia if and
to the extent required to insure compliance with the said Certificate of
Occupancy and any Requirements applicable law.
C. Tenant acknowledges that normal business hours at the Building are
between 8:00 AM and 5:30 PM on weekdays, and that access to the building is also
available under supervision of Building personnel during the hours of 5:30 PM
through 12:00 AM Monday through Friday, and from 10:00 AM through 6:00 PM on
Saturday and Sunday (hereinafter "Normal Building Hours"). In order to comply
with the fire safety procedures promulgated by Local Law 5 and any new/or
successor law, (and subject to final approval by Owner, and to procedures
outlined at Exhibit 3), Tenant covenants and agrees that if it intends to use
the Demised Premises after Normal Building Hours, Tenant shall see to its own
compliance and that of all of its employees and other personnel authorized to
occupy the Demised Premises, with the regulations respecting the use and
occupancy of the Demised Premises and the Building, during hours other than
Normal Building Hours, prescribed at Exhibit 3.
R.7 SUBORDINATION:
A. This Lease is subject and subordinate to all mortgages and trust
indentures which now or may hereafter affect the Demised Premises or the land
and the Building, or other buildings erected or to be erected thereon, of which
the Demised Premises now or shall hereafter form a part; and this Lease is also
subject and subordinate to all present and future ground or underlying leases of
the land and/or said buildings and to all present and future mortgages and trust
indentures which now or may hereafter be placed on or affect such leases and/or
all or any part of the real property of which the Demised Premises form a part
or any part; and to each advance made or to be made under any such mortgage,
trust indenture or lease;, and to all renewals, modifications, consolidations,
replacements or extensions of and/or substitutes for any of the above. (As of
execution, no superior ground leases affect the Property upon which the Building
is situated.)
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B. In confirmation of such subordination Tenant shall promptly execute any
certificate, and/or any amendment of this Lease, that Owner or any present or
future mortgagee, trustee or lessor, and/or their respective agents or
successors in interest, may reasonably request Tenant hereby constitutes and
irrevocably appoints Owner or any present or future mortgagee, trustee or
lessee, or their respective successors in interest as the Tenant's
attorney-in-fact, coupled with an interest, to execute and deliver any such
certificate or appropriate amendment for and on behalf of Tenant.
R.8 INDEMNIFICATION AND INSURANCE:
A. Tenant covenants and agrees that it will indemnify and save Owner
harmless from and against all damages, liabilities, claims, costs and expenses,
including reasonable attorneys' fees, arising out of the use or occupancy of the
Demised Premises, any wrongful vacancy from or abandonment of Premises, any
other wrongful action or omission to act, or any work or thing done, or any
condition created, by or for Tenant or its employees, agents or contractors
and/or Tenant's licensees, invitees or customers whether or not caused by the
negligence or breach of an obligation by Tenant.
B. Tenant covenants and agrees that it shall immediately secure, and that
at all times during the term of this Lease thereafter, it shall maintain in full
force and effect, at its own cost and expense, comprehensive general personal
injury, death and property damage insurance coverage, such insurance to afford
minimum protection during the term of this Lease, of not less than ONE MILLION
DOLLARS ($1,000,000) per occurrence, respecting bodily injury or death, and of
not less than FIVE HUNDRED THOUSAND DOLLARS ($500,000) for property damage,
together with umbrella, extended or coverage, in such amounts as may be
reasonably required by Owner. Such insurance policies shall name Owner and
Tenant as insureds, as their respective interests may appear, and shall insure
against all costs, expenses and/or liability arising out of or based upon any
and all claims, accidents, injuries and damages whatsoever affecting any person
or property, where such accident, damage or injury arose out of any action or
omission on the part of Tenant or its agents, employees, contractors, licensees,
invitees or customers or where same occurred on or about the Demised Premises.
C. Upon commencement of the term hereof, and thereafter at least ten (10)
days prior to the expiration of any such policy, Tenant shall deliver to Owner
the policy or policies of insurance and shall furnish to Owner at least ten (10)
days prior to the expiration of any such policy, evidence of the payment of
premium for the renewal of such policy together with the renewal policy. In the
event Tenant shall fail to provide the aforesaid insurance Owner shall have the
right, but not the obligation, after giving Tenant five (5) days' written
notice, to procure and pay for such insurance, and Tenant shall reimburse to
Owner, as Additional Rent, the cost thereof, together with interest at the then
maximum legal rate from the date of payment to the date of reimbursement. Each
such policy shall contain an endorsement that such insurance may not be canceled
or amended except upon ten (10) days' prior written notice to Owner. Tenant's
failure to provide and keep in force the aforementioned insurance shall be
regarded as a material default hereunder, entitling Owner to exercise any or all
of the remedies herein prescribed in the event of Tenant's default.
D. All policies of insurance procured by Tenant shall be issued in form
acceptable to Owner by insurance companies licensed to do business in the State
of New York and authorized to issue such policy or policies and eligible for a
rating by Best's Rating Service of "A" or better.
E. Tenant shall not stock, use or sell or suffer to be stocked, used or
sold any article or do or omit to do anything in or about the Demised Premises,
or the Building which may (either alone or in combination with the actions or
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omissions of other Tenants) tend to: (a) subject Owner to any liability for
injury to any person or property; (b) cause any increase in the insurance rates
applicable to any policies of insurance carried by Owner; (c) result in the or
threaten cancellation of, or assertion of any defense by the insurer to any
claim under, any policy of insurance maintained by or for the benefit of Owner;
(d) be prohibited by or violate the rules and regulations of the Insurance
Service Organization ("ISO") or any other insurance rating organization having
jurisdiction; or (e) increase any insurance rates or premiums on the Demised
Premises or the Building or cause the Demised Premises or the Building to be
uninsurable.
F. Owner and Tenant hereby waive, (solely to the extent permitted mutually
in the particular instance at hand, by both of their respective insurers), the
right to recover from each other for any damage or loss occasioned by any
hazards that may be fully compensated by insurance (including liability
insurance), regardless of whether said damages or loss resulted from the
negligence of either party, their employees or otherwise; and provided that the
conditions hereinabove recited are met, said parties do hereby waive the right
to subrogate any insurance carrier or other party to their respective rights of
recovery against each other in any event.
G. Tenant shall procure Tenant's own Property and personal insurance for
Tenant's merchandise, contents, fixtures, installations and furnishings (herein
"Property"), and, for rental obligations and lost profits arising out of any and
all interruptions of Tenant's business operations during the Term for whatever
reason; and, irrespective of whether said Tenant's Property and/or business
interruption insurance should at any time prove inadequate to cover Tenant's
loss therefrom, Tenant hereby relieves Owner of any responsibility for such
interruption or damage to Tenant's Property, whether caused by negligence of
Owner or its employees, or for other reasons (to wit, relative to pipe or roof
leaks, building system(s) or structural failure, etc.) that may accrue in excess
of Tenant's coverage amounts.
R.11 ASSIGNMENT AND SUBLETTING:
Notwithstanding the provisions of Article 11, and in modification and
amplification thereof:
A. If Tenant's interest in this Lease is assigned, whether or not in
violation of the provisions of this Lease, Owner may, at Owner's sole
discretion, collect Rent from the assignee. If the Demised Premises or any part
thereof are sublet to, or occupied or used by, any person other than Tenant,
whether or not in violation of this Lease, Owner may, at Owner's sole
discretion, collect Rent from any licensee, subtenant, user or occupant, and, at
its option, Owner may apply the net amount collected toward the Rents reserved
in this Lease, but no such action by Owner shall, if not accompanied by Owner's
express written consent, be deemed to indicate the acceptance by Owner of such
assignee, subtenant, licensee occupant or user as a tenant or in any way to
relieve Tenant of its obligations hereunder. The consent by Owner to any
assignment, subletting, occupancy or use shall not relieve Tenant of its
obligation to obtain the express prior written consent of Owner to any further
assignment, subletting, occupancy or use.
B. Tenant agrees to pay to Owner any reasonable counsel fees incurred by
Owner in connection with Owner's review of any proposed assignment of Tenant's
interest in this Lease or any proposed subletting of the Demised Premises or any
part thereof in an amount of approximately SEVEN HUNDRED FIFTY ($750.00) DOLLARS
(lower, if the need for review of finances and related matters is obviated by
the offer of further security and/or personal guaranties' reasonably
satisfactory to Owner, or higher, if circumstances require).
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C. Should Tenant desire to assign this Lease or to sublet the Demised
Premises, Tenant shall submit to Owner a written request for Owner's consent to
such assignment or subletting, which request shall contain or be accompanied by
the following information: (i) the name and address of the proposed assignee or
subtenant; (ii) the terms and conditions of the proposed transaction; (iii) the
nature and character of the business of the proposed assignee or subtenant and
its proposed use of the Demised Premises; (iv) and (v) banking, financial and
other credit information reasonably sufficient to enable Owner to determine the
financial resposibility of the proposed assignee or subtenant. Upon receipt of
the foregoing items, Owner shall have the following options, to be exercised by
notice (the "Exercise Notice") to be given to Tenant within thirty (30) days
after the receipt of Tenant's request for consent:
(1) Owner shall have a right of first refusal to undertake the
transaction above proposed upon similar terms, and upon exercise
thereof, Owner may require Tenant to surrender the Demised Premises to
Owner and to accept a termination of this Lease as of a date (the
"Termination Date") to be designated by Owner in its written notice
(the "Exercise Notice"), which date shall not be less than thirty (30)
days nor more than one hundred twenty (120) days following date of
Owner's Exercise Notice; at which time Tenant shall be released from
its obligations thereafter accruing hereunder and receive a refund
such part of its security as shall not previously have been applied;
or
(2) Owner may elect to review the above proposal to assign or sublet
to the party named therein, pursuant to Subpart D hereof.
If Owner shall exercise its election pursuant to C.(l) hereof, then this
Lease shall expire on the Termination Date as if that date had been originally
fixed as the Expiration Date, in which event Owner shall be free to use or
occupy the Demised Premises for its own account, or to arrange for disposition
of same to any third party (including, without limitation, Tenant's prospective
assignee or subtenant) in which event Tenant shall be released from its
obligations thereafter accruing hereunder.
D. If Owner shall not exercise its options under Paragraph C.(l) above,
within the time period therein provided, as to the proposed assignment or
subletting of the entire Demised Premises, then (subject to the remaining
provisions hereof) Owner's consent thereto shall not unreasonably be withheld
(except that Owner shall be under no obligation to be reasonable respecting any
proposal that would result in a subdivision of said Premises.)
The following facts (and, where applicable, written confirmation of same by
Tenant and any proposed assignee or sublessee) shall be necessary but nor
sufficient pre-conditions to the granting of such consent (if any) by Owner:
(1) Tenant shall not then be in default under this Lease with respect
to any incurable defaults and no curable default shall then be
continuing beyond applicable grace periods, and all representations
set forth at Exhibit 1 hereof shall be true (or any appropriate
exceptions to same, noted) through the date of Owner's consent;
(2) Without Limitation as to other conditions Owner may establish, the
proposed subtenant or assignee shall not request permission to operate
as: a school of any kind; an employment or placement
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agency; a governmental or quasi-governmental agency; a telephone or
secretarial service; a labor union; a food vendor, restaurant,
pharmacy or store for the sale of merchandise; or any establishment
doing business with the public at large or otherwise in a manner that
would tend to generate elevator or other Building traffic of a kind or
volume inconsistent with the Building's small scale and limited
capacity of the Building.
(3) The subletting or assignment shall be to a party tenant whose
image and appearance occupany will be in keeping with the dignity and
first class and character of the Building, and whose occupancy will
neither be more objectionable nor more hazardous than that of Tenant
herein, nor impose any material burden upon Owner in the operation of
the Building;
(4) The availability of the space for proposed sublease or assignment
shall not be advertised by Tenant at a lower rental rate than that
being charged at the time for similar space available for rental by
Owner at the Building, without Owner's consent;
(5) If the Rent, together with any form of monetary or in-kind
consideration due to Tenant in connection with any permitted sublease
or assignment shall, in the aggregate, exceed the Rent and Additional
Rent fixed under this Lease, Tenant shall pay seventy-five (75%)
percent of such excess to the Owner as Additional Rent;
(6) Neither the proposed sublessee, or assignee (nor any affiliates
having a substantial identity of ownership and/or control with them)
shall be a tenant, subtenant, licensee, occupant or assignee of any
other premises in the Building;
(7) The proposed sublessee or assignee is a reputable party whose net
worth and financial responsibility, considering the obligations
undertaken, are reasonably satisfactory to Owner;
(8) Any subletting shall be expressly subject to the further condition
and restriction that the sublease shall not be assigned, encumbered or
otherwise transferred, nor the affected spaces further sublet by the
sublessee in whole or in part, nor any part thereof suffered or
permitted by the sublessee to be used or occupied by others, without
the prior written consent of Owner per this R.ll, in each such
instance; and
(9) Owner may condition its approval of the proposed assignee or
sublessee upon the posting by such party of security (over and above
that already furnished by Tenant and to be held by Owner) up to the
amount of the security then in effect, unless circumstances indicate
more is warranted;
E. No permitted or consented-to assignment or subletting shall be effective
or valid for any purpose whatsoever unless and until a counterpart of the
assignment or a counterpart or reproduced copy of the sublease satisfactory to
Owner shall have been first delivered to Owner and, in the event of an
assignment, Tenant shall deliver to Owner a written agreement executed and
acknowledged by Tenant and such assignee in recordable form wherein such
assignee shall assume jointly and severally with Tenant the due performance of
all obligations under this Lease on Tenant's part to be performed, to the end of
the term of this Lease, notwithstanding any other or further assignment.
F. Any transfer, by operation of law or otherwise, shall be deemed an
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assignment of this Lease requiring the prior consent of Owner:
(1) if it affects more than Fifty-one Percent (51%) of the interest
in the then-Tenant's equity;or
(2) if it diminishes by Twenty-five percent (25%) or more the net
assets or net worth, of Tenant, (or the resulting Tenant entity
referred to at F(l), above);
irrespective of whether such transfer is effected: (A) in connection with this
Lease or otherwise; (B) in an arms length transaction or to an entity totally or
partially under common control with Tenant; or (C) in one transaction or in
successive steps.
R.12 ELECTRICITY AND OTHER UTILITIES:
A. As of the Commencement Date, Tenant shall be furnished with electrical
power by way of a direct meter already allocated to the Demised Premises and
Tenant shall arrange to pay for same through its own account with the public
utility, subject to Part B hereof. Tenant shall make no alterations or changes
in, or addition to, any of the service lines, or major equipment or appliance
loads now or hereafter servicing, or located upon the Premises without the
written consent of the Owner, (which Owner may either grant or withhold, in its
sole discretion) which consent Owner may grant or withhold in its sole
discretion. If, in the opinion of an Electrical Consultant, Tenant's electrical
installations or appliances or the operation of Tenant's business does or may
overload any riser or feeder on the Property of which the Demised Premises are a
part, or servicing the Demised Premises, Tenant will, at Tenant's expense,
install any additional riser or feeder as may reasonably be required, but none
of same may be installed without the prior written authorization and consent of
the Owner, on the basis of plans and specifications indicating the extent,
character and nature of the proposed installations.
B. Where more than one meter measures the service to Tenant, the service
rendered through each meter may be computed and billed separately in accordance
with this Article. Where one meter serves space in addition to the Demised
Premises, Owner shall pro-rate the charges therefor between Tenant and such
other space tenants, on the basis of a relative electrical loading and use of
each, as estimated by Owner from time to time; and, whenever Owner deems it
necessary Owner may engage an Electrical Consultant to prepare renewed estimates
of such relative equipment loading and usage, but shall not require
recomputation of the allocation of charges from any such shared meter more
frequently than once each calendar quarter. When allocation among submeters is
required, Owner may assess at time of billing an administrative fee of fifteen
(15%) percent of said allocated electrical usage.
C. Bills for electrical service shall be rendered in writing to Tenant's
address at such times as Owner may elect (but not more frequently than monthly)
and the amount, as computed from a meter (and allocated per Part B, if
applicable), shall be deemed to be, and be paid as, Additional Rent. In the
event that such bills are not paid promptly after the same are rendered, Owner
may, upon twenty (20) days' prior written notice, discontinue the service of
electric current to the Demised Premises without releasing Tenant from any
liability under this Lease and without Owner or Owner's agent incurring any
liability for any damage or loss sustained by Tenant by such discontinuance of
service. If any tax is imposed upon Owner's receipt from the sale or resale of
electrical energy or gas or telephone service to Tenant by any federal, state,
or municipal authority, Tenant covenants and agrees that, unless expressly
precluded by law, Tenant's pro rata share of such taxes shall be included in
said bill for reimbursement by Tenant to Owner.
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D. Furthermore, to the extent same may be required, Tenant shall, at its
sole cost and expense, procure all licenses, permits and other authorizations
that may be required for the lawful and proper installation of meters, pipes,
wires, conduits, tubes and other equipment and/or applicances used in creating
and/or supplying utility service for the Demised Premises.
E. Tenant further agrees to maintain, repair and replace, when necessary,
at its sole cost and expense, the heating, air conditioning, electric and
plumbing equipment serving the Demised Premises. In connection with this
obligation of Tenant, Owner agrees to provide Tenant access to the Building for
the installation and maintenance of Tenant's utility lines, meters and
equipment.
F. Owner shall have no liability for any loss or damage or expense which
Tenant may sustain or incur by reason of any failure, interruption, curtailment,
inadequacy or defect in the character, quantity or supply of electric current or
any other utility furnished to the Demised Premises, unless, and then solely to
the extent same may arise directly out of Owner's gross negligence, recklessness
or wilful misonduct.
R.13 ACCESS:
A. Tenant covenants and agrees that it will permit Owner, its agents,
servants, employees and contractors, at any and all times to pass and repass on
and through the Demised Premises, to gain access to any portions of the Building
as and when Owner may deem appropriate for the inspection, maintenance, repair,
improvement or reconstruction of the Building or any part thereof. In connection
with this access, Tenant will furnish Owner on demand with a set of keys to any
locked portions of the Demised Premises for emergency situations.
B. Without incurring any liability to Tenant, Owner may permit access to
the Demised Premises and open the same, whether or not Tenant shall be present,
to and upon demand of any receiver, trustee, assignee for the benefit of
creditors, sheriff, marshall or court officer or upon demand of any
representative of the fire, police, building, sanitation or other department of
the city, state or federal governments who by color of law appears entitled to
do so, and/or to any such party taking possession of, and/or removing, Tenant's
property, or for any other apparently lawful purpose; but no action by Owner
hereunder shall be deemed to impair Tenant's obligations under the Lease, nor to
indicate an acknowledgement on Owner's part that any such party has any right or
interest in or to this Lease or the Demised Premises.
R.17 DEFAULT:
A. No receipt of monies by owner from Tenant, after any re-entry or after
the cancellation or termination of this Lease in any lawful manner, shall
reinstate the Lease; and after the service of notice to terminate this Lease, or
after the commencement of any action or proceeding Owner may demand, receive-and
collect any monies due, and apply them on account of Tenant's obligations under
this Lease but without in any respect affecting such notice, action, proceeding
or remedy, except that if a money judgment is being sought in any such action or
proceeding, the amount of such judgment shall be reduced by such payment.
B. If Tenant is in arrears in the payment of Fixed Rent or any category of
Additional Rent, Tenant waives its right, if any, to designate the items in
arrears against which any payments made by Tenant are to be credited and Owner
may apply any of such payments to any such items in arrears as Owner, in its
sole discretion, shall determine, irrespective of any designation by Tenant
respecting same.
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C. No payment by Tenant nor receipt by Owner of a lesser amount than may be
required to be paid hereunder shall be deemed to be other than on account of
such payment, nor shall any endorsement or statement on any check or any letter
accompanying any check tendered as payment be deemed an accord and satisfaction,
and Owner may accept such check or payment without prejudice to Owner's right to
recover the balance of such payment due or to pursue any other remedy in this
Lease provided.
D. Tenant shall pay a "late charge" in the amount of three percent (3%) of
the face amount of any installment of Fixed Rent and Additional Rent paid more
than ten (10) business days after its scheduled due date or in the case of
charges provided herein to be assesed by statement from Owner, then within ten
(10) business days after such statement is rendered.
E. All of the rights and remedies herein given to Owner for the recovery of
the Demised Premises because of the default by the Tenant in the payment of any
sums which may be payable pursuant to the terms of this Lease, or upon the
breach of any of the terms hereof, or the right to re-enter and take possession
of the Demised Premises upon the happening of any of the defaults or breaches of
any of said covenants, or the right to maintain any action for Rent or damages
and all other rights and remedies allowed by law or in equity, are hereby
reserved and conferred upon Owner as distinct, separate and cumulative remedies,
and no one of them, whether exercised by Owner or not, shall be deemed to be to
the exclusion of any of the others.
R.18 REMEDIES OF OWNER:
A. (INTENTIONALLY OMITTED]
B. Without limitation as to remedies of Owner set forth at Paragraph 18 and
elsewhere in this Lease, Tenant agrees that Owner shall be entitled to collect
interest at the lesser of FIFTEEN PERCENT (15%) per annum, or the highest rate
then permitted by law, accruing on any installment of rent beginning on the
thirtieth (30th) day following the time same shall become due, until the time
same is paid. Said rate of interest shall apply as well to the amount of any
then-already-accrued deficiency between the amount of any installment of Rent
or Additional Rent hereunder, and the amount of rental received (if any) upon a
reletting of the Demised Premises.
C. At Owner's sole option following a reletting of the Premises pursuant to
Paragraph 18, Owner may demand and Tenant shall pay liquidated damages for any
prospective deficiency between the rentals stipulated herein and those set forth
in any such lease upon reletting, in a single payment, to be computed by
discounting to present value, the amount of such prospective deficiency from
each such future due date to the date that such liquidated sum is paid, at a
discount rate equal to or less than the discount rate of the Federal Reserve
Bank of New York at the time of award plus ONE PERCENT (1%); with any subsequent
excess of rental on re-letting actually received, over the amount of said
liquidated damages, to survive as a credit to Tenant in an amount up to but not
exceeding the face amount of Tenant's actual payments for such period of the
Term.
D. Tenant further agrees that, in calculating the damages incurred by
Owner, whether same are to be satisfied in monthly installments or by way of a
liquidated sum, allowance shall also be made for reasonably documented instances
of direct and consequential damages incurred by Owner (including, e.g., damages
in the event that prospective tenants elect to decline to Lease, respectively,
where Tenant's default and/or abandonment is, alone or together with the
defaults of others, a significant factor influencing any said party's
determination). Notwithstanding the foregoing, consequential damages shall be
exclusive of the costs of reconstructing the Premises to suit the particular
requirements of a replacement Tenant (but inclusive of the costs of demolishing
Tenant's particular improvements and pro-rata costs of repainting or
re-finishing the floors).
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R.20 BUILDING ALTERATION, MANAGEMENT: LANDMARK STATUS
A. Without limitation as to Paragraph 20, Tenant acknowledges that the
hallways and common areas adjoining the Demised Premises at its floor and
elsewhere in the Building, are intended for common use for purposes of access
only, by Tenant and other tenants now or hereafter situated there, and their
authorized personnel, contractors and invitees. Same shall at all times remain
unobstructed by any such persons, or by any of their personal property or
effects, and shall not be used for storage, loitering, congregation or any other
purpose. Owner reserves the right to refinish, reconfigure or otherwise
maintain, repair or alter these common areas and to regulate, replace, or remove
signage of Owner or any tenant therein, and same shall in no wise be deemed to
interfere with or effect an eviction of Tenant, so long as Tenant is given due
notice and so long as its use of the Demised Premises is not thereby prevented.
B. Tenant acknowledges that the Building is subject to regulation as a
landmark property pursuant to the New York City Landmarks Preservation Law.
Tenant hereby agrees to abide by any restrictions and/or permit any repair,
maintenance or alterations at any time respecting the treatment of the facade,
fenestration or other features of the Building, that may be reasonably entailed
in said landmark status, or that may be directly imposed by authorities having
jurisdiction over the Building and/or over any changes or alterations that may
be undertaken by Owner, in its sole discretion, in order to enhance the
appearance or operation of the Building. Owner shall be authorized at any time
and from time to time to undertake maintenance, renovation or alteration of any
portion of the Building, including the Building entrance, lobby, facades and any
other portion of the Building visible from the street, without thereby becoming
liable for any resulting inconvenience, annoyance or injury to business arising
from same.
C. Provided that Tenant is given at least ninety (90) days' notice and
reimbursement of any direct relocation and reconstruction expenses, Owner shall
have the option at any time to relocate the Demised Premises to comparable space
elsewhere in the Building, with a pro-rata adjustment of Rent, Tenant's Share
and other affected parameters, for any material change in Tenant's area
resulting therefrom.
R.21 WHOLE AGREEMENT: 110 REPRESENTATIONS:
A. Tenant hereunder agrees that it has inspected the Demised Premises and
accepts same in their present "as is" condition, Tenant further acknowledges
that it is not relying upon any verbal or written statement, representations,
real estate broker's "setups" or flyers pertaining to the layout, size or other
characteristics of the Building or the Demised Premises.
B. Tenant has examined the entire Lease, and all components thereof
described at Paragraph 45.D hereof, and Tenant acknowledges that it is
thoroughly familiar with all the terms, covenants, warranties and conditions set
forth herein. In accordance with Paragraph 21 of the Lease, and Section 5-703(2)
of the New York State General Obligations Law, Tenant hereby covenants and
agrees as follows:
(1) The Lease of which this provision is a part is the sole agreement
between the parties;
(2) Tenant has not relied, nor shall it rely upon any purported
modification hereof or additions hereto, nor upon any other purported
representation in connection herewith, unless same has been executed
by a natural person known to Tenant to be a duly authorized principal
of the Owner, and Tenant acknowledges that
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unless any such principal acting on behalf of Owner expressly notifies
Tenant in writing to the contrary, no agent, employee, attorney or
other party having "apparent authority" shall be deemed authorized to
bind Owner;
(3) No writing which purports to rescind, modify or otherwise vary the
terms of this Lease shall be deemed of any force and effect, and any
of same arising prior to the date hereof shall be deemed to have been
superseded hereby, unless expressly incorporated by reference herein;
and
(4) This Lease includes and consists exclusively of those documents
enumerated at Article 45.D hereof.
R.22 HOLDING OVER:
If Tenant shall then hold over after the Expiration Date then, for so long
as Owner shall elect to delay proceedings to remove Tenant from the Premises in
the manner permitted by law, the parties hereby agree that Tenant's use
occupancy of the Demised Premises after the expiration of the stated term shall
be in the nature of a month-to-month tenancy at sufferance of the Owner,
commencing on the first day after the expiration of the term, which tenancy
shall be upon all of the terms set forth in this Lease except Tenant shall pay
for its use and occupancy on the first day of each month of the holdover TWICE
(2%) the sum of: (a) the monthly installment of Fixed Annual Rent due and
payable by Tenant during the last month preceding such holdover period and (b)
the monthly installment of each and every category of Additional Rent payable by
Tenant pursuant to applicable formulas set forth in this Lease, in the amounts
that would have been billable by Owner during such holdover period had the term
of the Lease not expired.
R.29 SERVICES:
A. Freight elevators shall be available for use Monday through Friday
during the hours of 9:30 AM through noon, and 1:30 PM through 3:30 PM. All use
and operation of freight elevators shall be subject to the exclusive supervision
of the Building Management which shall be available outside said normal freight
hours only upon reasonable prior notice to Owner, and upon payment of Owner's
then customary fees therefor. Any operation other than by trained and authorized
personnel is strictly prohibited. The use of passenger elevators is reserved
exclusively for individuals traveling among floors of the Building, and the
transportation of freight thereon is strictly prohibited.
B. Owner shall furnish heat to the Demised Premises during the hours of
8:00 AM and 5:30 PM, Monday through Friday only.
C. In accordance with landmark regulations affecting the Building, the use
of through-window air conditioning units is strictly prohibited, except with
the express prior written consent of the Owner and the Landmarks Preservation
Commission. Each floor shall be equipped with an independent air conditioning
fan and compressor unit, designed to respect the integrity of the Building's
facade. All electrical power required for the operation of the respective air
conditioning units shall be drawn through lines serving the Demised Premises and
comsumption of same shall be charged by way of the direct meter, or any
subsequently designated submeter serving the Demised Premises, pursuant to R.12
hereof.
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R.34 SECURITY:
A. Subject to the provisions of R.18 hereof, the initial security deposit
hereunder shall be in the sum of $14,600.00 to be held throughout the term of
the Lease until later to occur of (1) the expiration or earlier termination of
this Lease; or (2) Tenant's full satisfaction of all terms, covenants and
conditions of this Lease subject to any offsets, charges or applications thereof
as shall have accrued against Tenant; together with four (4%) percent interest
upon the balance adjusted for for offsets or application during the term.
Provided that a separate accounting is maintained for funds to be credited
toward Tenant's security, said cash funds may be comingled with Owner's funds,
to the extent permitted by law.
B. If at any time during the term of this Lease, Owner shall have applied
all or a portion of the security deposit towards the curing of a default by
Tenant continuing beyond the expiration of any applicable grace period, or a
default that would entitle Owner to move to dispossess Tenant, then Tenant
shall, upon notice by Owner, promptly deposit with Owner such sums as may be
necessary to restore or augment the security deposit to the amount required
under the terms of this Lease. Tenant's failure to so restore or augment such
security within ten (10) days after receipt of such notice from Owner, shall
constitute a material default under this Lease.
R.35 TENANT'S CERTIFICATE:
Tenant agrees, at any time and from time to time, upon not less than five
(5) business days' prior written notice from Owner, to execute, acknowledge and
deliver to Owner, a certificate, in writing, addressed to Owner (and to such
other persons as Owner may request) in the form annexed hereto as Exhibit "1"
and containing additional certifications with respect to such other matters as
Owner may reasonably request. If Tenant believes that any of the certificates
contained therein are inaccurate, said certificate shall set forth, in
reasonable detail, the basis for such assertions and if appropriate, Tenant
shall modify the form of certificate solely to the extent needed accurately to
reflect the facts within Tenant's knowledge. Any such certificate may be relied
upon by Owner, any purchasers of the Building and/or the land, by any owner
under a ground or underlying lease affecting the Building and/or the land, and
by any assignee or transferee of any of the foregoing.
R.36 TRANSFER OF OWNER'S INTEREST:
In the event of a bona fide sale, lease or transfer of the Property of
which the Premises are a part, (the other party thereto, herein the
"Transferee") then Owner shall thereafter be entirely relieved of all terms,
covenants and obligations of Owner under this Lease, provided that (a) any funds
then in the hands of Owner in which Tenant has an interest shall be turned over,
(subject to such interest) to the Transferee; (b) notice of such transaction
shall be delivered to Tenant, and (c) the Transferee shall assume all of Owner's
obligations under this Lease.
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ADDITIONAL RIDER PROVISIONS
37. ADDITIONAL DEFINITIONS:
For the purposes of this Lease and all communications with respect thereto,
unless the context otherwise requires:
1. The term "Fixed Rent" shall mean rent at the annual rental rate or rates
provided for in Paragraph R.l.
2. The term "Additional Rent" shall mean all sums of money, other than
Fixed Rent, and which become due and payable from Tenant to Owner hereunder, and
Owner shall have the same remedies therefor as for a default in payment of Fixed
Rent.
3. The terms "Rent" and "Rents" shall mean and include Fixed Rent and/or
Additional Rent hereunder.
4. The terms "Commencement Date" shall mean June 1, 1991; and the term
"Expiration Date" shall mean May 31, 2001; said dates shall be subject to
modification, pursuant to the remaining provisions of this Lease.
5. The term "Real Property" shall mean the land and buildings presently
designated as Block 823, Lot 45 of the Tax Map of the County of New York which
designation includes the Demised Premises, and all rights and interests in and
to said Real Property as of the date hereof, irrespective of any subsequent re-
designation or subdivision of the tax lot boundaries of the Real Property, or
any transfer, reallocation or incorporation of zoning or development rights to
or into any other tax lot, whether pursuant to zoning lot merger, landmark
transfer or otherwise.
6. The term "Taxes" shall mean the real estate taxes, water and sewer rents
and other assessments imposed upon the Real Property including Tenant's share of
any penalties and interest on Taxes that may result from non-payment thereof by
Tenant. Income, franchise, transfer, inheritance and capital stock taxes shall
be deemed excluded from the term "Taxes" for the purposes hereof, except as
otherwise provided herein. If and to the extent that, due to a change in the
basis for and/or method of assessment or taxation, any business improvement
district, transit, or other additional form of charge shall be imposed, or if
any franchise, capital stock, capital, Rents, income, profits or other tax or
charge shall be designated as new forms of "Tax" hereunder substituted in whole
or in part for the Taxes now or hereafter imposed upon the Real Property, then
such additional or substitute tax or charge, shall be deemed included in the
term "Taxes" for the purposes hereof.
7. The term "Tax Year" shall mean each period of twelve (12) months,
commencing on the first day of July of each such period, in which occurs any
part of the term of this Lease or such other period of twelve (12) months
occurring during the term of this Lease, as hereafter may be duly adopted as the
fiscal year for real estate tax purposes of the City of New York. The first "Tax
Year" will commence on July 1, 1992.
8. The term "Base Tax" shall mean Taxes for the year July 1., 1991 to June
30, 1992 (the "Base Tax Year").
9. Intentionally Deleted.
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10.
11.
[INTENTIONALLY DELETED]
12.
13.
38. LIMITATION OF LIABILITY:
Tenant agrees that the liability of Owner under this Lease and all matters
pertaining to or arising out of the tenancy and the use and occupancy of the
Demised Premises, shall be limited to Owner's interest in the Real Property and
in no event shall Tenant make any claim against, or seek to impose any personal
liability upon, any general or limited partner of Owner, or any principal of any
firm or corporation that may hereafter be, become or succeed to the interest of
the Owner in this Lease, subject to any such successor complying with the terms
of R.36 hereof.
39. BROKER:
Tenant represents and warrants that it neither consulted nor negotiated
with any broker or finder except Walter L. Deane of Longstreet Assoc. with
regard to the rental of the Demised Premises from Owner, and Tenant hereby
indemnifies and holds Owner harmless from any damages, costs, and expenses
suffered by Owner by reason of any breach of the foregoing representation.
40. ATTORNEY'S FEES:
Wherever this agrement provides that either Tenant or Owner is required to
pay attorney's fees incurred by the other, such provisions shall be deemed to
mean reasonable attorneys' fees.
41. SIGNS:
Tenant shall not install any sign within, upon or about the Building or
Demised Pemises which can be seen from the street or the Building or the
exterior of the Demised Premises or Building without Owner's prior written
approval, as to which Owner's discretion shall be unrestricted. Owner shall have
the right, with or without notice to Tenant, to remove any signs installed by
Tenant in violation of this Article and to charge Tenant for the cost of such
removal and any repairs necessitated thereby. Tenant shall remove signs
installed by it, if any, at the end of the Term and restore any damage to the
Demised Premises or the Property caused by maintenance, installation or removal
of same, at Tenant's sole cost and expense. There are no present plans for a
Building Lobby Directory, but Tenant will be entitled to __________________ line
entries in any that may be installed hereafter.
42. CHANGES IN LAW:
In the event that all or any part of the Rent or Additional Rent provided
to be paid by Tenant under the provisions of this Lease during the demised term
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shall be uncollectible by virtue of any federal, state or city law, order or
regulation now or hereafter in effect, Owner, at its option, may at any time
thereafter terminate this Lease by not less than sixty (60) days' written notice
to Tenant, in which event this Lease shall terminate on the date fixed in said
notice as if the said date were the date originally fixed herein for the
expiration of the term; provided, however, that if Tenant agrees in writing
within thirty (30) days after Owner's notice to enter into a new or amended
lease which, by its terms, yields to Owner an amount not less than the full
scheduled amount of the Rent and Additional Rent required to be paid under the
provisions of this particular Lease, and provided that such new agreement by
Tenant shall then be legally enforceable by Owner, then Owner agrees to execute
such new or amended lease agreement.
43. LIMITATION OF REMEDIES:
If in this Lease it is provided that Owner's consent or approval as to any
matter will not be unreasonably withheld, and it is established by a court or
body having final jurisdiction thereover that Owner has been unreasonable, then
so long as Owner is not found to have shown actual malice, the only effect of
such finding shall be that Owner shall be deemed to have given its consent or
approval; but Owner shall not be liable to Tenant in any respect for money
damages by reason of withholding its consent.
44. OPERATIONAL COVENANTS:
A. Tenant covenants and agrees that it will, at its sole cost and expense,
at least once a month during the term of this Lease, or at such other intervals
as Owner reasonably selects, employ the services of a licensed, competent and
insured exterminator to keep the Demised Premises free of all insects, vermin,
rodents and any other pests of any kind or nature whatsoever. Upon Tenant's
default in obtaining such services Owner may secure such service for its own
account and charge the Tenant therefor as Additional Rent under the terms of
this Lease, with all of Owner's remedies therefor.
B. Tenant covenants that it will not use or suffer or permit any person to
use or occupy the Demised Premises for any unlawful purpose, and that Tenant
will obtain and maintain at Tenant's sole cost and expense all licenses and
permits from any and all governmental authorities having jurisdiction of the
Demised Premises, which may be necessary for the conduct of Tenant's business
therein and for such use and occupancy. Tenant further covenants to comply with
all applicable laws, resolutions, codes, rules and regulations of any
department, bureau, agency, or any governmental authority having jurisdiction
(together "Requirements") and (2) to idemnify and save Owner harmless from and
against any claims, penalties, loss, damage or expense imposed by reason of any
violation of any such Requirements; in either case, respecting or arising out of
the operation, occupancv, improvement, alteration, maintenance and use of othe
Demised Premises for the purposes set forth herein.
C. Without limitation as to the remaining provisions of this Lease
controlling permitted uses, Tenant hereby expressly warrants and represents that
Tenant's use as defined at Paragraph 2 hereof does not now, and shall not at any
time during the Term hereof, entail, include or in any way involve the
treatment, processing, storage, handling or presence at, on or near the Demised
Premises, of any hazardous or toxic substance which is now or may hereafter
become subject to regulation or control pursuant to the terms of any
Requirements now or hereafter enacted by any body now or hereafter having
jurisdiction over such matters.
For purposes hereof, the terms "toxic" or "hazardous" shall be construed
both with referenc to the operative terms of any Requirements, and with
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reference to their plain meaning; and accordingly, Tenant hereby covenants and
agrees that it shall notify and seek the written consent of Owner, prior to the
introduction or use of any substance that Tenant should reasonably know might be
toxic or hazardous in nature, irrespective of whether same is at that time known
to be subject to any enforceable Requirement. The Tenant acknowledges and agrees
that the foregoing is intended to safeguard the health and safety of all
tenants, licensees and invitees expected to occupy or frequent Demised Premises,
the Building and their environs, and, accordingly, that the benefit of every
doubt concerning the potentially toxic or hazardous character, or the
appropriate use, of any substance at the Building, shall be cast in favor of
reasonable caution in the interest of health and safety.
Any default by Tenant under this Paragraph 44.C shall be deemed a violation
of a material obligation of the Lease, entitling Owner to exercise any and all
remedies available to it in the event of a material default hereunder. The terms
of this Paragraph 44.C shall inure to the benefit of Owner, and that of any
Mortgagees under mortgages now or hereafter affecting the Building.
45. MISCELLANEOUS:
A. It is specifically understood and agreed that this Lease is subject to
the prior written consent of Owner and any Mortgagee of Owner who may now or
hereafter require same; and Tenant has hereunto affixed its signature with the
understanding that (without prejudice as to the terms hereof respecting payment
of Rent) the said Lease shall not in any way bind Owner until the earlier to
occur of (1) the thirtieth (30) day following execution hereof; or (2) such time
as any prior notice of approval or disapproval is issued by Mortgagee.
B. The terms "person" and "persons" as used in this Lease, shall be deemed
to include natural persons, firms, corporations, partnerships, associations and
any other private or public entities.
C. This lease shall be governed in all respects by the laws of the State of
Mew York. If any term or provision of this Lease or the application thereof to
any persons or circumstance shall, to any extent, be finally held to be invalid
or unenforceable, then the remainder of this Lease, (or the application of such
term or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable), shall not be affected thereby and each term and
provision of this Lease shall be deemed valid and be enforced according to its
terms, to the fullest extent permitted by law.
D. This Lease contains the entire agreement between the parties, and any
writing heretofore or hereafter made shall not operate to change, modify, or
discharge this Lease in whole or in part unless such writing (if prior) is
included or incorporated by reference herein and, in any event, is signed by the
party sought to be charged therewith. This Lease consists exclusively of the
following documents, and no others:
(1) Standard Form of Office Lease (REBMY 3/90), consisting of
Paragraphs 1 through 36;
(2) Rider having 22 pages consisting of Paragraphs R.l through R.36,
and Paragraphs 37 through 45;
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(3) Exhibit 1: Estoppel Certificate
Exhibit 2: Work Letter
Exhibit 3: After Hours Access
Exhibit 4: Guaranty;
(4) Exhibit A: Demised Premises.
E. Notices delivered hereunder shall be delivered in writing, via
messenger, certified mail, and/or recognized overnight courier service, In any
event, with a return receipt requested, to the parties at the addresses first
hereinabove set forth or at such other addresses as thereafter specified by
notice; with copies to their respective counsel:
For Owner at:
Finkelstein Bruckman Wohl Most & Rothman
575 Lexington Avenue, 19th Floor
New York, New York 10022
Att: George T. Bruckman, Esq. or
Alan S. Fintz, Esq.
(212) 754-3100
(212) 371-2980 (FAX)
and for Tenant:
Jeannette Warner, Esq.
110 East 59th Street Suite 600
New York, NY 10022
tel. 909-0400
fax. 909-0592
F. Without limitation as to the remaining terms of the Lease, any
continuing material default hereafter arsing under this Lease shall be deemed a
default under the 5th floor Lease of Look's affiliate, Rockin Beast, Inc. and
its Co-Tenant, Taka's House, Inc., and any continuing material default under the
latter lease shall be deemed a default hereunder; and any and all security
deposits under either Lease shall be deemed security available for application
in the event of a default under the other. By execution hereof, Owner does not
waive any objection to any pre-existing default, arrearage, or other condition
heretofore accruing under Look's existing 4th floor lease, and any of same shall
be deemed to survive the Commencement Date against the account of Tenant under
this Lease.
G. Tenant acknowledges that this Lease is entered into in order to extend
its current occupancy at the Building (under the "Existing Lease"). The terms of
this Lease shall control with respect to all matters accruing on and after the
execution hereof. So long as Tenant shall not have been in continuing default
hereunder or under its Existing Lease from date of execution through June 1,
1991, this Lease shall go into effect as of said scheduled Commencement Date.
Without limitation as to the remaining terms of the Lease, any continuing
material default arising between this date and the Commencement Date under
either lease shall entitle Owner forthwith and without notice, to cancel this
Lease at any time. By execution hereof, Owner does not waive objection to any
preexisting default, arrearage, or other condition heretofore accruing, and any
of same shall be deemed to survive the Commencement Date against the account of
Tenant under this Lease.
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EXHIBIT "1"
Form of Estoppel Certificate
The undersigned ____________________________________________ ("Tenant") in
consideration of One Dollar ($1.00), and other valuable considerations, the
receipt and sufficiency of which is hereby acknowledged, hereby certifies to 170
FIFTH ASSOCIATES Inc.("Owner"), [the holder of any mortgage covering the
property (the "Mortgagee")] [the ground lessor under any ground lease affecting
the Property (the "Ground Lessor")] and [the vendee under any contract of sale
with respect to the Property (the "Purchaser)], as follows:
1. Tenant executed and exchanged with Owner a certain lease (the "Lease"),
dated_______________1991, including only those documents at Paragraph 45.D
thereof, and covering the Premises shown on the plan annexed hereto as Schedule
A (the "Demised Premises") for a term to commence (or which commenced) on
__________________ 1991, and to expire on _______________, 199__.
2. The Lease is in full force and effect and has not been modified,
changed, altered or amended in any respect.
3. Tenant has accepted and is now in possession of the Demised Premises and
is paying the full Rental under the Lease.
4. The Fixed Annual Rent payable under this Lease is $________________. The
Fixed annual Rent and all Additional Rent and other charges required to be paid
under the Lease have been paid for the period up to and including
____________________________.
5. No Rent under the Lease has been paid for more than thirty (30) days in
advance of its due date.
6. All work required under the Lease to be performed by Owner has been
completed to the full satisfaction of Tenant; and there are no other defects in
The Demised Premises or Building affecting Tenant's rights under the Lease; and
the Demised Premises are not affected by any toxic or hazardous substances
within the meaning of Paragraph 44C of the Lease.
7. There are presently no defaults existing under the lease on the part of
either Owner or Tenant.
8. There is no existing or anticipated basis for Tenant to cancel or
terminate the Lease.
9. As of the date hereof, there exists no valid defense, offsets, credits,
abatement or deductions in Rent or claims against the enforcement of any of the
agreements, terms, covenants or conditions of the Lease.
10. There are no actions, whether voluntary or otherwise, pending or
threatened against the Tenant under the bankruptcy Laws of the United States or
any state thereof.
11. Tenant acknowledges that Owner has informed Tenant that a collateral
assignment of Owner's interest in the Lease has been or will be made to the
Mortgagee and that no modification, revision, or cancellation of the Lease, or
amendments thereto, shall be effective unless a written consent thereto of the
Mortgagee is first obtained, and that until further notice, payments under
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the Lease may continue as heretofore.
12. The Lease does not contain and the undersigned does not have any
outstanding option or rights of first refusal to purchase the Building, or any
part thereof, or the real property of which the Building is a part.
13. The amount of the security deposit, if any, deposited with the Owner,
in cash or letter of credit pursuant to the terms of the Lease, is $________.
14. This certification is made to induce Purchaser to consummate a purchase
of the Property and to induce Mortgagee to make and maintain a mortgage loan
secured by the Property, knowing that said Purchaser and Mortgagee rely upon the
truth of this certification in making and/or maintaining such purchase or
mortgage, as applicable.
15. Except as modified herein, all other provisions of the Lease are hereby
ratified and confirmed.
DATE:__________________________
By:____________________________
TENANT
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Exhibit 2
Scope of Owner's Work
and Outline Specifications
4th Floor- 170 Fifth Avenue, New York, NY
for iVillage,Inc. ("Tenant")
Owner agrees, at its sole cost and expense and without charge to Tenant, to do
the following work, all of which shall be of material, manufacture, design,
capacity and finish selected by the Owner as Standard of the Building. The
following shall define the scope of work.
1. Demolition
Provide, as necessary, demolition and removal of all existing six interior
partition walls ("recording rooms") including related doors, ceilings, light
fixtures, electric and telephone outlets, shelving brackets, nails, screws, and
obsolete attachments. This shall include removal of discarded furniture,
equipment, shelving or fixtures discarded by Tenant.
2. Ceiling Systems
No drop ceiling shall be provided or allowed.
3. Floor Coverings and Cove Base
Owner shall refinish, where existing, the original maple floors. Where the
floors have missing hardwood boards or gaps exist, new maple boards will be
patched in to fill the void. The Owner shall reasonably attempt to repair the
floor with like materials to provide a flat surface. Owner shall not be
responsible to reconstruct the entire floor to correct any inconsistencies in
the floor finish, whether due to discoloring, staining or wear marks, scratches
or board patterns, whether due to original construction or subsequent cutting or
mutilation, it being understood that irregular board patterns are in keeping
with the historic quality of the building. Floors will be resanded and treated
with one coat of sealer and two coats of polyurethane.
4. Lighting
Install up to 125 linear feet of track lighting with an allowance for ten track
fixtures at a budget of $50.00 per fixture.
5. Gypsum Wallboard System and Plastering
Install up to fifteen linear feet of drywall partition wall approximately eight
feet high at a location to be determined by Tenant ("New Walls"). New Walls
shall consist of a 3-5/8 metal stud assembly with one layer of 5/8 drywall on
each side. Wall height shall vary in accordance with the Plans. shall not be
acoustically insulated. All new drywall partitions shall be taped and have a
minimum of two coats of joint compound, sanded smooth with all screw holes
filled and also sanded to a smooth finish. Any voids in the walls or ceiling
from prior attachments or damage shall be filled and sanded smooth.
With respect to the permiter wall and remaining walls and ceilings. Owner shall
not skim coat the entire surface of the original plaster walls or ceiling; any
uneveness in the plaster work or painted surface shall remain.
Page 1
8/7/95
iVillage, Inc.
Owner's Work
P.25 A
<PAGE>
6. Doors. Door Frames and Hardware
None.
7. Painting. Wall Coverings/Finishing
All wall surfaces will be primed and painted with two coats of paint in an
eggshell vinyl throughout on all wall and ceiling surfaces with no more than one
color. All doors, door frames and window frames will be painted with a single
color in an enamel alkyd paint. Exposed duct shall be painted.
8. Window Treatment (Blinds or Shades) None.
9. Plumbing None.
10.Existing Windows, Glass and Glazing All window bottom sashes will be made
operable. Broken window glass shall be replaced. All windows shall be cleaned
inside and outside.
11. Electrical Receptacles Any recepticles that are attached to existing
partitions which will be demolished shall be remounted, if reasonably possible,
to adjacent walls. Wiring may be installed in concealed cabling or in exposed
electrical conduit.
13. Heating Ventilating and Air Conditioning
c) Remove the air conditioner compressor installed in the lower sash of the #2
westerly window and install it in the upper sash of the #1 westerly window.
Clean and inspect only the air-conditioning equipment. Owner makes no
warranties, express or implied, as to the condition of the existing
air-conditioning equipment. Any other work on the air-conditioning shall be by
Tenant.
The steam radiation shall be examined for any leaks or breaks. The air valves
shall be changed and any leaky shut-off valves shall be changed.
14. Telephone and Data Piping and Wiring
None.
15. Millwork and Casework
None; all furniture, shelving, files and or built in workstations shall be by
Tenant.
16. Fire Protection No changes
17. As Is
Except for the foregoing, the premises shall remain "As Is" with all of the
existing conditions to remain unchanged. The Tenant has inspected the premises
and is fully familiar with all conditions. Tenant has not relied on Landlord,
Landlord's architect or Landlord's agents for consultation as to the suitability
of the premises for Tenant's use. Tenant has consulted with its own
professionals and relies on its own knowledge of its requirements and outside
consultants to understand the outline specifications described herein.
Page 2
8/7/95
iVillage. Inc.
Owner's Work
25 B
<PAGE>
EXHIBIT "3"
AFTER HOUR ACCESS
(l)Tenant agrees to arrange for at least two (2) of its regular authorized
occupants at the Demised Premises to be trained as Fire Wardens and as Building
Evacuation Supervisors ("Supervisors"), within the meaning of New York City Fire
Department Regulations promulgated pursuant to Local Law 5 ("Regulations"), with
such training to be conducted, and the fitness of any such personnel to be
subject to supervision and approval in Owner's sole discretion;
(2)In the event that any one or more of the persons authorized by the
Tenant to occupy the Demised Premises, desire from time to time to continue work
related to Tenant's permitted use during hours other than Normal Building Hours,
Tenant agrees that at least one of the two persons tenant described at subpart
(1), above, shall be at the Demised Premises and ready to carry out the
responsibilities of a designated Supervisor until the Last person has vacated
the Demised Premises, or until the beginning of the next-succeeding shift of
Normal Building Hours, whichever first occurs;
(3)In the event that extended hours are anticipated by any authorized
occupants, the Demised Premises, then, prior to the end of the Normal Business
Hours for the affected day, Tenant's designated Supervisor will log in at the
Building management office, to acknowledge that some of Tenant's personnel shall
be occupying the Building late, and to indicate that the designated Supervisor
will be available during such hours to carry out his/her resconsibilities;
(4)Tenant acknowledges and agrees that, in the event that its designated
Supervisors are unavailable to serve in their intended capacities, occupancy of
the Demised Premises after Normal Building Hours shall be strictly prohibited,
unless Tenant makes prior written arrangements with any other tenants, or with
the Building Management, for other persons duly authorized under the Regulations
to execute the resconsibility of a Supervisor as hereinabove set forth, on
behalf of the Tenant.
-26-
<PAGE>
Lease Amendment
AGREEMENT, made this 20th day of September, 1995 by and between 170 Fifth
Associates, Inc. a New York Corporation (hereinafter called "Owner") and
i Village, Inc., a Delaware Corporation, (hereinafter called "Tenant").
WITNESSETH:
WHEREAS, Owner and Tenant entered into a written agreement of Lease bearing
date of August 21, 1995, (hereafter referred to as the "Lease") whereby the
Owner leased to Tenant and Tenant hired from Owner, all of the fourth floor
"Demised Premises," in the Building situate and known by the street address 170
Fifth Avenue, New York, NY (the "Building");
Whereas, the parties agree to amend the lease for ten dollars and good and
valuable consideration to provide additional services in the Building all as
hereinafter set forth:
NOW, THEREFORE IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. Tenant shall be entitled to After Hour Access pursuant to strict compliance
with the agreement attached hereto labeled "Exhibit 3."
2. Owner specifically reserves the right to revoke the privileges of After Hour
Access, without notice, if Tenant fails to comply in any respect to the rules
and regulations, promulgated for the building- which rules may change from time
to time- in Owner's sole discretion.
3. Tenant shall pay a fee for each access card of $12.00 in advance (subject to
reasonable increase from time to time). The fee is non-refundable and shall
apply for each replacement, whether lost, stolen or broken (including normal
wear and tear). Only one card is issued per person and the card is
non-transferable to other individuals (including among individuals in the same
Tenant or among company employees).
4. Ratification of Least. All provisions of the Lease, not expressly amended
hereby remain in full force and effect
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have hereunto set their hands and seals the day and year first above written.
iVillage, Inc. (Tenant)
Signature /s/ Candice Carpenter
------------------------
170 FIfth Associates, Inc.
/s/ Sheldon Stein
- ---------------------------------
Sheldon Stein, President
Lease Amendment
Page 1 9/19/95
<PAGE>
6. The undersigned subordinate to Owner any and all claims which either of
them may have against the Tenant by reason of subrogation for payments or
performance under this Guaranty or claims for any other reason or cause. The
undersigned agree not to assert any claim which either may have against the
Tenant. including claims by reason of subordination under this Guaranty, until
such time as payment and other obligations of the Tenant to the Owner are fully
satisfied and discharged.
7. This Guaranty is binding upon the undersigned, its principals, legal
representatives and assigns, and is binding upon and shall inure to the benefit
of the Owner and its successors and assigns. No purported assignment or
delegation by the undersigned shall release them of their obligations under this
Guaranty, and with reference to Tenant's obligations, the term "Tenant" used
herein includes the first and any successive assignees or subleases of the
Tenant or of any such assignee or subleases.
8. Except as otherwise provided at Par.3 hereof, this Guaranty may not be
modified orally. but only by writing signed by both the undersigned and Owner.
9. "Good Guy" Clause": Notwithstanding anything to the contrary hereinabove
set forth. Owner acknowledges and agrees that Guarantors shall not be personally
liable under this Guaranty for the payment of rent obligations of Tenant that
shall accrue for the portion of the Lease Term that follows the date upon which
Tenant vacates the Premises hereunder, irrespective of whether such vacancy (a
"Vacancy"), might occur in technical violation of Lease terms respecting the
stated Expiration Date. For purposes of this Paragraph 9, a "Vacancy" shall be
deemed to occur if and only if: (a) Tenant surrenders Premises broom clean
condition; (b) Tenant removes all of its personalty, including furnishings,
fixtures and equipment form Premises; (c) Owner shall have been given notice of
Vacancy and an opportunity to confirm that Premises are delivered in condition
substantially identical to that obtaining upon the Commencement Date of the
Lease, subject only to reasonable wear and tear; and (d) Tenant surrenders to
Owner or its designated agent, possession of all keys to the Premises and its
remaining appurtenances. The foregoing limitation upon Guarantor's obligations
shall apply to costs of removing abandoned property; restoring damage or
unauthorized alterations to Premises; and generally, to any and all claims,
liabilities and expenses. including known or contingent tort or contractual
liabilities to third parties (e.g. without limitation, outstanding or
unsatisfied liens, encumbrances, tide retention agreements or the like), which
may have accrued or arisen at the Premises or pursuant to Lease operation, with
or without Owner's knowledge or consent, prior to the Vacancy date, to the
extent that same would otherwise constitute Additional Rent obligations or
liabilities of Tenant. under the remaining terms of the Lease.
Guarnatee is limited to the obligations of the initial Lease term unless the
terms of the guarantee are extended in writing by the parties hereto.
IN WITNESS WHEREOF. the undersigned have duly signed this Guaranty on this
____ day of August, 1995.
By: /s/ Candice Carpenter
----------------------
Name: Candice Carpenter
Address: 799 Park Avenue, New York. New York 10021
SSN: ###-##-####
Page 2 of 2
8:36 PM
<PAGE>
FIRST AMENDMENT AND SUPPLEMENT TO LEASE AGREEMENT
-------------------------------------------------
THIS FIRST AMENDMENT AND SUPPLEMENT TO OFFICE LEASE made
as of the 5 day of April, 1996, by and between 170 FIFTH ASSOCIATES,
INC., a New York corporation (hereafter referred to as "Owner") with an
office at 55 Fifth Avenue, New York, New York 10003 and iVILLAGE, INC., a
Delaware corporation (hereafter refined to as "Tenant") with an office at
170 Fifth Avenue, New York, New York 10010.
W I T N E S S E T H:
WHEREAS, Owner and Tenant entered into a certain lease
agreement dated August 21, 1995 ("Lease") for office space occupying the
entire Fourth Floor at 170 Fifth Avenue, New York, New York ("Premises"),
for a term of six years commencing September 11, 1995 and ending on August
31, 2001; and;
WHEREAS, Tenant and Owner mutually agreed to amend the
lease September 20, 1995 to provide for after hour access into the building,
and otherwise more particularly set forth therein;
WHEREAS, it is the desire of the Owner and the Tenant to
add to the demised premises additional space known as the rear half of the
Fifth Floor at 170 Fifth Avenue, New York, New York and for that purpose
wish to amend and supplement the Lease, under certain terms and conditions,
all as hereinafter set forth.
NOW, THEREFORE, in consideration for the premises, the
mutual terms, covenants, conditions, warranties and agreements herein set
forth and other good and valuable consideration, the adequacy of .which is
hereby acknowledged by both parties, intending to be legally bound hereby,
Owner and Tenant agree as follows:
1. Additional Space: Anything in the Lease, to the contrary,
notwithstanding, the Lease is hereby amended by adding thereto the rear half
(Suites 504, 505,. 506 & 507) of the Fifth Floor at 170 Fifth Avenue, New
York, New York (hereinafter "Additional Space") effective April 5, 1996.
2. Term: The Lease term for the Additional Space shall commence
April 5, 1996 and end in accordance with the provisions of the Second
Amendment and Supplement to the Lease Agreement attached hereto as Exhibit B
(hereinafter "Second Amendment"). In the event the Second Amendment is
voided in accordance with paragraph 15 therein, the lease term for the
Additional Space, shall continue on a month to month tenancy thereafter at
the same fixed minimum rent.
3. Owner's Work: The Additional Space is leased and shall be
delivered in "as is" condition. Owner shall not make any improvements to the
Additional Space.
4. Fixed Minimum Rent: Effective on April 5, 1996, the Fixed
Minimum Rent for the Additional Space shall be:
<PAGE>
Lease Term Fixed Minimum Rent
April 5, 1996 - April 30, 196 $3,033.42 (26 days @ 116.67 per diem)
After April 30, 1996 $3,500.00 per month
Owner reserves the right to raise the fixed minimum rent with at least 30
days advance written notice. Without limitation as to the rent schedule
under this amendment, Tenant shall remain obligated for any and all rent
accrued prior to the date hereof, and for all items of additional rent
hereafter accruing under the terms of the Lease Agreement, including without
limitation Tenant's pro-rata share of real estate taxes and electrical power
consumption and other items of additional rent, and/or charges, fees, and
penalties stipulated under the remaining provisions of the lease as amended.
5. Utility Service: Anything in the Lease, as amended,
notwithstanding, Tenant acknowledges and agrees that effective April 5,
1996, Tenant shall pay a proportionate cost of electric consumption of the
Fifth Floor meter. The meter serves the entire floor including the Heating,
Ventilating and Air Conditioning system equipment. Tenant's proportionate
share of meter charges shall be 28% during Tenant's occupancy of the
Additional Space.
6. Security Deposit: Tenant acknowledges and agrees that the amount
of the Security Deposit required pursuant to Paragraph 34 of the Lease, is
hereby amended in proportion to the addition of the Additional Space.
Accordingly, the pre-existing principal security balance of $14,600.00 is
augmented by payment due contemporaneously with this Amendment, in the sum
of $3,500.00 respecting Suite 504 of the Fifth Floor, with the amended
aggregate total security to be in the sum of $18,100.00.
7. Liability Insurance: Within seven (7) days following the
execution of this Amendment, Tenant shall furnish to Owner a Certificate of
Insurance (as required by Rider paragraph 8 of the Lease), to include
Tenant's occupancy of the Additional Space.
8. Unoccupied portion of Fifth Floor: In the event the front half
(suites 500, 501, 502, & 503) of the Fifth Floor becomes vacant and
available during Tenant's occupancy of Suite 504 and prior to delivery of
both the Third and Tenth Floors in accordance with the Second Amendment,
then Tenant shall let the entire front portion of the fifth floor (to
augment and become part of the "Additional Space" as defined herein) and the
fixed minimum rent recited herein representing the rear portion of the fifth
floor shall be doubled to represent occupancy by Tenant of the entire fifth
floor until the term of this First Amendment and Supplement to the Lease has
concluded.
Upon Tenant's hire of the entire Fifth Floor, Tenant
hereby acknowledges and agrees to arrange to place the utility meter in
their own name and be directly responsible for all utility charges for the
entire Fifth Floor. Within seven (7) days of occupancy of the entire Fifth
Floor, Tenant agrees to furnish Owner with a Certificate of Insurance
evidencing coverage of the entire Fifth Floor, said coverage to become
effective upon the first day- of occupancy by Tenant of the entire Fifth
Floor.
<PAGE>
9. Failure to give Possession: The provisions of paragraph 24 of
the Lease remain unamended and are specifically confirmed herein to continue
in full force and effect during the entire term of this Amendment.
10. Holding Over: The provisions of Rider paragraph 22 of the Lease
remain unamended and are specifically confirmed herein and shall continue in
full force and effect during the entire term of this agreement.
11. Right to Terminate: Owner shall have the right to terminate
this lease Amendment, termination to take place on the last day of the
calendar month upon 14 days written notice. Notice of termination shall be
served in accordance with paragraph 45 of the Lease Agreement.
12. Ratification of the Lease: Except as otherwise expressly set
forth hereinabove, all terms, covenants and conditions of the Lease are
hereby confirmed to remain unamended and in full force and effect, and are
incorporated by reference as if fully set forth herein.
13. Not an Offer: Tenant acknowledges and agrees that this
instrument is submitted for review and execution by Tenant subject to final
disposition by Owner; that delivery hereof shall not be deemed to constitute
an "offer" within the meaning of New York State contract law; and that same
shall be binding upon Owner only following Owner's review, approval,
execution and delivery of same to Tenant by Owner, in Owner's sole
discretion. Owner's acceptance of this agreement is subject to review by
Owner's lender.
IN WITNESS WHEREOF, the said parties have caused this
Amendment to be executed the day and year first above written.
TENANT: iVILLAGE, INC. OWNER: 170 FIFTH ASSOCIATES, INC.
By: Valhal Corp., General Partner
By: /s/ Candice Carpenter By: /s/ Sheldon Stein
----------------------------- ------------------------------------
Candice Carpenter, CEO Sheldon Stein, President
<PAGE>
EXHIBIT B
SECOND AMENDMENT AND SUPPLEMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT AND SUPPLEMENT TO OFFICE LEASE made as of the ____
day of April, 1996, by and between 170 FIFTH ASSOCIATES, INC. a New York
corporation, (hereafter referred to as "Owner") with an office at c/o Vaihal
Corp. 55 Fifth Avenue, 17th Floor, New York, New York, 10003 and iVillage, Inc.
a New York corporation (hereafter referred to as "Tenant") with an office at 170
Fifth Avenue, New York, NY, 10010.
WITNESSETH:
WHEREAS, Owner and Tenant entered into a certain lease agreement dated
August 21, 1995 ("Lease") for office space occupying the entire fourth floor of
the building 170 Fifth Avenue, New York, NY ("Premises") and more particularly
delineated on the floor plan annexed to the Lease as "Exhibit 2A", for a term of
six years commencing September 11, 1995 and August 31, 2001; and;
WHEREAS, Tenant and Owner mutually agreed to amend the lease on September
20, 1995 to provide for after hour access into the building, and otherwise more
particularly set forth therein; and
WHEREAS, Tenant and Owner entered into a First Amendment and Supplement to
Lease Agreement dated April___, 1996, to temporarily lease the rear half of the
fifth floor as particularly set forth therein;
WHEREAS, it is the desire of the Owner and the Tenant to amend the lease
again under certain terms and conditions, all as hereinafter set forth.
NOW, THEREFORE, in consideration for the premises, the mutual terms,
covenants, conditions, warranties and agreements herein set forth and other good
and valuable consideration, the adequacy of which is hereby acknowledged by both
parties, intending to be legally bound hereby, Owner and Tenant agree as
follows:
1. Amendment to Prevail: If and to the extent that any of the provisions
below of this Amendment conflict or are otherwise inconsistent with any of
the terms of the Lease as previously written or amended (whether or not
such inconsistency is expressly noted below) the provisions of this
Amendment shall prevail.
2. Rental of the Third and Tenth Floors: As of the Second Commencement Date
as set forth below, Tenant shall lease two additional full floors in 170
Fifth Avenue, New York, NY., the third and tenth floors, hereafter to be
called "New Floors," subject to the following terms and conditions. Lease
provisions defined below that are indicated to apply to the New Floors
shall not apply to the Demised Premises under lease preceding this
amendment.
3. Term: The Lease term for the New Floors shall be two years commencing on
the Second Commencement Date (as defined below), hereafter" New Floors
Demised Term."
4. Owner's Work: Owner, at Owner's sole expense. shall (i) paint the walls
of the New Floors (and not the windows, ceiling or doors) (ii) build up to
50 linear feet of 8' high partitions finished with tape and compound to
professional standards with all holes filled and seams covered; (iii)
re-poly the floors on the 3rd and 10th Floors; (iv) clean, paint and
improve lighting in the stairwell between third and fourth floors and
install one each 100 square inch glass lite in each stairtower door; (v)
relocated glass door and side lite on 10th floor; (vi) clean and start-up
the air-conditioning units, collectively "Owner's Work". The parties agree
that Owner's Work shall be commenced and completed prior to the Second
Commencement Date. Notwithstanding Owner's Work items above and subject to
any express representations, warranties and covenants
iVillage, Inc.- Second Amendment
Page 1 of 5 4/5/96 2:23 PM
<PAGE>
set forth in the Lease and all amendments thereto, the New Floors are
delivered and accepted "as Is
5. Consultants: Tenant warrants to Owner that the Tenant has not consulted
with any real estate brokers or real estate sales persons who would look to
the Owner for compensation or a commission.
6. Second Commencement Date: When Owner believes that Owner's Work is
substantially complete (subject to normal punchlist items) Owner shall give
notice thereof to Tenant, accompanied by an executed Second Commencement
Date Memorandum ("Memorandum[s]") in the form attached hereto as Exhibit C.
Tenant shall not delay acceptance of the Premises because of any
outstanding punchlist items or for any other reason. Tenant shall accept
the Premises if substantially complete and attach a punchlist to the
Memorandum detailing any construction items that Owner shall complete
following the Tenant Occupancy. If Tenant contests the Substantial
Completion as represented by Owner, Tenant shall within One business day of
receipt of Owner's Memorandum detail in writing to Owner any deficiencies
to Substantial Completion that Tenant believes remain to be completed.
Following delivery of the newly constructed Premises to Tenant, Owner shall
diligently prosecute completion of the Punchlist items at minimal
interference to Tenant within two weeks of Commencement Date for each New
Floor. By executing the Memorandum, Tenant shall be deemed to have agreed
that Owner's Work has been completed in accordance with the terms of this
Amended Lease. The Second Commencement Date shall be the date as defined in
the Memorandum. Notwithstanding the foregoing, Owner shall deliver and
Tenant shall accept delivery of each New Floor separately as it becomes
available, subject to the terms of this agreement, and the rent shall be
pro-rated to the proportionate value assigned in the Fixed Minimum Rent
schedule below for the respective area delivered. A separate memorandum
shall be executed for each New Floor.
7. Fixed Minimum Rent: Effective on the New Commencement Date, the Fixed
Minimum Rent for the New Floors shall be:
- --------------------------------------------------------------------------------
YEAR 1 YEAR 2
--------------------------- ----------------------------
Rent/year Rent/month Rent/year Rent/month
--------- ---------- --------- ----------
10th Floor 91,250 $ 7,600.00 94,900 $ 7,800.00
3rd Floor(1) 83,950 $ 6,995.83 87,600 $ 7,300.00
========= =========== ========= ===========
Total $ 175,200 $ 14,596.00 $ 182,500 $ 15,100.00
- --------------------------------------------------------------------------------
Without limitation as to the rent schedule under this amendment, Tenant
shall remain obligated for any and all rent accrued prior to the date
hereof, accruing under the Lease, as amended, and for all items of
additional rent hereafter including without limitation Tenant's pro-rata
share of real estate taxes and electrical power consumption, if applicable,
and other items of additional rent, and/or charges, fees, and penalties
stipulated under the remaining provisions of the lease as amended.
8. Real Estate Taxes: Only During the New Floors Demised Term, the real
estate tax Percent as defined in the lease shall be changed as follows: In
section R.1.2.A of the Lease, in the first sentence EIGHT and 19/00 shall
be deleted and in its place TWENTY-FOUR and 57/100 shall be substituted.
The Tenant shall pay 100% of the Tax Payment for the New Floors,
notwithstanding the seventh line of the same section: this shall continue
to apply for the Fourth Floor but shall not apply for the two third
proportion relating to the New Floors.
- ----------
Subject to the right of Owner to substitute the Fifth Floor in place of the
Third Floor in accordance with paragraph 14 hereof In the event of a Fifth Floor
substitution then all rents and other provisions attributable to the Third Floor
shall equally apply to the Fifth Floor.
iVillage, Inc.- Second Amendment
Page 2 of 5 4/5/96 2:23PM
<PAGE>
9. Direct Utility Service: Anything in the Lease, as amended,
notwithstanding, Tenant acknowledges and agrees that effective the New
Commencement Date, Tenant shall arrange for electrical service by way of a
direct account with the public utility for the New Floors. It shall be
Tenant's sole responsibility to convert the existing meter into Tenant's
name with the utility and pay all charges accrued on its own account.
10. Security Deposit: Tenant acknowledges and agrees that the amount of the
Security Deposit required pursuant to R.34 of the Lease, is hereby amended
in proportion to the addition of the New Floors to the total leased
premises. Accordingly, the pre-existing principal security balance of
$14,600.00 is augmented by payment due contemporaneously with this
Amendment, in the sum of $15,000.00 respecting the New Floors, and $7,500
due upon execution of each Memorandum, with the amended aggregate total
security to be in the sum of $44,600.00. The security deposit respecting
the New Floors shall be returned, consistent with the terms of the Lease,
at the end of the New Floors Demised Term.
11. Liability Insurance: Within thirty (30) days following the New
Commencement Date, Tenant shall furnish to Owner a Certificate of Insurance
(as required by Pars. 8 and R.8 of the Lease), reflecting full coverage for
amounts recited therein.
12. Maintenance: Tenant shall re-polyurethane the wood floors in the
premises with an additional coat no less than one time annually during the
term hereof. Tenant shall change filters on the Air-conditioning units no
less than two times annually and have the unit cleaned, if necessary, for
good operation. Owner shall advise tenant of the scheduling of the
foregoing maintenance, and at Tenant's election, contract for the foregoing
services and be reimbursed by Tenant at no additional charge to Tenant
above what Tenant would pay if it contracted directly for the same
services. Notwithstanding, if Tenant fails to maintain the floors and
air-conditioners (and evidence same to Owner) then Owner may contract for
same at Tenant's expense. Tenant shall reimburse Owner for any related
expense in its next monthly billing.
13. Ratification of the Lease: Except as otherwise expressly set forth
hereinabove, the terms, covenants and conditions of the Lease Agreement are
hereby confirmed to remain unammended and in full force and effect, and are
incorporated by reference as if fully set forth herein.
14. DELIVERY SCHEDULE for New Floors. The 10th floor shall be delivered to
Tenant on or before July 1, 1996 and the Third Floor on or before July, 31,
1996. Notwithstanding the foregoing, Owner may elect to substitute the
Fifth Floor in the same time frame indicated above lieu of the Third floor,
with substantially similar improvements, including an equal number of
private offices, conference rooms, lighting treatment, and wall glass in a
plan to be mutually agreed between Tenant and Owner. In the event of a
Fifth Floor substitution by Owner for the Third Floor, all provisions
respecting the Third Floor shall alternately apply to the Fifth Floor
("Substitute")
Owner shall notify Tenant on or before May 1, 1996 whether Owner elects a
substitution of floors and immediately thereafter Owner shall commence
construction on the fifth floor if Substitution is elected by Owner. In the
event of substitution to the fifth floor, the Owner shall construct the
improvements on the front half of the floor while Tenant is in occupancy on
the back halt with the intent to minimize interference with Tenant's
business, and Tenant shall then occupy the completed front half of the
floor to allow Owner to do the construction in the back half Tenant shall
only bear the cost of rent for the half of floor in occupancy during such
period.
Owner shall credit Tenant a late delivery penalty equal to One Hundred and
Fifty Dollars ($150.00) per day for each day of delay in delivery of the
respective premises after July 1,
iVillage, Inc.- Second Amendment
Page 3 of 5 4/5/96 2:23PM
<PAGE>
1996 and July 31, 1996, respectively. The foregoing schedule is subject to
delays of FORCE MAJURE (forces beyond Owner's control).
15. Owner Option to Void Agreement. If on or before May 1, 1996 Owner
determines that delivery of the New Floors cannot be reasonably
accomplished in the time frame above then Owner reserves the right to void
this agreement In the event of an Owner election to Void the agreement,
Owner shall return the security deposit tendered therewith and the
agreement shall have no further force and effect.
16. Options to Extend Term: Effective upon expiration of the two year term
as defined herein, Tenant shall have the option to extend the lease term
for the New Floors for an additional two year term ("First New Floor
Extension Term"). Upon expiration of the First New Floor Extension Term,
Tenant shall have the option to extend the lease term for the New Floors
for a term to end concurrently and absolutely upon the expiration of the
Lease term for the fourth floor premises as defined in the Lease as August
31, 2001 ("Second New Floor Extension Term"). Tenant shall exercise said
options by providing written notice to Owner no sooner than 180 days and no
later than 150 days prior to the expiration of any given current term. Upon
commencement of both the First New Floor Term and Second New Floor Term,
the fixed minimum rent for the New Floors shall increase at a stipulated
3.5% per annum during each and every extended term period.
17. Fifth Floor- Interim Use. Tenant's occupancy of the rear of the Fifth
Floor of the Building pursuant to the First Amendment to the Lease shall
continue until Owner delivery of both New Floors in the event this
agreement is not voided pursuant to provision 15 hereof
18. Not an Offer: Tenant acknowledges and agrees that this instrument is
submitted for review and execution by Tenant subject to final disposition
by Owner; that delivery hereof shall not be deemed to constitute an "offer"
within the meaning of New York State contact law; and that same shall be
binding upon Owner only following Owner's review, approval, execution and
delivery of same to Tenant by Owner, in Owner's sole discretion. Owner's
acceptance of this agreement is subject to review by Owner's lender.
IN WITNESS WHEREOF, the said parties have caused this Agreement to be
executed the day and year first above written.
TENANT: iVillage, Inc.
BY: _____________________________
Candice Carpenter, President
OWNER: 170 FIFTH ASSOCIATES, Inc.
BY: Valhal Corp., General Partner
______________________________
Sheldon Stein, President
iVillage, Inc.- Second Amendment
Page 4 of 5 4/5/96 2:23PM
<PAGE>
EXHIBIT C
MEMORANDUM OF SECOND COMMENCEMENT DATE
Pursuant to the requirements of the Second Amendment and Supplement to the
Lease Agreement, dated April 5, 1996 ("Second Amendment") between 170 FIFTH
ASSOCIATES, INC. ("Owner") and iVillage. Inc. ("Tenant"), this agreement will
serve to confirm the Second Commencement Date for the Second Amendment, as
follows:
1. Delivery of Additional Space. Subject to the remaining provisions
hereof, the delivery of the Additional Space within the meaning of the Paragraph
6 of the Second Amendment will be: July 10, 1996 for the 5th Floor. It is
expressly agreed that one New Floor shall be delivered in sequence at a time and
a separate New Commencement Date shall apply for each new floor. The delivery of
the second of the two New Floors shall establish the Second Commencement Date
for the initial Term of the Second Amendment.
2. Expiration Date. The expiration of the Lease term will
be June 30, 1998.
3. Fixed Minimum Rent Payment The first payment of Fixed Minimum Rent
pursuant to Paragraph 7 of the Second Amendment shall be payable upon the
execution by all parties of this Memorandum of New Commencement Date. Tenant
acknowledging that the New Commencement Date, with respect to its rights and
Owner's obligations under the Lease and all Amendments thereto including the
Second Amendment, is contingent upon payment of any and all sums due thereunder
through the date of this Memorandum, which, in the event Owner declares the New
Commencement Date to fall in the middle of a calendar month, shall include
payment of the pro rata portion of said fixed minimum rent and any additional
rent due for the fraction of the calendar month within which the New
Commencement Date falls.
4. Acceptance of New Floor. Tenant acknowledges and agrees that Owner's
work required under the Second Amendment with respect to the New Floor, has been
completed and Tenant hereby accepts the entire 5th New Floor in its
present condition, subject only to punch list items described on Schedule 1
attached hereto, which Owner agrees to complete within a reasonable time
hereafter, and subject further to latent defects, if any, not readily
discernible upon reasonable inspection.
IN WITNESS WHEREOF, the parties have executed this New Commencement Date
Memorandum on this ______ day of ,1996.
TENANT: iVillage, Inc.
BY: /s/ Fean Clinton
-------------------------------
Candice Carpenter, CEO
OWNER: 170 FIFTH ASSOCIATES, INC.
BY: /s/ Sheldon Stein
------------------------------
Sheldon Stein, President
Valhal Corp., General Partner
iVillage. Inc.-Second Amendment
Page 5 of 5 4/5/96 2:23 PM
<PAGE>
EXHIBIT C
MEMORANDUM OF SECOND COMMENCEMENT DATE
Pursuant to the requirements of the Second Amendment and Supplement to the
Lease Agreement dated April 5, l996 ("Second Amendment') between 170 FIFTH
ASSOCIATES, INC. ("Owner") and iVillage, Inc. ("Tenant"), this agreement will
serve to confirm the Second Commencement Date For the Second Amendment, as
follows:
1. Delivery of Additional Space. Subject to the remaining provisions
hereof, the delivery of the Additional Space within the meaning of the Paragraph
6 of the Second Amendment will be: 6/19/96 for the 3rd Floor. It is expressly
agreed that one New floor shall be delivered in sequence at a time and a
separate New Commencement Date shall apply for each new floor. The delivery of
the second of the two New Floors shall establish the Second Commencement Date
for the initial Term of the Second Amendment.
2. Expiration Date. The expiration of the Lease term will be 6/30/98.
3. Fixed Minimum Rent Payment. The first payment of Fixed Minimum Rent
pursuant to Paragraph 7 of the Second Amendment shall be payable upon the
execution by all parties of this Memorandum of New Commencement Date. Tenant
acknowledging that the New Commencement Date, with respect to its rights and
Owner's obligations under the Lease and all Amendments thereto including the
Second Amendment, is contingent upon payment of any and all sums due thereunder
through the date of this Memorandum, which, in the event Owner declares the New
Commencement Date to fall in the middle of a calendar month, shall include
payment of the pro rata portion of said fixed minimum rent and any additional
rent due for the fraction of the calendar month within which the New
Commencement Date falls.
4. Acceptance of New Floor. Tenant acknowledges and agrees that Owner's
work required under the Second Amendment with respect to the New Floor, has been
completed and Tenant hereby accepts the entire 3rd New Floor in its present
condition, subject only to punch list items described on Schedule 1 attached
hereto, which Owner agrees to complete within a reasonable time hereafter, and
subject further to latent defects, if any, not readily discernible upon
reasonable inspection.
IN WITNESS WHEREOF, the parties have executed this New Commencement Date
Memorandum on this _____ day of ______ 1996.
TENANT: iVillage. Inc.
BY: /s/ Candice Carpenter
----------------------
Candice Carpenter, CEO
OWNER: 170 FIFTH ASSOCIATES. INC.
BY: /s/ Sheldon Stein
----------------------
Sheldon Stein President
Vaihal Corp., General Partner
<PAGE>
[LOGO]
THIRD AMENDMENT AND SUPPLEMENT TO LEASE AMENDMENT
AGREEMENT, made this 20 day of January 1997 by and between 170 Fifth Associates,
Inc. a New York Corporation (hereinafter called "Owner") and iVillage, Inc., a
Delaware Corporation, (hereinafter called "Tenant").
WITNESSETH:
WHEREAS, Owner and Tenant, entered into a written agreement of Lease
bearing date of August 21, 1995, (hereafter referred to as the "Lease") whereby
the Owner leased to Tenant and Tenant hired from Owner, all of the fourth floor
"Demised Premises," in the Building situate and known by the street address 170
Fifth Avenue, New York, NY (the "Building");
WHEREAS, Tenant and Owner entered into a First Amendment and Supplement
to the Lease Agreement dated April 5, 1996, to temporarily lease the rear half
of the fifth floor as more particularly set forth therein;
WHEREAS, Tenant and Owner entered into a Second Amendment and Supplement
to the Lease Agreement dated April 5, 1996, to lease the third and tenth floors
of the building, as more particularly set forth therein;
WHEREAS, Tenant and Owner entered into a Letter Agreement dated April
19, 1996, substitute the leasing of the fifth floor in lieu of the leasing of
the tenth floor, as more particularly set forth therein;
WHEREAS, Tenant and Owner entered into a Letter Agreement dated
September 27, 1996, to clarify several issues regarding the design and
construction of the filth floor, as more particularly set forth therein;
WHEREAS, the parties agree to again amend the lease for ten dollars and
good and valuable consideration to provide additional services in the Building
all as hereinafter set forth:
NOW, THEREFORE IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. Amendment to Prevail: If and to the extent that any of the provisions
below of this Amendment conflict or are otherwise inconsistent with
any of the terms of the Lease as previously written or amended
(whether or not such inconsistency is expressly noted below) the
provisions of this Amendment shall prevail.
2. Rental of the 11th Floor: As of the Third Commencement Date as set
forth below, Tenant shall lease the eleventh floor of the building,
170 Fifth Avenue, for a term of two years, commencing on or about May
1, 1997 and ending two years from the Commencement Date, on or about
April 30, 1999, subject to the terms and conditions set forth herein.
Notwithstanding Exhibit 2 attached hereto, if the Commencement of the
11th floor is later than May 1, 1997, the term shall expire upon the
second anniversary of the Commencement Date.
Lease Amendment Page 1 1/14/97
<PAGE>
[LOGO]
3 Premises "As Is": The 11th Floor shall be delivered "As is," in its
present arrangement and condition except that Owner shall provide a
work allowance of $12,000.00 for improving the 12th Floor premises. No
other work by Owner is included as a condition of this agreement.
Owner shall perform work allowance improvements on Tenant's behalf to
achieve values competitive for similar commercial improvements,
including architectural design, painting, partition demolition and
partition construction.
4. The Fixed Minimum Rent for the 11th Floor shall be in accordance with
the rent schedule, Exhibit 2,, attached hereto. The Fixed Minimum Rent
for the 11th Floor shall commence upon delivery of the floor to by
Owner to the Tenant, on or about May 1, 1997.
5 Lease Conditional: The Owner reserves that is agreement is subject to
Owner receiving from the Tenant, to Owner's satisfaction, in Owner's
sole discretion, proof on or before March 15, 1997 of $20 Million in
new funding commitments. In the event that Owner determines that new
funding commitments are insufficient, the leasing of the 11th Floor as
described herein can be withdrawn by Owner and the agreement hereof
shall be null and void.
6. Floor shall be extended for one year to October 31, 1999. The Lease
Term of the Fourth Floor shall be reduced by one year to an expiration
of August 31, 2000.
7. Real Estate Taxes: During the Demised Term, the Tenant shall pay the
increases in Real Estate Taxes for each floor pursuant to section
R1.2.A of the Lease. Each floor represents 8.19% of the building with
the total of the four floors representing 32.76% of the building.
Tenant's tax proportion shall be adjusted for each Lease Year to be
apportioned for the term of he respective floors. The Tenant shall pay
100% of the Tax Payment for the 3rd, 5th and 11th Floors,
notwithstanding the seventh line of R.1.2A in the Lease.
8 Intentionally Deleted.
9. No cleaning or repair services for the Demised Premises are included
by Owner under the terms hereof.
10. Brokers: Tenant warrants to Owner that Tenant has not consulted with
any real estate brokers other than Valhal Corp. Tenant shall indemnify
Owner for any costs or expenses related to a claim by a real estate
broker to Owner for a commission Dot specifically noted herein.
11. Licenses and Use Fees: Tenant shall pay any licenses and use fees or
taxes related to Tenant's occupancy in the Premises including but not
limited to rent taxes and or occupancy fees or equipment usage fees
specifically related to the Demised Premises whether installed by
Owner or Tenant. Such fees may be charged by any city, state or
federal agency and may relate to usage of the premises or services
Lease Amendment Page 2 1/24/97
<PAGE>
[LOGO]
enjoyed by the tenant in the premises whether or not the equipment is
owned by the Tenant or located on the premises for the tenant's use.
12. Not an Offer: Tenant acknowledges and agrees that this instrument is
submitted for review and execution by Tenant subject to final
disposition by Owner; that delivery hereof shall not be deemed to
constitute an "offer" within the meaning of New York State contract
law; and that same shall be binding upon Owner only following Owner's
review, approval, execution and delivery of this Agreement to Tenant
by Owner, in Owner's sole Discretion. Owner's acceptance of this
agreement is also subject to approval by Owner's lender.
13. Ratification of Lease All provisions of the Lease, not expressly
amended hereby remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have hereunto set their hands and seals the day and year first above written.
iViliage, Inc. (Tenant) 170 Fifth Associates, Inc.
Signature /s/ Steven Elkes /s/ Sheldon Stein
-------------------- ------------------------
by: Steven Elkes Sheldon Stein, President
title: VP Finance
Lease Amendment Page 3 1/14/97
<PAGE>
FOURTH AMENDMENT TO LEASE
-------------------------
THIS FOURTH AMENDMENT TO LEASE is made on the 3rd day of
November, 1998 by and between 170 FIFTH ASSOCIATES, INC. (hereinafter called
"Owner") with an office at 55 Fifth Avenue, New York, NY 10003 and
iVilliage, Inc., a Delaware Corporation (hereinafter called "Tenant"), with
an office at 170 Fifth Avenue, New York, NY.
BACKGROUND
- ----------
Landlord and Tenant are parties to an office Lease dated
August 21, 1995 ("Original Lease"), pursuant to which Landlord leased to
Tenant the fourth floor of the Building 170 Fifth Avenue, New York, NY
("Building").
Whereas, the Original Lease was amended by a First Amendment
dated April 5, 1996;
Whereas, the Lease was amended again with a Second
Amendment dated April 5, 1996, to lease the third and tenth floors of the
Building;
Whereas, the Lease was amended with a Letter Agreement
dated April 19, 1996, substituting the fifth floor in lieu of the tenth
floor of the Building, as more particularly set forth therein;
Whereas, the Lease was amended by a Third Amendment dated
January 20, 1997 which added the 11th floor to the Lease;
Whereas, the Lease was amended by a Letter Agreement dated
May 8, 1997 to clarify issues of the Third Amendment to the Lease:
The Lease as amended by both prior amendments, is
hereinafter referred to as the "Amended Lease".
Whereas, it is the desire of the parties to amend the
lease again, all as hereinafter set forth.
Now, Therefore, intending to be legally bound hereby,
Landlord and Owner agree as follows:
1. TERM ADJUSTMENTS. The Lease term respecting the respective
floors of the Building shall be changed per the schedule below.
<PAGE>
Expiration as of this
Leased Floor Scheduled Term Expiration Fourth Amendment
Third Floor October 31, 1999 Unchanged
Fourth Floor August 31, 2000 May 31, 1999
Fifth Floor October 31, 1998 June 30, 1999
Eleventh Floor April 30, 1999 November 30, 1998
2. RENT. The Fixed Minimum Rent for the fifth floor shall be
increased to $9,000.00 monthly as of May 1, 1999, payable in advance, per
the rent schedule attached hereto as Exhibit A.
3. EFFECTIVENESS. This is not an offer by Landlord to lease space,
and shall become an amendment to the Lease only upon execution by both
parties.
4. NO BROKER. Tenant represents to Owner that it has not consulted
with a Real Estate Broker in this transaction. The Tenant has not engaged a
Broker to represent Tenant in this lease transaction. Tenant recognizes that
Owner's reliance on the foregoing sentence represents a material inducement
to enter into this agreement and in consideration therefore, the Tenant
shall indemnify Owner for and Tenant shall pay any and all costs for Owner
related thereto (including attorney fees, court costs and any commissions,
if ultimately owed) in defending a claim by a real estate broker claiming a
right to a commission related to Broker's claimed engagement or association
with Tenant.
5. RATIFICATION OF LEASE. ALL PROVISIONS OF THE AMENDED LEASE NOT
EXPRESSLY AMENDED HEREBY REMAIN IN FULL FORCE AND EFFECT.
6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which shall be
one and the same instrument.
7. ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements, or representations by or
among the parties, written or oral, to the extent they have related in any
way to the subject matter hereof.
8. HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9. EXECUTION. This Agreement may be executed by facsimile
signatures by either party hereto and such signature shall be deemed binding
for all purposes hereof, but each party shall deliver an original signed
copy to the other party immediately thereafter.
<PAGE>
10. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
each party hereto. No waiver by any party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in
any way any rights arising by virtue of any prior or subsequent such
occurrence.
11. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
12. INCORPORATION OF EXHIBITS AND ANNEXES. The Exhibits and Annexes
identified in this Agreement are incorporated herein by reference and made a
part hereof.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have hereunto set their hands and seals the day and
year first above written.
iVillage, Inc. 170 Fifth Associates, Inc.
By: /s/ Steven Elkes By /s/ Sheldon Stein
--------------------------------------- ------------------------------
Steven Elkes, VP Business Affairs Sheldon Stein, President
<PAGE>
Exhibit A
iVillage Rent Schedule 10-19-98 9:31AM
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Nov-96 Dec-96 Jan-97 Feb-97 Mar-97 Apr-97 May-97 Jun-97 Jul-97
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3rd Floor $ 6,995.83 $ 6,995.83 $ 6,995.83 $ 6,995.83 $ 6,995.83 $ 6,995.83 $ 6,995.83 $ 6,995.83 $ 7,300.00
- -------------------------------------------------------------------------------------------------------------------------------
4th Floor $ 7,592.00 $ 7,592.00 $ 7,592.00 $ 7,592.00 $ 7,592.00 $ 7,592.00 $ 7,592.00 $ 7,592.00 $ 7,592.00
- -------------------------------------------------------------------------------------------------------------------------------
5th Floor $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00
- -------------------------------------------------------------------------------------------------------------------------------
11th Floor $ 8,212.50 $ 8,212.50 $ 8,212.50
- -------------------------------------------------------------------------------------------========== ========== ==========
$21,887.83 $21,887.83 $21,887.83 $21,887.83 $21,887.83 $21,887.83 $30,100.33 $30,100.33 $30,404.50
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Nov-97 Dec-97 Jan-98 Feb-98 Mar-98 Apr-98 May-98 Jun-98 Jul-98
- -------------------------------------------------------------------------------------------------------------------------------
3rd Floor $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00
- -------------------------------------------------------------------------------------------------------------------------------
4th Floor $ 7,895.68 $ 7,895.68 $ 7,895.68 $ 7,895.68 $ 7,895.68 $ 7,895.68 $ 7,895.68 $ 7,895.68 $ 7,895.68
- -------------------------------------------------------------------------------------------------------------------------------
5th Floor $ 7,573.75 $ 7,573.75 $ 7,573.75 $ 7,573.75 $ 7,573.75 $ 7,573.75 $ 7,573.75 $ 7,573.75 $ 7,573.75
- -------------------------------------------------------------------------------------------------------------------------------
11th Floor $ 8,212.50 $ 8,212.50 $ 8,212.50 $ 8,212.50 $ 8,212.50 $ 8,212.50 $ 8,582.06 $ 8,582.06 $ 8,582.06
- -------------========== ========== ========== ========== ========== ========== ========== ========== ==========
$30,981.93 $30,981.93 $30,981.93 $30,981.93 $30,981.93 $30,981.93 $31,351.49 $31,351.49 $31,351.49
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Nov-98 Dec-98 Jan-99 Feb-99 Mar-99 Apr-99 May-99 Jun-99 Jul-99
- -------------------------------------------------------------------------------------------------------------------------------
3rd Floor $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00 $ 7,300.00
- -------------------------------------------------------------------------------------------------------------------------------
4th Floor $ 8,211.52 $ 8,211.52 $ 8,211.52 $ 8,211.52 $ 8,211.52 $ 8,211.52 $ 8,211.52 $ 8,211.52 $ 8,211.52
- -------------------------------------------------------------------------------------------------------------------------------
5th Floor
- -------------------------------------------------------------------------------------------------------------------------------
11th Floor $ 8,582.06 $ 8,582.06 $ 8,582.06 $ 8,582.06 $ 8,582.06 $ 8,582.06
- -------------========== ========== ========== ========== ========== ==========
$24,093.58 $24,093.58 $24,093.58 $24,093.58 $24,093.58 $24,093.58
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Nov-99 Dec-99 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00
- -------------------------------------------------------------------------------------------------------------------------------
3rd Floor
- -------------------------------------------------------------------------------------------------------------------------------
4th Floor $ 8,539.97 $ 8,539.97 $ 8,539.97 $ 8,539.97 $ 8,539.97 $ 8,539.97 $ 8,539.97 $ 8,539.97 $ 8,539.97
- -------------------------------------------------------------------------------------------------------------------------------
5th Floor
- -------------------------------------------------------------------------------------------------------------------------------
11th Floor
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------
Aug-97 Sep-97 Oct-97
- ----------------------------------------------------
<S> <C> <C> <C>
3rd Floor $ 7,300.00 $ 7,300.00 $ 7,300.00
- ----------------------------------------------------
4th Floor $ 7,592.00 $ 7,895.68 $ 7,895.68
- ----------------------------------------------------
5th Floor $ 7,300.00 $ 7,300.00 $ 7,300.00
- ----------------------------------------------------
11th Floor $ 8,212.50 $ 8,212.50 $ 8,212.50
- ----------------========== ========== ==========
$30,404.50 $30,708.18 $30,708.18
- ----------------------------------------------------
- ----------------------------------------------------
Aug-98 Sep-98 Oct-98
- ----------------------------------------------------
3rd Floor $ 7,300.00 $ 7,300.00 $ 7,300.00
- ----------------------------------------------------
4th Floor $ 7,895.68 $ 8,211.52 $ 8,211.52
- ----------------------------------------------------
5th Floor $ 7,573.75 $ 7,573.75 $ 7,573.75
- ----------------------------------------------------
11th Floor $ 8,582.06 $ 8,582.06 $ 8,582.06
- ----------------========== ========== ==========
$31,351.49 $31,667.33 $31,667.33
- ----------------------------------------------------
- ----------------------------------------------------
Aug-99 Sep-99 Oct-99
- ----------------------------------------------------
3rd Floor $ 7,300.00 $ 7,300.00 $ 7,300.00
- ----------------------------------------------------
4th Floor $ 8,211.52 $ 8,539.97 $ 8,539.97
- ----------------------------------------------------
5th Floor
- ----------------------------------------------------
11th Floor
- ----------------------------------------------------
- ----------------------------------------------------
Aug-00 Sep-00 Oct-00
- ----------------------------------------------------
3rd Floor
- ----------------------------------------------------
4th Floor $ 8,539.97
- ----------------------------------------------------
5th Floor
- ----------------------------------------------------
11th Floor
- ----------------------------------------------------
</TABLE>
Page 1
<PAGE>
================================================================================
STANDARD FORM OF LOFT LEASE
The Real Estate Board on New York, Inc.
================================================================================
Agreement of Lease, made as of this 5th day of March 1998, between 149 Fifth
Avenue Corporation, a New York corporation with offices c/o William Colavito,
Inc., 510 Madison Avenue, New York, NY 10022 party of the first part,
hereinafter referred to as OWNER, and iVILLAGE, INCORPORATED, a Delaware
Corporation, with offices at 170 Fifth Avenue N.Y., NY 10010 party of the second
part, hereinafter referred to as TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner The
westerly Portion of the second (2nd) floor as shown in blue on the plan attached
hereto and forming a part of this lease. (5500 square feet) in the building
known as 149 Fifth Avenue, thru to and including 921-5 Broadway in the Borough
of Manhattan, City of New York, for the term of TWO (2) YEARS & 1/2 MONTHS (or
until such term shall sooner cease and expire as hereinafter provided) to
commence on the 15th day of March nineteen hundred and Ninety-Eight, and to end
on the 31st day of March Two Thousand both dates inclusive, at an annual rental
rate of ONE HUNDRED TEN THOUSAND ($110,000.00) DOLLARS
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner on such or such place as Owner
may designate, without any set off or deduction whatsoever, except that Tenant
shall pay the first __ monthly installment(s) on the execution hereof (unless
this lease be a renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent: 1. Tenant shall pay the rent as above and as hereinafter provided.
Occupancy: 2. Tenant shall use and occupy demised premises for offices for its
internet web site business provided such use is in accordance with the
certificate of occupancy for the building, if any, and for no other purpose.
Alterations:
3. Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written consent not to be unreasonably withheld or
delayed. Subject to prior written consent of Owner, and to the provisions of
this article, Tenant, at Tenant's expense, may make alterations, installations,
additions or improvements which are nonstructural and which do not affect
utility services or plumbing and electrical lines, in or to the interior of the
demised premises using contractors or mechanics. Tenant shall, at its expense,
before making any alterations, additions, installations or improvements obtain
all permits, approval and certificates required by any governmental or
quasi-governmental bodies and (upon completion) certificates of final approval
thereof and shall deliver promptly duplicates of all such permits, approvals and
certificates to Owner. Tenant agrees to carry and will cause Tenant's
contractors and sub-contractors to carry such workman's compensation, general
liability, personal and property damage insurance as necessary and as Owner may
reasonably require. If any mechanic's lien is filed against the demised
premises, or the building of which the same forms a part, for work claimed to
have been done for, or materials furnished to, Tenant, whether or not done
pursuant to this article, the same shall be discharged by Tenant within thirty
days thereafter, at Tenant's expense, by payment or filing the bond required by
law or otherwise. All fixtures and all paneling, partitions, railings and like
installations, installed in the premises at any time, either by Tenant or by
Owner on Tenant's behalf, shall, upon installation, become the property of Owner
and shall remain upon and be surrendered with the demised premises unless Owner,
by notice to Tenant no later than twenty days prior to the date fixed as the
termination of this lease, elects to relinquish Owner's right thereto and to
have them removed by Tenant, in which event the same shall be removed from the
demised premises by Tenant prior to the expiration of the lease, at Tenant's
expense. Nothing in this Article shall be construed to give Owner title to or to
prevent Tenant's removal of trade fixtures, moveable office furniture and
equipment, but upon removal of any such from the premises or upon removal of
other installations as may be required by Owner, Tenant shall immediately and at
its expense, taking into regard ordinary wear and tear repair and restore the
premises to the condition existing prior to installation and repair any material
damage to the demised premises or the building due to such removal. All property
permitted or required to be removed by Tenant at the end of the term remaining
in the premises after Tenant's removal shall be deemed abandoned and may, at the
election of Owner, either be retained as Owner's property or removed from the
premises by Owner, at Tenant's expense.
Repairs:
4. Owner shall maintain and repair the exterior of and the public portions of
the building. Tenant shall, throughout the term of this lease, take good care of
the demised premises including the bathrooms and lavatory facilities and the
windows and window frames and, the fixtures and appurtenances therein and at
Tenant's sole cost and expense promptly make all repairs thereto and to the
building, whether structural or non-strucutural in nature, caused by or
resulting from the carelessness, omission, neglect or improper conduct of
Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other provisions
of this lease, including Article 6. Tenant shall also repair all damage to the
building and the demised premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be of quality or class
equal to the original work or construction. If Tenant fails, after ten days
notice, to proceed with due diligence to make repairs required to be made by
Tenant, the same may be made by the Owner at the expense of Tenant, and the
expenses thereof incurred by Owner shall be collectible, as additional rent,
after rendition of a bill or statement therefore. If the demised premises be or
become infested with vermin as a direct result of action or inaction by tenant,
Tenant shall, at its expense, cause the same to be exterminated. Tenant shall
give Owner prompt notice of any defective condition in any plumbing, heating
system or electrical lines located in the demised premises and following such
notice, Owner shall remedy the condition with due diligence and with best
efforts, but at the expense of Tenant, if repairs are necessitated by damage or
injury attributable to Tenant, Tenant's servants, agents, employees, invitees or
licensees as aforesaid not attributable to ordinary wear and tear. Except as
specifically provided in Article 9 or elsewhere in this lease, there shall be no
allowance to the Tenant for a diminution of rental value and no liability on the
part of Owner by reason of inconvenience, annoyance or injury to business
arising from Owner, Tenant or others making or failing to make any repairs,
alterations, additions or improvements in or to any portion of the building or
the demised premises or in and to the fixtures, appurtenances or equipment
thereof. It is specifically agreed that Tenant shall not be entitled to any set
off or reduction of rent by reason of any non-material failure of Owner to
comply with the covenants of this or any other article of this lease. Tenant
agrees that Tenant's sole remedy at law in such instance will be by way of any
action for damages for breach of contract. The provisions of this Article 4 with
respect to the making of repairs shall not apply in the case of fire or other
casualty with regard to which Article 9 hereof shall apply.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to be cleaned from the outside in violation of Section 202 of
the New York State Labor Law or any other applicable law or of the Rules of the
Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
Requirements of Law, Fire Insurance:
6. Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter Tenant shall, at Tenant's solo cost and expense,
promptly comply with all present and future laws, orders and regulations of all
state, federal, municipal and local governments, departments, commissions and
boards and any direction of any public officer pursuant to law, and all orders,
rules and regulations of the New York Board of Fire Underwriters, or the
Insurance Services Office, or any similar body which shall impose any violation,
order or duty upon Owner or Tenant with respect to the demised premises, whether
or not arising out of Tenant's use or manner of use thereof, or, with respect to
the building, if arising out of Tenant's use or manner of use of the demised
premises of the building (including the use permitted under the lease). Except
as provided in Article 30 hereof, nothing herein shall require Tenant to make
structural repairs or alterations unless Tenant has, by its manner of use of the
demised premises or method of operation therein, violated any such laws,
ordinances, orders, rules, regulations or requirements with respect thereto.
Tenant shall not do or
<PAGE>
permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall not keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will substantially increase the insurance rate for
the building or any property located therein over that in effect prior to the
commencement of Tenant's occupancy. If by reason of failure to comply with the
foregoing the fire insurance rate shall, at the beginning of this lease or any
time thereafter, be higher than it otherwise would be, then Tenant shall
reimburse Owner, as additional rent hereunder, for that portion of all fire
insurance premiums thereafter paid by Owner which shall have been charged
because of such failure by Tenant. Tenant shall be entitled to conduct an
independent audit to determine an increase in Owner's insurance rate, proposed
increase, if any, and if the audit reveals less than owner's proposed increase,
Tenant's independent audit rate shall apply to said increase, if any. In any
action or proceeding wherein Owner and Tenant are parties, a schedule or
"make-up" or rate for the building or demised premises issued by a body making
fire insurance rates applicable to said premises shall be conclusive evidence of
the facts therein stated and of the several items and charges in the fire
insurance rates then applicable to said premises. Tenant shall not place a load
upon any floor of the demised premises exceeding the floor load per square foot
area which it was designed to carry and which is allowed by law. Owner reserves
the right to prescribe the weight and position of all safes, business machines
and mechanical equipment. Such installations shall be placed and maintained by
Tenant, at Tenant's expense, in settings sufficient, in Owner's judgement, to
absorb and prevent vibration, noise and annoyance.
Subordination:
7. This lease is subject and subordinate to all ground or underlying leases and
to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
reasonably request.
Tenant's Liability Insurance Property Loss, Damage, Indemnity:
8. Owner or its agents shall not be liable for any damage to property of Tenant
or of others entrusted to employees of the building, nor for loss of or damage
to any property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees; Owner
or its agents shall not be liable for any damage caused by other tenants or
persons in, upon or about said building or caused by operations in connection of
any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorney's fees,
paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or licensees. Tenant's
liability under this lease extends to the acts and omissions of any sub-tenant,
and any agent, contractor, employee, invitee or licensee of any sub-tenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent and other items of additional rent as applicable,
until such repair shall be completed, shall be apportioned from the day
following the casualty according to the part of the premises which is usable.
(c) If the demised premises are totally damaged or rendered wholly unusable by
fire or other casualty, then the rent and other items of additional rent as
hereinafter expressly provided shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner (or sooner reoccupied in part by Tenant
then rent shall be apportioned as provided in subsection (b) above), subject to
Owner's right to elect not to restore the same as hereinafter provided. (d) If
the demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, or 30 days after adjustment of
the insurance claim for such fire or casualty, whichever is sooner, specifying a
date for the expiration of the lease, which date shall not be more than 60 days
after the giving of such notice, and upon the date specified in such notice the
term of the lease shall expire as fully and completely as if such date were the
date set forth above for the termination of this lease and Tenant shall
forthwith quit, surrender and vacate the premises without prejudice however, to
Owner's rights and remedies against Tenant under the lease provisions in effect
prior to such termination, and any rent owing shall be paid up to such date and
any payments of rent made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant. Unless Owner shall serve a
termination notice as provided for herein, Owner shall make the repairs and
restorations under the conditions of (b) and (c) hereof, with all reasonable
expedition, subject to delays due to adjustment of insurance claims, labor
troubles and causes beyond Owner's control. After any such casualty, Tenant
shall cooperate with Owner's restoration by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Owner that the premises are
substantially ready for Tenant's occupancy. (c) Nothing contained hereinabove
shall relieve Tenant from liability that may exist as a result of damage from
fire or other casualty. Notwithstanding the foregoing, including Owner's
obligation to restore under subparagraph (b) above, each party shall look first
to any insurance in its favor before making any claim against the other party
for recovery for loss or damage resulting from fire or other casualty, and the
extent that such insurance is in force and collectible and to the extent
permitted by law, Owner and Tenant each hereby releases and waives all right of
recovery with respect to subparagraphs (b), (d) and (c) above, against the other
or any one claiming through or under each of them by way of subrogation or
otherwise. The release and waiver herein referred to shall be deemed to include
any loss or damage to the demised premises and/or to any personal property,
equipment, trade fixtures, goods and merchandise located therein. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
a clause providing that such a release or waiver shall not invalidate the
insurance. If, and to the extent, that such waiver can be obtained only by the
payment of additional premiums, then the party benefitting from the waiver shall
pay such premium within ten days after written demand or shall be deemed to have
agreed that the party obtaining insurance coverage shall be free of any further
obligation under the provisions hereof with respect to waiver of subrogation.
Tenant acknowledges that Owner will not carry insurance on Tenant's furniture
and or furnishings or any fixtures or equipment, improvements, or appurtunances
removable by Tenant and agrees that Owner will not be obligated to repair any
damage thereto or replace the same.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease. Tenant shall have the right to make
an independent claim to the condemning authority for the value of Tenant's
moving expenses and personal property, trade fixtures and equipment, provided
Tenant is entitled pursuant to the terms of the lease to remove such property,
trade fixtures and equipment at the end of the term and provided further such
claim does not reduce Owner's award.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Owner in each instance not to be unreasonably
withheld or delayed. Transfer of the majority of the stock of a corporate Tenant
or the majority partnership interest of a partnership Tenant shall be deemed an
assignment. If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may, after
default by Tenant, collect rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
assignment, underletting, occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
Electric Current:
12. Rates and conditions in respect to submetering or rent inclusion, as the
case my be, to be added in RIDER attached hereto. Tenant covenants and agrees
that at all times its use of electric current shall no exceed the capacity of
existing feeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The reasonable change at any time of the
character of electric service shall in no wise make Owner liable or responsible
to Tenant, for any loss, damages or expenses which Tenant may sustain.
Access to Premises:
13. Owner or Owner's agents shall have the right (but shall not be obligated) to
enter the demised premises in any emergency at any time, and, at other
reasonable times, to examine the same and to make such repairs, replacements and
improvements as Owner may deem necessary and reasonably desirable to any portion
of the building or which Owner may elect to perform in the premises after
Tenant's failure to make repairs or perform any work which Tenant is obligated
to perform under this lease, or for the purpose of complying with laws,
regulations and other directions of governmental authorities. Tenant shall
permit Owner to use and maintain and replace pipes and conduits in and through
the demised premises and to erect new pipes and conduits therein provided,
wherever possible, they are within walls or otherwise concealed. Owner may,
during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. However, the Owner agrees to make its best effort to
expedite such work and perform same in a diligent and unobtrusive manner.
Throughout the term hereof Owner shall have the right to enter the demised
premises at reasonable hours for the purpose of showing the same to prospective
purchasers or mortgagees of the building, and during the last six months of the
term for the purpose of showing the same to prospective tenants and may, during
said six months period, place upon
<PAGE>
the demised premises the usual notices "To Let" and "For Sale" which notices
Tenant shall permit to remain thereon without molestation. If Tenant is not
present to open and permit an entry into the demised premises, Owner or Owner's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly and provided best efforts are exercised to safeguard
Tenant's property, such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant hereunder be
affected. If during the last month of the term Tenant shall have removed all or
substantially all of Tenant's property therefrom, Owner may upon prior notice to
Tenant enter, alter, renovate or redecorate the demised premises without
limitation or abatement of rent, and such act shall have no effect on this lease
or Tenant's obligation hereunder.
Vault, Vault Space, Area:
14. No Vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder anything contained
in or indicated on any sketch, blue print or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding. Owner makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant, if used by Tenant,
whether or not specifically leased hereunder.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in violation
of the certificate of occupancy issued for the building of which the demised
premises are a part. Tenant has inspected the premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner's work, if any. In
any event, Owner makes no representation as to the condition of the premises and
Tenant agrees to accept the same subject to violations, whether or not of
record. If any governmental license or permit shall be required for the proper
and lawful conduct of Tenant's business, Tenant shall be responsible for and
shall procure and maintain such license or permit. See Art. 57.
Bankruptcy:
16: (a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by either party by sending of a written notice to the
other party within a reasonable time after the happening of any one or more of
the following events: (1) the commencement of a case in bankruptcy or under the
laws of any state naming as the debtor; or (2) the making by the other party of
an assignment or any other arrangement for the benefit of creditors under any
state statute. Neither Tenant nor any person claiming through or under Tenant,
or by reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this lease. (b) It is stipulated and agreed that in the
event of the termination of this lease pursuant to (a) hereof, Owner shall
forthwith, notwithstanding any other provisions of this lease to the contrary,
be entitled to recover from Tenant as and for liquidated damages an amount equal
to the difference between the rental reserved hereunder for the unexpired
portion of the term demised and the fair and reasonable rental value of the
demised premises for the period for which such installment was payable shall be
discounted to the date of termination at the rate of four percent (4%) per
annum. If such premises or any part thereof be relet by the Owner for the
unexpired term of said lease, or any part thereof, before presentation of proof
of such liquidated damages to any court, commission or tribunal, the amount of
rent reserved upon such reletting shall be deemed to be the fair and reasonable
rental value for the part or the whole of the premises so re-let during the term
of the re-letting. Nothing herein contained shall limit or prejudice the right
of the Owner to prove for and obtain as liquidated damages by reason of such
termination, an amount equal to the maximum allowed by any statute or rule of
law in effect at the time when, and governing the proceedings in which, such
damages are to be proved, whether or not such amount be greater, equal to, or
less than the amount of the difference referred to above.
Default:
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if the
demised premises becomes vacant or deserted" or if this lease be rejected under
ss. 235 of Title 11 of the U.S. Code (bankruptcy code);" or if any execution or
attachment shall be issued against Tenant or any of Tenant's property whereupon
the demised premises shall be taken or occupied by someone other than
Tenant; or if Tenant shall make default with respect to any other lease between
Owner and Tenant; or if Tenant shall have failed, after five (5) days written
notice, to redeposit with Owner any portion of the security deposited hereunder
which Owner has applied to the payment of any rent and additional rent due and
payable hereunder or failed to move into or take possession of the premises
within thirty (30) days after the commencement of the term of this lease, of
which fact Owner shall be the sole judge; then in any one or more of such
events, upon Owner serving a written fifteen (15) days notice upon Tenant
specifying the nature of said default and upon the expiration of said fifteen
(15) days, if Tenant shall have failed to comply with or remedy such default, or
if the said default or omission complained of shall be of a nature that the same
cannot be completely cured or remedied within said fifteen (15) day period, and
if Tenant shall not have diligently commenced during such default within such
fifteen (15) day period, and shall not thereafter with reasonable diligence and
in good faith, proceed to remedy or cure such default, then Owner may serve a
written five (5) days' notice of cancellation of this lease upon Tenant, and
upon the expiration of said five (5) days this lease and the term thereunder
shall end and expire as fully and completely as if the expiration of such five
(5) day period were the day herein definitely fixed for the end and expiration
of this lease and the term thereof and Tenant shall then quit and surrender the
demised premises to Owner but Tenant shall remain liable as hereinafter
provided. (2) If the notice provided for in (1) hereof shall have been given,
and the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
Remedies of Owner and Waiver of Redemption:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent, and additional rent, shall
become due thereupon and be paid up to the time of such re-entry, dispossess
and/or expiration, (b) Owner may re-let the premises or any part or parts
thereof, either in the name of Owner or otherwise, for a term or terms, which
may at Owner's option be less than or exceed the period which would otherwise
have constituted the balance of the term of this lease and may grant concessions
or free rent or charge a higher rental than that in this lease, (c) Tenant or
the legal representatives of Tenant shall also pay Owner as liquidated damages
for the failure of Tenant to observe and perform said Tenant's covenants herein
contained, any deficiency between the rent hereby reserved and or covenanted to
be paid and the net amount, if any, of the rents collected on account of the
subsequent lease or leases of the demised premises for each month of the period
which would otherwise have constituted the balance of the term of this lease.
The failure of Owner to re-let the premises or any part or parts thereof shall
not release or affect Tenant's liability for damages. In computing such
liquidated damages there shall be added to the said deficiency such expenses as
Owner may incur in connection with re-letting, such as reasonable attorney's
fees, brokerage, advertising and for keeping the demised premises in good order
or for preparing the same for re-letting. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent day specified in this lease
and any suit brought to collect the amount of the deficiency for any month shall
not prejudice in any way the rights of Owner to collect the deficiency for any
subsequent month by a similar proceeding. Owner, in putting the demised premises
in good order or preparing the same for re-rental may, at Owner's option, make
such alterations, repairs, replacements, and/or decorations shall not operate or
be construed to release Tenant from liability hereunder as aforesaid. Owner
shall in no event be liable in any way whatsoever for failure to re-let the
demised premises, or in the event that the demised premises are re-let, for
failure to collect the rent thereof under such re-letting, and in no event shall
Tenant be entitled to receive any excess, if any, of such net rents collected
over the sums payable by Tenant to Owner hereunder. In the event of a breach by
Tenant of any of the covenants or provisions hereof, Owner may have the right of
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not herein provided for.
Mention in this lease of any particular remedy, shall not preclude Owner from
any other remedy, in law or in equity.
Fees and Expenses:
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, after reasonable notice
if required and upon expiration of any applicable grace period if any, (except
in an emergency), then, unless otherwise provided elsewhere in this lease, Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder. If Owner, in connection with the foregoing or
in connection with any default by Tenant in the covenant to pay rent hereunder,
make any expenditures or incurs any obligations for the payment of money,
including but not limited to reasonable attorney's fees, in instituting,
prosecuting or defending any action or proceedings, and prevails in any such
action or proceeding, then Tenant will reimburse Owner for such sums so paid or
obligations incurred. The foregoing expenses incurred by reason of Tenant's
default shall be deemed to be additional rent hereunder and shall be paid by
Tenant to Owner within ten (10) days of rendition of any bill or statement to
Tenant therefor. If Tenant's lease term shall have expired at the time of making
of such expenditures or incurring of such obligations, such sums shall be
recoverable by Owner as damages.
Building Alterations and Management:
20. Owner shall have the right at any time without the same constituting an
eviction and without incurring liability to Tenant therefor to change the
arrangement and or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the building and
to change the name, number or designation by which the building may be known.
There shall be no allowance to Tenant for diminution of rental value and no
liability on the part of Owner by reason of inconvenience, annoyance or injury
to business arising from Owner or other Tenant making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition of
any controls of the manner of access to the building by Tenant's social or
business visitors as the Owner may reasonably deem necessary for the security of
the building and its occupants. However, the Owner agrees to make it's best
effort to expedite such work and perform same in a diligent and unobtrusive
manner.
<PAGE>
No Representations by Owner:
21. Neither Owner nor Owner's agents have made any representations or promises
with respect to the physical condition of the building, the land upon which it
is erected or the demised premises, the rents, leases, expenses of operation or
any other matter or thing affecting or related to the demised premises or the
building except as herein expressly set forth and no rights, easements or
licenses are acquired by Tenant by implication or otherwise except as expressly
set forth in the provisions of this lease. Tenant has inspected the building and
the demised premises and is thoroughly acquainted with their condition and
agrees to take the same "as is" on the date possession is tendered and
acknowledges that the taking of possession of the demised premises by Tenant
shall be conclusive evidence that the said premises and the building of which
the same form a part were in good and satisfactory condition at the time such
possession was so taken, except as to latent defects. All understandings and
agreements heretofore made between the parties hereto are merged in this
contract, which alone fully and completely expresses the agreement between Owner
and Tenant and any executory agreement hereafter made shall be ineffective to
change, modify, discharge or effect an abandonment of it in whole or in part,
unless such executory agreement is in writing and signed by the party against
whom enforcement of the change, modification, discharge or abandonment is
sought.
End of Term:
22. Upon the expiration or other termination of the term of this lease, Tenant
shall quit and surrender to Owner the demised premises, broom clean, in good
order and condition, ordinary wear and damages which Tenant is not required to
repair as provided elsewhere in this lease excepted, and Tenant shall remove all
its property from the demised premises. Tenant's obligation to observe or
perform this covenant shall survive the expiration or other termination of this
lease. If the last day of the term of this Lease or any renewal thereof, falls
on Sunday, this lease shall expire at noon on the preceding Saturday unless it
be a legal holiday in which case it shall expire at noon on the preceding
business day.
Quiet Enjoyment:
23. Owner covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to, Article 34
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure to Give Possession:
24. If Owner is unable to give possession of the demised premises on the date of
the commencement of the term hereof, because of the holding-over or retention of
possession of any tenant, undertenant or occupants or if the demised premises
are located in a building being constructed, because such building has not been
sufficiently completed to make the premises ready for occupancy or because of
the fact that a certificate of occupancy has not been procured or if Owner has
not completed any work required to be performed by Owner, or for any other
reason, Owner shall not be subject to any liability for failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any wise to extend
the term of this lease, but the rent payable hereunder shall be abated (provided
Tenant is not responsible for Owner's inability to obtain possession or complete
any work required) until after Owner shall have given Tenant notice that Owner
is able to deliver possession in the condition required by this lease. If
permission is given to Tenant to enter into the possession of the demised
premises or to occupy premises other than the demised premises prior to the date
specified as the commencement of the term of this lease, Tenant covenants and
agrees that such possession and/or occupancy shall be deemed to be under all the
terms, covenants, conditions and provisions of this lease, except the obligation
to pay the fixed annual rent set forth in page one of this lease. The provisions
of this article are intended to constitute "an express provision to the
contrary" within the meaning of Section 223-a of the New York Real Property Law.
No Waiver:
25. The failure of Owner to seek redress for violation of, or to insist upon the
strict performance of any covenant or condition of this lease or of any of the
Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation. The receipt by Owner of rent
with knowledge of the breach of any covenant of this lease shall not be deemed a
waiver of such breach and no provision of this lease shall be deemed to have
been waived by Owner unless such waiver be in writing signed by Owner. No
payment by Tenant or receipt by Owner of a lesser amount than the monthly rent
herein stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement of any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Owner may accept such check or payment without prejudice to
Owner's right to recover the balance of such rent or pursue any other remedy in
this lease provided. All checks tendered to Owner as and for the rent of the
demised premises shall be deemed payments for the account of Tenant. Acceptance
by Owner of rent from anyone other than Tenant shall not be deemed to operate as
an attornment to Owner by the payor of such rent or as a consent by Owner to an
assignment or subletting by Tenant of the demised premises to such payor, or as
a modification of the provisions of this lease. No act or thing done by Owner or
Owner's agents during the term hereby demised shall be deemed an acceptance of a
surrender of said premises and no agreement to accept such surrender shall be
valid unless in writing signed by Owner. No employee of Owner or Owner's agent
shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
26. Waiver of Trial by Jury:
(Text Omitted)
Inability to Perform:
27. This Lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment,
fixtures or other materials if Owner is prevented or delayed from doing so by
reason of strike or labor troubles or any cause whatsoever beyond Owner's sole
control including, but not limited to, government preemption or restrictions or
by reason of any rule, order or regulation of any department or subdivision
thereof of any government agency or by reason of the conditions which have been
or are affected, either directly or indirectly, by war or other emergency.
Bills and Notices:
28. Except as otherwise in this lease provided, a bill statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
Water Charges:
29. If Tenant requires, uses or consumes water for any purpose in addition to
ordinary lavatory purposes Owner may install a water meter and thereby
reasonably and proportionately measure Tenant's water consumption for all other
purposes. Tenant shall pay Owner for the cost of the meter and the cost of the
installation, thereof and throughout the duration of Tenant's occupancy Tenant
shall keep said meter and installation equipment in good working order and
repair at Tenant's own cost and expense in default of which Owner may cause such
meter and equipment to be replaced or repaired and collect the cost thereof from
Tenant, as additional rent. Tenant agrees to pay for water consumed, as shown on
said meter as and when bills are rendered, and on default in making such payment
Owner may pay such charges and collect the same from Tenant, as additional rent.
Tenant agrees to pay for water consumed, as shown on said meter as and when
bills are rendered, and on default in making such payment Owner may pay such
charges and collect the same from Tenant, as additional rent. Tenant covenants
and agrees to pay, as additional rent, the sewer rent, charge or any other tax,
rent, levy or charge which now or hereafter is assessed, imposed or a lien upon
the demised premises or the realty of which they are part pursuant to law, order
or regulation made or issued in connection with the use, consumption,
maintenance or supply of water, water system or sewage or sewage connection or
system. If the building or the demised premises or any part thereof is supplied
with water through a meter through which water is also supplied to other
premises Tenant shall pay to Owner, as additional rent, on the first day of each
month, % ($ ) of the total meter charges as Tenant's portion. Independently of
and in addition to any of the remedies reserved to Owner hereinabove or
elsewhere in this lease, Owner may sue for and collect any monies to be paid by
Tenant or paid by Owner for any of the reasons or purposes hereinabove set
forth.
Sprinklers:
30. Anything elsewhere in this lease to the contrary notwithstanding, if the New
York Board of Fire Underwriters or the New York Fire Insurance Exchange or any
bureau, department or official of the federal, state or city government
recommend or require the installation of a sprinkler system or that any changes,
modifications, alterations, or additional sprinkler heads or other equipment be
made or supplied in an existing sprinkler system by reason of Tenant's business,
or the location of partitions, trade fixtures, or other contents of the demised
premises, or if any such sprinkler system installations, modifications,
alterations, additional sprinkler heads or other such equipment, become
necessary to prevent the imposition of a penalty or charge against the full
allowance for a sprinkler system in the fire insurance rate set by any said
Exchange or by any fire insurance company, due to Tenant's tenancy or use of the
demised premises Tenant shall, at Tenant's expense, promptly make such sprinkler
system installations, changes, modifications, alterations, and supply additional
sprinkler heads or other equipment as required whether the work involved shall
be structural or non-structural in nature. Tenant shall pay to Owner as
additional rent the sum of $___, on the first day of each month during the term
of this lease, as Tenant's portion of the contract price for sprinkler
supervisory service.
Elevators, Heat, Cleaning:
31. As long as Tenant is not in material or material monetary default under any
of the covenants of this lease beyond the applicable grace period provided in
this lease for the curing of such defaults, Owner shall: (a) provide necessary
passenger elevator facilities on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m. and have at least one (1) passenger elevator in
service at all other times; (b) if freight elevator service is provided, same
shall be provided only on regular business days Monday through Friday inclusive,
and on those days only between the hours of 9 a.m. and 12 noon and between 1
p.m. and 5 p.m.; (c) furnish heat, water and other services supplied by Owner to
the demised premises, when and as required by law, on business days from 8 a.m.
to 6 p.m. and on Saturdays from 8
<PAGE>
a.m. to 1 p.m.; (d) clean the public halls and public portions of the building
which are used in common by all tenants. Tenant shall, at Tenant's expense, keep
the demised premises, including the windows, clean and in order, to the
reasonable satisfaction of Owner, and for that purpose shall employ the person
or persons, or Corporation approved by Owner. Tenant shall pay to Owner the
reasonable cost of removal of any of Tenant's refuse and rubbish from the
building. Bills for the same shall be rendered by Owner to Tenant at such time
as Owner may elect and shall be due and payable hereunder, and the amount such
bills shall be deemed to be, and be paid as, additional rent. Tenant shall,
however, have the option of independently contracting for the removal of such
rubbish and refuse in the event that Tenant does not wish to have same done by
employees of Owner. Under such circumstances, however, the removal of such
refuse and rubbish by others shall be subject to such rules and regulations as,
in the judgment of Owner, are necessary for the proper operation of the
building. Owner reserves the right to stop service of the heating, elevator,
plumbing and electric systems, when necessary, by reason of accident, or
emergency, or for repairs, alterations, replacements or improvements, in the
judgment of Owner necessary to be made, until said repairs, alterations,
replacements or improvements shall have been completed. If the building of which
the demised premises are a part supplies manually operated elevator service,
Owner may proceed diligently with alterations necessary to substitute automatic
control elevator service without in any way affecting the obligations of Tenant
hereunder.
Security:
32. Tenant has deposited with Owner the sum of $18,333.32 as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant material
defaults in respect of any of the terms, provisions and conditions of this
lease, including, but not limited to, the payment of rent and additional rent,
Owner may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any material rent and
additional rent or any other sum to which Tenant is in material default or for
any sum which Owner may expend or may be required to expend by reason of
Tenant's default with respect of any of the terms, covenants and conditions of
this lease, including, but not limited to, any damages or deficiency in the
reletting of the premises, whether such damage or deficiency accrued before or
after summary proceedings or other re-entry by Owner. In the event that Tenant
shall comply with all of the terms, provisions, covenants and conditions of this
lease, the security shall be returned to Tenant within fourteen (14) days after
the date fixed as the end of the Lease and after delivery of entire possession
of the demised premises to Owner. In the event of the sale of the land and
building or leasing of the building, of which the demised premises form a part,
Owner shall have the right to transfer the security to the vendee or lessee and
Owner shall thereupon be released by Tenant from all liability for the return of
such security; and Tenant agrees to look to the new Owner solely for the return
of said security, and it is agreed that the provisions hereof shall apply to
every transfer or assignment made of the security to a new Owner. Tenant further
convenants that it will not assign or encumber or attempt to assign or encumber
the monies deposited herein as security and that neither Owner nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance.
Captions:
33. The Captions are inserted only as a matter of convenience and for reference
and in no way define, limit or describe the scope of this lease nor the intent
or any provision thereof.
Definitions:
34. The term "Owner" as used in this lease means only the owner of the fee or of
the leasehold of the building, or the mortgagee in possession, for the time
being of the land and building (or the owner of a lease of the building or of
the land and building) of which the demised premises form a part, so that in the
event of any sale or sales of said land and building or of said lease, or in the
event of a lease of said building, or of the land and building, the said Owner
shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so expressed or expressed in monthly
installments, and "additional rent." "Additional rent" means all sums which
shall be due to Owner from Tenant under this lease, in addition to the annual
rental rate. The term "business days" as used in this lease, shall exclude
Saturdays, Sundays and all days observed by the State or Federal Government as
legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service. Wherever it is expressly
provided in this lease that consent shall not be unreasonably withheld, such
consent shall not be unreasonably delayed.
Adjacent Excavation-Shoring:
35. If an excavation shall be made upon land adjacent to the demised premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person shall deem necessary to
preserve the wall or the building of which demised premises form a part from
injury or damage and to support the same by proper foundations without any claim
for damages or indemnity against Owner, or diminution or abatement of rent.
Rules and Regulations:
36. Tenant and Tenant's servants, employees, agents, visitors, and licensees
shall observe faithfully, and comply with, the Rules and Regulations annexed
hereto and such other and further reasonable Rules and Regulations as Owner or
Owner's agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit the
question of the reasonableness of any additional Rule or Regulation for decision
to the New York office of the American Arbitration Association, whose
determination shall be final and conclusive upon the parties hereto. The right
to dispute the reasonableness of any additional Rule or Regulation upon Tenant's
part shall be deemed waived unless the same shall be asserted by service of a
notice, in writing upon Owner within fifteen (15) days after the giving of
notice thereof. Nothing in this lease contained shall be construed to impose
upon Owner any duty or obligation to enforce the Rules and Regulations or terms,
covenants or conditions in any other lease, as against any other tenant and
Owner shall not be liable to Tenant for violation of the same by any other
tenant, its servants, employees, agents, visitors or licensees.
Glass:
37. Owner shall replace, at the expense of the Tenant, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the demised
premises. Owner may insure, and keep insured, all plate and other glass in the
demised premises for and in the name of Owner. Bills for the premiums therefor
shall be rendered by Owner to Tenant at such times as Owner may elect, and shall
be due from, and payable by, Tenant within thirty (30) days of receipt of such
amount thereof shall be deemed to be, and be paid, as additional rent.
Estoppel Certificate:
38. Tenant, at any time, and from time to time, upon at least 10 days' prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any
other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified in full force and effect (or, if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications), stating the dates to which the rent and additional rent have
been paid, and stating whether or not there exists any default by Owner under
this Lease, and, if so, specifying each such default.
Directory Board Listing:
39. If, at the request of and as accommodation to Tenant, Owner shall place
upon the directory board in the lobby of the building, one or more names of
persons other than Tenant, such directory board listing shall not be construed
as the consent by Owner to an assignment or subletting by Tenant to such person
or persons.
Successors and Assigns:
40. The covenants, conditions and agreements contained in this lease shall bind
and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns. Tenant shall look only to Owner's estate
and interest in the land and building for the satisfaction of Tenant's remedies
for the collection of a judgement (or other judicial process) against Owner in
the event of any default by Owner hereunder, and no other property or assets of
such Owner (or any partner, member, officer or director thereof, disclosed or
undisclosed), shall be subject to levy, execution or other enforcement procedure
for the satisfaction of Tenant's remedies under or with respect to this lease,
the relationship of Owner and Tenant hereunder, or Tenant's use and occupancy of
the demised premises.
- ----------
>Space to be filled in or deleted.
ATTACHED hereto is Rider containing Articles No. 41 to 56 incl., which are
incorporated with and made a part of this lease.
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
WILLIAM COLAVITO, INC., AAF
Witness for Owner: 149 FIFTH AVENUE CORPORATION
(CORP. SEAL)
/s/ ILLEGIBLE BY: /s/ STEVEN T. COLAVITO [L.S.]
- ------------------------------ ---------------------------
Steven T. Colavito, Vice President
Witness for Tenant iVILLAGE, INC.
Steve Elkes, VP. Finance/legal
(CORP. SEAL)
/s/ Aimee Feuer BY: /s/ Steve Elkes [L.S.]
- ------------------------------ ---------------------------
Please print name & title
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated March 5, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Westerly portion of the second floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
41. It is mutually understood and agreed that Tenant herein will obtain its
electricity for the demised premises through the presently existing wiring and
equipment servicing the demised premises, either on a "submetering" basis or on
a "rent inclusion" basis. Initially, the parties agree, electricity distribution
shall be on a "submetering" basis, utilizing existing submeter(s) serving the
Floor, however if for any reason beyond the Owner's control, including action by
government or other authority asserting jurisdiction over the matter tenant can
no longer obtain its electricity supply on a "submetering" basis, then and in
such events Owner will redistribute to Tenant the electricity for the demised
premises, on a "rent inclusion" basis, as hereinafter provided for in this
article.
(A) Submetering: If and so long as Landlord provides electricity to the
demised premises on a submetering basis, Tenant covenants and agrees to purchase
the same from Landlord or Landlord's designated agent at Landlord's Cost (as
hereinafter defined), for Tenant's submetered electricity consumption plus 10%
thereof. Where more than one meter measures the service of Tenant in the
Building, the KWHR and the KW recorded by each meter shall be added, and billed
as if billed from a single meter. Bills therefor shall be rendered at such time
as Landlord may elect and the amount, as computed from a meter or meters and
determined by Landlord's electrical consultant, in accordance with this Article,
shall be deemed to be, and be paid as, additional rent
Landlord's Cost for such redistributed electricity shall be equal to Landlord's
Cost Rates (as hereinafter defined) for the relevant billing period multiplied
by Tenant's electricity consumption (i.e., energy and demand) based on the meter
readings as herein provided.
(B) Landlord's Cost Rates Shall be determined as follows:
Landlord's Electricity Consumption Cost", (Landlords' cost per KWHR) for any
given Utility Billing Period, shall mean the amount arrived at by dividing (i)
Landlord's KWHR cost, as indicated on the applicable utility bill (inclusive of
any taxes, including any taxes included in the computation of said utility bill)
for Landlord's Electricity Consumption for said Utility Billing Period,
inclusive of any fuel adjustments or rate adjustments contained in said utility
bill allocable to Landlord's Electricity Consumption (provided that same have
not been included in the computation of Landlord's Electricity Demand Cost), by
(ii) Landlord's Electricity Consumption as indicated on said bill.
"Landlord's Electricity Demand Cost", (Landlord's cost per KW) for any given
Utility Billing Period, shall mean the amount arrived at by dividing (i)
Landlord's KW cost, as indicated on the applicable utility bill (inclusive of
any taxes, including any taxes included in the computation of said utility bill)
for Landlord's Electricity Demand for said Utility Billing Period, inclusive of
any rate adjustments contained in said utility bill allocable to Landlord's
Electricity Demand (provided that same have not been included in the computation
of Landlord's Electricity Consumption cost), by (ii) Landlord's Electricity
Demand as indicated on said bill. For purposes of determining Landlord's
Electricity Consumption Cost and Landlord's Electricity Demand Cost, each amount
appearing on any utility bill for demand, energy, fuel or rate adjustments shall
be taken into account (where it cannot be determined from the utility bill
whether such amount related to consumption or to demand, it shall be deemed to
relate to demand).
"Utility Billing Period" shall mean the respective period of electricity
consumption and demand for which Landlord is charged on each successive bill
from the utility company furnishing electricity to the Building.
For purposes of this Article, the following terms shall have the following
meanings:
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ Steve Elkes
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated March 5, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Westerly portion of the second floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
"Landlord's Electricity Consumption", for any given Utility Billing Period,
shall mean the number of kilowatt hours of electricity consumed in and for the
Building (including common areas, tenantable areas and mechanical areas) during
said Utility Billing Period, as indicated on the applicable utility bill.
"Landlord's Electricity Demand", for any given Utility Billing Period, shall
mean the number of kilowatts of electricity demanded in and for the Building
(including common areas, tenantable areas and mechanical areas) during said
Utility Billing Periods, as indicated on the applicable utility bill.
C) Rent inclusion: If and so long as Landlord provides electricity to the
demised premises on a rent inclusion basis. Tenant agrees;
1. The fixed annual rent shall be increased by the amount of the
Electricity Rent Inclusion Factor ("ERIF"), as hereinafter defined. Tenant
acknowledges and agrees (i) that the fixed annual rents hereinabove set forth
in this lease do not yet but are to include an ERIF to compensate Landlord for
electrical wiring and other installations necessary for, and for its obtaining
and making available to tenant, the redistribution of, electric current as an
additional service; and (ii) that such ERIF, which is a portion of the fixed
annual rent, shall be subject to periodic adjustments as herein provided..
2. The ERIF shall be based on a survey of Tenant's consumption of
redistributed electricity, made as hereinafter provided, and shall be equal to a
sum equal to Landlord's cost ("Landlord's Cost") for such electricity, plus ten
percent (10%) thereof. (Landlords Cost for such redistributed electricity shall
be equal to Landlord's Cost Rates (as hereinabove defined ) for the relevant
billing period (s) multiplied by Tenant's electricity consumption (i.e. .,
energy and demand) based on the most recent survey thereof, all as hereinafter
provided.) If after the start of the relevant billing period, the cost to
Landlord of electricity shall be increased or decreased, by change in Landlord's
electric rates or service classifications, or by electricity charges, including
changes to in market prices, or by changes in fuel adjustments, or by taxes or
charges of any kind imposed on Landlord's electricity purchases, or on
Landlord's electricity redistribution, then the ERIF, based on the most recent
survey, shall be redetermined, effective as of the date of such change in rates,
etc., by Landlord's electrical consultant, in accordance with the provisions
hereof.
3. The parties agree that a reputable, independent electrical consultant,
mutually selected by Landlord and Tenant ("electrical consultant") shall by
survey determine an estimate of Tenant's demand and energy in order to calculate
the ERIF in accordance with this article, and that electrical
consultant shall from time to time make surveys in the demised premises of the
electrical equipment and fixtures and the use of current in and for such space.
The ERIF portion of the fixed annual rent shall theft be appropriately
adjusted, effective as of the date of each said survey, and in accordance with
the provisions hereof.
Pending the results of the first survey and determination to be made by
Landlord's consultant, as herein provided, Tenant shall pay to Landlord a
temporary ERIF at the rate of $2.50 per rentable square foot per year (which
temporary charge shall thereafter be adjusted by survey and computations as
hereinafter provided), for any portion of the demised premises receiving
electricity on a rent inclusion basis. Said temporary payments shall be adjusted
between Landlord and Tenant, by appropriate payments thereafter or by rent
credits, retroactive to Tenant's commencement of being provided electricity on a
rent inclusion basis, Landlord will cause such a survey and determination to be
made of the electricity consumption in and for said space: the initial survey's
ERIF shall be payable from the date of the start of rent inclusion thereunder.
Thereafter, the ERIF shall be adjusted in accordance with surveys and
determinations by Landlord's electrical consultant, retroactive to the date of
such survey subsequent to the initial survey of the demised premises.
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ Steve Elkes
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated March 5, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Westerly portion of the second floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
The parties understand and agree that in any survey of Tenant's electricity
consumption in and for the demised premises, the consultant's survey results
shall be calculated to reflect a proper demand (diversity) factor.
42. SORTING AND SEPARATION OF REFUSE AND TRASH
(1) Tenant covenants and agrees, at its sole cost and expense, to comply with
all present and future laws, orders, and regulations of all state, federal,
municipal, and local governments, departments, commissions, and boards regarding
the collection, sorting, separation, and recycling of waste products, garbage,
refuse, and trash. Tenant shall sort and separate such waste products, garbage,
refuse and trash into such categories as provided by law. Each separately sorted
category of waste products, garbage, refuse, and trash shall be placed in
separate receptacles reasonably approved by the Owner. Such separate receptacles
may, at the Owner's option, be removed from the demised premises in accordance
with a collection schedule prescribed by law.
(2) The Owner reserves the right to refuse to collect or accept from Tenant any
waste products, garbage, refuse, or trash that is not reasonably separated and
sorted as required by law, and to require Tenant to arrange for such collection
at Tenant's sole cost and expense, utilizing a contractor reasonably
satisfactory to the Owner. Tenant shall pay all costs, expenses, fines,
penalties, or damages that may be imposed on the Owner or Tenant by reason of
Tenant's failure to comply with the provisions of this Article, and at Tenant's
sole cost and expense, shall indemnify, defend, and hold the Owner harmless
(including legal fees and expenses) from and against any actions, claims, and
suits arising from such noncompliance, utilizing counsel reasonably satisfactory
to the Owner.
43. The Owner shall in no event be responsible for the maintenance or upkeep of
any existing installation in the demised premises and/or any installation to be
made by the Tenant in the demised premises, except for otherwise provided for
herein.
44. The Tenant has examined the demised premises, knows its physical condition,
and agrees to accept same "as is"., except the owner shall, at its sole cost and
expense do the following work:
1.] Paint the demised premise ( Excluding the ceiling ), as well as the common
hallway and bathrooms in a building standard color and manner.
2.] Shampoo and stretch the existing carpet.
3.] Deliver the two (2) existing finished bathrooms in good working order and
repair any broken bathroom fixtures.
4.] Deliver the existing ten (10) ton air conditioning unit in good working
order and the Owner shall maintain same at its sole cost and expense throughout
the term of this lease.
45. In the event that any monthly installment of rent, or any other payment
required to be made by Tenant under this Lease shall be overdue, on the tenth
(lOth) day a late charge of two cents ($0.02) for each dollar so overdue may be
charged by the Owner for each month, or fraction of each month, from its due
date until paid, for the purpose of defraying the expense (exclusive of legal
costs) incurred in handling delinquent payments.
46. (a) Tenant covenants and agrees that it will indemnify and save the Owner
free and harmless from and against any and all claims, liability, loss or
damage, whether for injury to persons or loss of life or damage to property
arising out of Tenant's use or occupancy of the demised premises during the term
of this Lease caused by or arising out of Tenant's negligence only. Tenant
further covenants and agrees that throughout the term of this Lease, it will
carry general public liability insurance for the benefit of the Owner, Owner's
Agent and Tenant in single limits of $1,000,000.00 .
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ Steve Elkes
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated March 5, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Westerly portion of the second floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
(b) All policies of insurance provided for herein, or certificates, thereof,
shall be delivered to the Owner forthwith upon issuance and at least thirty (30)
days prior to the expiration of any such policy, Tenant shall deliver to the
Owner from time to time throughout the Lease term, new policies or certificates
of insurance in renewal or replacement thereof, all at Tenant's own cost and
expense. If the Tenant shall fail to obtain and deliver such policies and
renewals or certificates thereof to the Owner, after fifteen (15) business days
notice in writing by the Owner and/or its agent to the Tenant, Owner may procure
such insurance and collect from the Tenant the amount of any premiums paid
therefor as additional rent payable upon demand.
(c) The Owner shall at no time be responsible for the payment of any
insurance premiums on any of the abovementioned policies and it shall be so
stated in any certificates of insurance supplied to the Owner.
47. The Tenant herein has been made aware that the Building is included within
the boundaries of the Ladies Mile Historic District, and therefore any
alteration or work requiring a Building Department Permit, whether exterior or
interior, must receive a Landmark Permit before the Building Department Permit
can be issued. The Tenant herein agrees to obtain said permit at its sole cost
and expense and Landlord agrees to cooperate with Tenant in connection
therewith.
48. Wherever the word "Landlord" shall appear in this Lease, it shall mean
"Owner and Landlord".
49. This Lease shall not be binding upon the Owner unless and until same is
approved and executed by the Owner.
50. Notwithstanding any other provisions of this lease or any rule or regulation
of the building, the Tenant shall not engage any contractor to do demolition,
construction or alterations or similar work in the demised premises without the
Owner's written approval, which will not be unreasonably withheld.
51. It shall be the Tenants obligation to obtain ail necessary certificates and
approvals from all City, State or Governmental agencies having jurisdiction
thereof, and/or the New York Board of Fire Underwriters, Fire Insurance Rating
Organization as to all work being performed and completed by the Tenant.
52. The Tenant agrees that prior to the commencement of alterations, the Tenant
will arrange to have the contractor and /or contractors who arc to perform the
alteration, obtain and deliver to the Owner and/or Owner's representative a
certificate of insurance indicating that the contractor and/or contractors are
insured against bodily injury and property damage, and further the contractor
and/or contractors will name the Owner as additional insured without cost to the
Owner.
53. Tenant shall have access to the demised premises 24 hours a day, 7 days a
week throughout the term hereof.
54. It is mutually understood and agreed that provided the tenant herein is not
in material or material monetary default of any of the terms, covenants, and
conditions of the Lease, Tenant shall have one (1) option to extend the Term of
this Lease effective 4/1/2000 upon giving to the Owner at least six (6) months
prior written notice by registered or certified mail, return receipt requested
of its intention to extend the term for one (1) year commencing April 1, 2000,
and ending March 31, 2001. All other provision of said lease shall continue to
be applicable to said extended term including the base rent.
55. Provided the Tenant is not in material or material monetary default of any
of the terms, covenants, and conditions of the within lease the Tenant shall
have the right of first refusal to lease the balance of the Second (2nd) Floor
known as the Easterly Portion of the Second (2nd) Floor (hereinafter referred to
as the "Expansion Premises"), representing approximately 4,500 square feet.
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ Steve Elkes
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated March 5, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Westerly portion of the second floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
The Tenant's Right of First Refusal to lease the "Expansion Premises" shall be
in accordance with the following terms and conditions:
1.) The Tenant's Right of First Refusal to lease the "Expansion Premises" shall
be applicable only to the first (1st) six (6) months of the term of this lease
and pursuant to the terms of this agreement, thereafter, the Owner shall have no
obligation to the Tenant under this article.
2.) Should the Owner obtain a prospective Tenant to lease the "Expansion
Premises" within the six (6) month period as designated above the Owner agrees
to notify the within Tenant by certified mail, return receipt requested of its
intention to lease the "Expansion Premises". The Tenant must notify the Owner by
certified mail, return receipt requested within fifteen (15) days of receipt of
said notice stating the Tenant's intention to exercise its right to lease the
"Expansion Premises".
i.) Should the Tenant exercise its right to lease the "Expansion Premises"
then the Owner agrees to lease said "Expansion Premises" at a base rental
rate of $20.00 Per/Square/Foot and the Owner further agrees to paint and
carpet the "Expansion Premise" in building standard pain and carpet (Not to
exceed $13.75 Per/Sq/Yd installed).
ii.) All other terms, covenants, and conditions contained in this lease
shall be applicable to the lease covering the "Expansion Premise".
3.) Should the Tenant not exercise its right to lease the "Expansion Premises"
or fail to notify the Owner within the fifteen (15) day period of Owner's notice
as mentioned above, the Owner's obligation to the Tenant shall have been
fulfilled and the Owner shall be free to lease the "Expansion Premises" to
others.
It is mutually understood and agreed that if the Easterly Portion of the
second floor is leased to an entity, organization or party other than the Tenant
the Owner at its sole cost and expense reserves the right to modify and create a
public corridor to the passenger elevator, freight elevator and fire tower as
illustrated in red on the diagram attached hereto and forming a part of this
lease known as Exhibit B. In the event the Owner modifies and/or creates said
public corridor, owner will do the following:
i.) Give the Tenant 15 days notice of its intention to modify and or
create said public corridor.
ii.) Provide the Tenant with additional non-communal space as shown hatched
on Exhibit B attached hereto.
56. Tenant represents that they negotiated for the within lease solely with
Insignia/ Edward S. Gordon Co., Inc. as Broker and William Colavito, Inc.,
Managing Agent representing the Owner., and the Tenant further represents that
they did not hire or enlist the aid or negotiate with any other agent or broker
in connection with this lease and agrees to indemnify and hold the Owner
harmless from any and all suits arising from this transaction. If any such
claims are made, the Tenant herein further agrees, at its sole cost and expense
to defend the Owner.
57. The Tenant herein acknowledges that they have reviewed the Certificate of
Occupancy attached hereto and forming a part of this lease. It is mutually
understood and agreed by both parties of interest that in the event a violation
is issued because of the Tenant's use (office space) then the Owner shall have
the right but not the obligation, at its sole cost and expense within ten (10)
days of the issuance of said violation to hire the services of an expediter to
commence the process of amending the Certificate of Occupancy to include the use
of offices and to cure said violation.
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ Steve Elkes
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated March 5, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Westerly portion of the second floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
In the event the Owner elects not to amend the Certificate of Occupancy then the
Tenant shall have the right but not the obligation, to amend said Certificate of
Occupancy at its sole cost and expense provided the Tenant commences the process
of amending the Certificate of Occupancy by hiring the services of an expediter
within ten (10) days of notification by the Owners of their decision not to
amend the Certificate of Occupancy which notice shall be sent to the Tenant by
certified mail return receipt requested.
If both the Owner and Tenant choose not to exercise their rights to amend the
Certificate of Occupancy then either party shall have the right to terminate the
within lease by giving (30) days prior written notice, certified mail receipt
requested, one to the other of its intention to terminate the within lease and
upon the date set forth in said notice this lease shall cease, terminate and
come to and end in the same manner and with the same force and effect as if such
date were the original expiration date of the lease and the Tenant shall
surrender complete possession of the demised premises leaving same in good broom
clean order and condition.
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ Steve Elkes
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
Exhibit A
149 FIFTH AVENUE
SECOND FLOOR - "AS BUILT"
Floor Plan
<PAGE>
Exhibit B
149 FIFTH AVENUE
SECOND FLOOR - "AS BUILT"
Floor Plan
<PAGE>
ACKNOWLEDGEMENTS
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of
On this ______ day of ____________________, 19__, before me personally came
____________________________________ to me known, who being by me duly sworn,
did depose and say that he resides in _________________________________________
that he is the __________________________ of __________________________________
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
.....................................
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this ______ day of ____________________, 19__, before me personally came
____________________________________ to me known and known to me to be the
individual described in and who, as TENANT, executed the foregoing instrument
and acknowledged to me that _____________________ he executed the same.
.....................................
[GRAPHIC] IMPORTANT -- PLEASE READ [GRAPHIC]
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE IN
ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for
any purpose other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances into any of
the corridors of halls, elevators, or out of the doors or windows or stairways
of the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls
of the building without the prior written consent of the Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the demised premises or the building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or
other similar floor covering, so that the same shall come in direct contact with
the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
fire doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon the termination of his
Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
9. No Tenants shall obtain for use upon the demised premises ice, drinking
water, towel and other similar services, or accept barbering or bootblacking
services in the demised premises, except from persons authorized by Owner, and
at hours and under regulations fixed by Owner. Canvassing, soliciting and
peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building all persons who
do not present a pass to the building signed by Owner. Owner will furnish passes
to persons for whom any Tenant requests the same in writing. Each Tenant shall
be responsible for all persons for whom he requests such pass and shall be
liable to Owner for all acts of such persons. Notwithstanding the foregoing,
Owner shall not be required to allow Tenant or any person to enter or remain in
the building, except on business days from 8:00 a.m. to 6:00 p.m. and on
Saturdays from 8:00 a.m. to 1:00 p.m. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.
11. Owner shall have the right to prohibit any advertising by any Tenant
which in Owner's opinion, tends to impair the reputation of the building or its
desirability as a loft building, and upon written notice from Owner, Tenant
shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, or explosive, or hazardous
fluid, material, chemical or substance, or cause or permit any odors of cooking
or other processes, or any unusual or other objectional odors to permeate in or
emanate from the demised premises.
13. Tenant shall not use the demised premises in a manner which disturbs
or interferes with other Tenants in the beneficial use of their premises.
Address 149-51 Fifth Ave. thru to
and incl. 921-5 Broadway
Premises Westerly portion of 2nd Floor
================================================================================
149 Fifth Avenue Corporation
TO
iVillage, Incorporated
================================================================================
STANDARD FORM OF
Loft
[LOGO] [LOGO]
Lease
The Real Estate Board of New York, Inc.
(c) Copyright 1994. All Rights Reserved.
Reproduction in whole or in part prohibited.
================================================================================
Dated March 5, 1998
Rent Per Year $110,000.00
(BASE)
Rent Per Month $9,166.66
(BASE)
Term 2 Years 1/2 Month
From 3-15-1998
To 3-31-2000
Drawn by ..................................................
Checked by ................................................
Entered by ................................................
Approved by ...............................................
================================================================================
<PAGE>
MODIFICATION AGREEMENT
Agreement made this 20th day of April, 1998 by and between
149 Fifth Avenue Corporation with offices in care of William Colavito, Inc.
located at 510 Madison Avenue, New York, New York 10022 (hereinafter called
"Owner") and iVillage, Inc., a Delaware Corporation located at 170 Fifth
Avenue, New York, New York 10010 (hereinafter called "Tenant").
WITNESSETH:
WHEREAS, by lease in writing (hereinafter called the
"Lease"), dated March 5th, 1998 made by and between the "Owner" and the
"Tenant", the "Owner" leased to the "Tenant" the Westerly Portion of the
Second (2nd) Floor (5,500 Sq. Ft.) in the building known as 149 Fifth Avenue
a/k/a 921/25 Broadway, New York, New York 10010 (hereinafter called the
"Premise") for a term of Two (2) Years and One-Half (1/2) Month commencing
March 15th, 1998 and ending March 31st, 2000; and
WHEREAS, the "Tenant" is presently in possession of the
"Premise" and
WHEREAS, the "Tenant" and the "Owner" have agreed to modify
and supplement the "Lease";
NOW, THEREFORE, it is mutually agreed that effective May
1st, 1998 the "Lease" shall be and the same is hereby modified in the
following respects:
A.) The "Premises" described in the "Lease" as the Westerly Portion of the
Second (2nd) Floor as shown in blue on the plan attached to and forming a
part of the "Lease" (5,500 Sq. Ft.) shall be deleted and in its stead shall
read the Entire Second (2nd) Floor, (10,000 Sq. Ft.) as indicated on the
plan attached to and forming a part of this Modification Agreement.
B.) The annual rental rate of One Hundred Ten Thousand ($110,000.00) Dollars
($9,1666.66 Per/Month) referenced in the "Lease" shall be deleted and in its
stead shall read at an annual rental rate of Two Hundred Thousand
($200,000.00) Dollars ($16,666.67 Per/Month).
C.) Article 32 - Security
On the signing of this Modification Agreement the Tenant deposits with
the Owner an additional $15,000.00 as lease security making the total lease
security on deposit with the Owner the sum of $33,333.33.
D.) Owner agrees that the Tenant, at its sole cost and expense may increase
the existing electrical service to the Second (2nd) Floor provided such
additional service does not exceed 200 Amps.
The "Lease" and this Modification Agreement are hereby ratified and
confirmed in all respects.
Neither the "Lease" nor this "Modification" can be changed,
supplemented, or terminated orally. There are no oral agreements or
understandings between the parties hereto and the
<PAGE>
Tenant further acknowledges that neither the Owner nor any representative of
the Owner has made any oral representations, warranties, or promises to the
Tenant of any kind, nature, or description.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED AND DELIVERED
THIS AGREEMENT AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
WITNESS: WILLIAM COLAVITO, INC. AGENT FOR
149 FIFTH AVENUE CORPORATION
[illegible] BY: /s/ Steven T. Colavito
- ------------------------------- -----------------------------------
Steven T. Colavito - Vice President
iVillage, Inc.
/s/ Aimee Feuer BY: /s/ Steve Elkes
- ------------------------------- -----------------------------------
Steve Elkes - VP Finance/Legal
<PAGE>
================================================================================
STANDARD FORM OF LOFT LEASE
The Real Estate Board on New York, Inc.
================================================================================
Agreement of Lease, made as of this 30th day of June 1998, between 149 FIFTH
AVENUE CORPORATION, a New York Corporation with offices c/o William Colavito,
Inc., 510 Madison Avenue, New York, NY 10022 party of the first part,
hereinafter referred to as OWNER, and iVILLAGE, INCORPORATED a Delaware
Corporation, with offices at 170 Fifth Avenue NY, NY 10010 party of the second
part, hereinafter referred to as TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner
The Entire Fifth (5th) Floor
in the building known as 149 Fifth Avenue thru to and including 921-5 in the
Borough of Manhattan, City of New York, for the term of TWO (2) YEARS
(or until such term shall sooner cease and expire as hereinafter provided) to
commence on the 1st day of July nineteen hundred and Ninety-Eight, and to end on
the 30th day of June TWO THOUSAND both dates inclusive, at an annual rental rate
of TWO HUNDRED THOUSAND ($200,000.00) DOLLARS
which Tenant agrees to pay in lawful money of the United States which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance on the first day of each
month during said term, at the office of Owner on such or such place as Owner
may designate, without any set off or deduction whatsoever, except that Tenant
shall pay the first __ monthly installment(s) on the execution hereof (unless
this lease be a renewal).
In the event, at the commencement of the term of this lease, or thereafter,
Tenant shall be in default in the payment of rent to Owner pursuant to the terms
of another lease with Owner or with Owner's predecessor in interest, Owner may
at Owner's option and without notice to Tenant add the amount of such arrears to
any monthly installment of rent payable hereunder and the same shall be payable
to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees, executor,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
Rent Occupancy
1. Tenant shall pay the rent as above and as hereinafter provided.
2. Tenant shall use and occupy demised premises for offices for it's internet &
web site business.
provided such use is in accordance with the certificate of occupancy for the
building, if any, and for no other purpose.
Alterations:
3. Tenant shall make no changes in or to the demised premises of any nature
without Owner's prior written consent not to be unreasonably withheld or
delayed. Subject to prior written consent of Owner, and to the provisions of
this article, Tenant, at Tenant's expense, may make alterations, installations,
additions or improvements which are nonstructural and which do not affect
utility services or plumbing and electrical lines, in or to the interior of the
demised premises using contractors or mechanics first approved in each instance
by Owner. Tenant shall, at its expense, before making any alterations,
additions, installations or improvements obtain all permits, approval and
certificates required by any governmental or quasi-governmental bodies and (upon
completion) certificates of final approval thereof and shall deliver promptly
duplicates of all such permits, approvals and certificates to Owner. Tenant
agrees to carry and will cause Tenant's contractors and sub-contractors to carry
such workman's compensation, general liability, personal and property damage
insurance as necessary and as Owner may require reasonably. If any mechanic's
lien is filed against the demised premises, or the building of which the same
forms a part, for work claimed to have been done for, or materials furnished to,
Tenant, whether or not done pursuant to this article, the same shall be
discharged by Tenant within thirty days thereafter, at Tenant's expense, by
payment or filing the bond required by law or otherwise. All fixtures and all
paneling, partitions, railings and like installations, installed in the premises
at any time, either by Tenant or by Owner on Tenant's behalf, shall, upon
installation, become the property of Owner and shall remain upon and be
surrendered with the demised premises unless Owner, by notice to Tenant no later
than twenty days prior to the date fixed as the termination of this lease,
elects to relinquish Owner's right thereto and to have them removed by Tenant,
in which event the same shall be removed from the demised premises by Tenant
prior to the expiration of the lease, at Tenant's expense. Nothing in this
Article shall be construed to give Owner title to or to prevent Tenant's removal
of trade fixtures, moveable office furniture and equipment, but upon removal of
any such from the premises or upon removal of other installations as may be
required by Owner. Tenant shall immediately and and at its expense, taking into
regard ordinary wear and tear repair and restore the premises to the condition
existing prior to installation and repair any material damage to the demised
premises or the building due to such removal. All property permitted or required
to be removed by Tenant at the end of the term remaining in the premises after
Tenant's removal shall be deemed abandoned and may, at the election of Owner,
either be retained as Owner's property or removed from the premises by Owner, at
Tenant's expense.
Repairs:
4. Owner shall maintain and repair the exterior of and the public portions of
the building. Tenant shall, throughout the term of this lease, take good care of
the demised premises including the bathrooms and lavatory facilities and the
windows and window frames and, the fixutres and appurtenances therein and at
Tenant's sole cost and expense promptly make all repairs thereto and to the
building, whether structural or non-strucutural in nature, caused by or
resulting from the carelessness, omission, neglect or improper conduct of
Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other provisions
of this lease, including Article 6. Tenant shall also repair all damage to the
building and the demised premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be of quality or class
equal to the original work or construction. If Tenant fails, after ten days
notice, to proceed with due diligence to make repairs required to be made by
Tenant, the same may be made by the Owner at the expense of Tenant, and the
expenses thereof incurred by Owner shall be collectible, as additional rent,
after rendition of a bill or statement therefore. If the demised premises be or
become infested with vermin as a direct result of action or inaction by tenant.
Tenant shall, at its expense, cause the same to be exterminated. Tenant shall
give Owner prompt notice of any defective condition in any plumbing, heating
system or electrical lines located in the demised premises and following such
notice, Owner shall remedy the condition with due diligence and with best
efforts, but at the expense of Tenant, if repairs are necessitated by damage or
injury attributable to Tenant, Tenant's servants, agents, employees, invitees or
licensees as aforesaid not attributable to ordinary wear and tear. Except as
specifically provided in Article 9 or elsewhere in this lease, there shall be no
allowance to the Tenant for a diminution of rental value and no liability on the
part of Owner by reason of inconvenience, annoyance or injury to business
arising from Owner, Tenant or others making or failing to make any repairs,
alterations, additions or improvements in or to any portion of the building or
the demised premises or in and to the fixtures, appurtenances or equipment
thereof. It is specifically agreed that Tenant shall not be entitled to any set
off or reduction of rent by reason of any non-material failure of Owner to
comply with the covenants of this or any other article of this lease. Tenant
agrees that Tenant's sole remedy at law in such instance will be by way of any
action for damages for breach of contract. The provisions of this Article 4 with
respect to the making of repairs shall not apply in the case of fire or other
casualty with regard to which Article 9 hereof shall apply.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to be cleaned from the outside in violation of Section 202 of
the New York State Labor Law or any other applicable law or of the Rules of the
Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
Requirements of Law, Fire Insurance:
6. Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter Tenant shall, at Tenant's solo cost and expense,
promptly comply with all present and future laws, orders and regulations of all
state, federal, municipal and local govenments, departments, commissions and
boards and any direction of any public officer pursuant to law, and all orders,
rules and regulations of the New York Board of Fire Underwriters, or the
Insurance Services Office, or any similar body which shall impose any violation,
order or duty upon Owner or Tenant with respect to the demised premises, whether
or not arising out of Tenant's use or manner of use thereof, or, with respect to
the building, if arising out of Tenant's use or manner of use of the demised
premises of the building (including the use permitted under the lease). Except
as provided in Article 30 hereof, nothing herein shall require Tenant to make
structural repairs or alterations unless Tenant has, by its manner of use of the
demised premises or method of operation therein, violated any such laws,
ordinances, orders, rules, regulations or requirements with respect thereto.
Tenant shall not do or
<PAGE>
permit any act or thing to be done in or to the demised premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Owner. Tenant shall not keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will substatially increase the insurance rate for the
building or any property located therein over that in effect prior to the
commencement of Tenant's occupancy. If by reason of failure to comply with the
foregoing the fire insurance rate shall, at the beginning of this lease or any
any time thereafter, be higher than it otherwise would be, then Tenant shall
reimburse Owner, as additional rent hereunder, for that portion of all fire
insurance premiums thereafter paid by Owner which shall have been charged
because of such failure by Tenant. Tenant shall be entitled to conduct an
independent audit to determine an increase in Owner's insurance rate, proposed
increase, if any, and if the audit reveals less than owner's proposed increase,
Tenant's independent audit rate shall apply to said increase, if any. In any
action or proceeding wherein Owner and Tenant are parties, a schedule or
"make-up" or rate for the building or demised premises issued by a body making
fire insurance rates applicable to said premises shall be conclusive evidence of
the facts therein stated and of the several items and charges in the fire
insurance rates then applicable to said premises. Tenant shall not place a load
upon any floor of the demised premises exceeding the floor load per square foot
area which it was designed to carry and which is allowed by law. Owner reserves
the right to prescribe the weight and position of all safes, business machines
and mechanical equipment. Such installations shall be placed and maintained by
Tenant, at Tenant's expense, in settings sufficient, in Owner's judgement, to
absorb and prevent vibration, noise and annoyance.
Subordination:
7. This lease is subject and subordinate to all ground or underlying leases and
to all mortgages which may now or hereafter affect such leases or the real
property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall from time to time execute promptly any certificate that Owner may
reasonably request.
Tenant's Liability Insurance Property Loss, Damage, Indemnity:
8. Owner or its agents shall not be liable for any damage to property of Tenant
or of others entrusted to employees of the building, nor for loss of or damage
to any property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees; Owner
or its agents shall not be liable for any damage caused by other tenants or
persons in, upon or about said building or caused by operations in connection of
any private, public or quasi public work. If, at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's'own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorney's fees,
paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents,
contractors, employees, invitees, or licensees, of any covenant or condition of
this lease, or the carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or licensees. Tenant's
liability under this lease extends to the acts and omissions of any sub-tenant,
and any agent, contractor, employee, invitee or licensee of any sub-tenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Owner and this
lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially unusable
by fire or other casualty, the damages thereto shall be repaired by and at the
expense of Owner and the rent and other items of additional rent as applicable
until such repair shall be completed, shall be apportioned from the day
following the casualty according to the part of the premises which is usable.
(c) If the demised premises are totally damaged or rendered wholly unusable by
fire or other casualty, then the rent and other items of additional rent as
hereinafter expressly provided shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner (or sooner reoccupied in part by Tenant
then rent shall be apportioned as provided in subsection (b) above), subject to
Owner's right to elect not to resote the same as hereinafter provided. (d) If
the demised premises are rendered wholly unusable or (whether or not the demised
premises are damaged in whole or in part) if the building shall be so damaged
that Owner shall decide to demolish it or to rebuild it, then, in any of such
events, Owner may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, or 30 days after adjustment of
the insurance claim for such fire or casualty, whichever is sooner, specifying a
date for the expiration of the lease, which date shall not be more than 60 days
after the giving of such notice, and upon the date specified in such notice the
term of the lease shall expire as fully and completely as if such date were the
date set forth above for the termination of this lease and Tenant shall
forthwith quit, surrender and vacate the premises without prejudice however, to
Owner's rights and remedies against Tenant under the lease provisions in effect
prior to such termination, and any rent owing shall be paid up to such date and
any payments of rent made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant. Unless Owner shall serve a
termination notice as provided for herein, Owner shall make the repairs and
restorations under the conditions of (b) and (c) hereof, with all reasonable
expedition, subject to delays due to adjustment of insurance claims, labor
troubles and causes beyond Owner's control. After any such casualty, Tenant
shall cooperate with Owner's restoration by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Owner that the premises are
substantially ready for Tenant's occupancy. (c) Nothing contained hereinabove
shall relieve Tenant from liability that may exist as a result of damage from
fire or other casualty. Notwithstanding the foregoing, including Owner's
obligation to restore under subparagraph (b) above, each party shall look first
to any insurance in its favor before making any claim against the other party
for recovery for loss or damage resulting from fire or other casualty, and the
extent that such insurance is in force and collectible and to the extent
permitted by law, Owner and Tenant each hereby releases and waives all right of
recovery with respect to subparagraphs (b), (d) and (c) above, against the other
or any one claiming through or under each of them by way of subrogation or
otherwise. The release and waiver herein referred to shall be deemed to include
any loss or damage to the demised premises and/or to any personal property,
equipment, trade fixtures, goods and merchandise located therein. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
a clause providing that such a release or waiver shall not invalidate the
insurance. If, and to the extent, that such waiver can be obtained only by the
payment of additional premiums, then the party benefitting from the waiver shall
pay such premium within ten days after written demand or shall be deemed to have
agreed that the party obtaining insurance coverage shall be free of any further
obligation under the provisions hereof with respect to waiver of subrogation.
Tenant acknowledges that Owner will not carry insurance on Tenant's furniture
and or furnishings or any fixtures or equipment, improvements, or appurtunances
removable by Tenant and agrees that Owner will not be obligated to repair any
damage thereto or replace the same.
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim for the
value of any unexpired term of said lease. Tenant shall have the right to make
an independent claim to the condemning authority for the value of Tenant's
moving expenses and personal property, trade fixtures and equipment, provided
Tenant is entitled pursuant to the terms of the lease to remove such property,
trade fixtures and equipment at the end of the term and provided further such
claim does not reduce Owner's award.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributees, executors, administrators,
legal representatives, successors and assigns, expressly covenants that it shall
not assign, mortgage or encumber this agreement, nor underlet, or suffer or
permit the demised premises or any part thereof to be used by others, without
the prior written consent of Owner in each instance not to be unreasonably
withheld or delayed. Transfer of the majority of the stock of a corporate Tenant
or the majority partnership interest of a partnership Tenant shall be deemed an
assignment. If this lease be assigned, or if the demised premises or any part
thereof be underlet or occupied by anybody other than Tenant, Owner may, after
default by Tenant, collect rent from the assignee, under-tenant or occupant, and
apply the net amount collected to the rent herein reserved, but no such
assignment, underletting, occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
Electric Current:
12. Rates and conditions in respect to submetering or rent inclusion, as the
case my be, to be added in RIDER attached hereto. Tenant covenants and agrees
that at all times its use of electric current shall no exceed the capacity of
existing feeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The reasonable change at any time of the
character of electric service shall in no wise make Owner liable or responsible
to Tenant, for any loss, damages or expenses which Tenant may sustain.
Access to Premises:
13. Owner or Owner's agents shall have the right (but shall not be obligated) to
enter the demised premises in any emergency at any time, and, at other
reasonable times, to examine the same and to make such repairs, replacements and
improvements as Owner may deem necessary and reasonably desirable to any portion
of the building or which Owner may elect to perform in the premises after
Tenant's failure to make repairs or perform any work which Tenant is obligated
to perform under this lease, or for the purpose of complying with laws,
regulations and other directions of governmental authorities. Tenant shall
permit Owner to use and maintain and replace pipes and conduits in and through
the demised premises and to erect new pipes and conduits therein provided,
wherever possible, they are within walls or otherwise concealed. Owner may,
during the progress of any work in the demised premises, take all necessary
materials and equipment into said premises without the same constituting an
eviction nor shall the Tenant be entitled to any abatement of rent while such
work is in progress nor to any damages by reason of loss or interruption of
business or otherwise. However, the Owner agrees to make its best effort to
expedite such work and perform same in a diligent and unobtrusive manner.
Throughout the term hereof Owner shall have the right to enter the demised
premises at reasonable hours for the purpose of showing the same to prospective
purchasers or mortgagees of the building, and during the last six months of the
term for the purpose of showing the same to prospective tenants and may, during
said six months period, place upon
<PAGE>
the demised premises the usual notices "To Let" and "For Sale" which notices
Tenant shall permit to remain thereon without molestation. If Tenant is not
present to open and permit an entry into the demised premises. Owner or Owner's
agents may enter the same whenever such entry may be necessary or permissible by
master key or forcibly and provided best efforts are exercised to safeguard
Tenant's property, such entry shall not render Owner or its agents liable
therefor, nor in any event shall the obligations of Tenant hereunder be
affected. If during the last month of the term Tenant shall have removed all or
substantially all of Tenant's property therefrom. Owner may upon prior notice to
Tenant enter, alter, renovate or redecorate the demised premises without
limitation or abatement of rent, and such act shall have no effect on this lease
or Tenant's obligation hereunder.
Vault, Vault Space, Area:
14. No Vaults, vault space or area, whether or not enclosed or covered, not
within the property line of the building is leased hereunder anything contained
in or indicated on any sketch, blue print or plan, or anything contained
elsewhere in this lease to the contrary notwithstanding. Owner makes no
representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of
building, which Tenant may be permitted to use and/or occupy, is to be used
and/or occupied under a revocable license, and if any such license be revoked,
or if the amount of such space or area be diminished or required by any federal,
state or municipal authority or public utility, Owner shall not be subject to
any liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant, if used by Tenant,
whether or not specifically leased hereunder.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in violation
of the certificate of occupancy issued for the building of which the demised
premises are a part. Tenant has inspected the premises and accepts them as is,
subject to the riders annexed hereto with respect to Owner's work, if any. In
any event, Owner makes no representation as to the condition of the premises and
Tenant agrees to accept the same subject to violations, whether or not of
record. If any governmental license or permit shall be required for the proper
and lawful conduct of Tenant's business, Tenant shall be responsible for and
shall procure and maintain such license or permit. See Art. 57.
Bankruptcy:
16: (a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by either party by sending of a written notice to the
other party within a reasonable time after the happening of any one or more of
the following events: (1) the commencement of a case in bankruptcy or under the
laws of any state naming as the debtor, or (2) the making by the other party of
an assignment or any other arrangement for the benefit of creditors under any
state statute. Neither Tenant nor any person claiming through or under Tenant,
or by reason of any statute or order of court, shall thereafter be entitled to
possession of the premises demised but shall forthwith quit and surrender the
premises. If this lease shall be assigned in accordance with its terms, the
provisions of this Article 16 shall be applicable only to the party then owning
Tenant's interest in this lease. (b) It is stipulated and agreed that in the
event of the termination of this lease pursuant to (a) hereof, Owner shall
forthwith, notwithstanding any other provisions of this lease to the contrary,
be entitled to recover from Tenant as and for liquidated damages an amount equal
to the difference between the rental reserved hereunder for the unexpired
portion of the term demised and the fair and reasonable rental value of the
demised premises for the period for shich such installment was payable shall be
discounted to the date of termination at the rate of four percent (4%) per
annum. If such premises or any part thereof be relet by the Owner for the
unexpired term of said lease, or any part thereof, before presentation of proof
of such liquidated damages to any court, commission or tribunal, the amount of
rent reserved upon such reletting shall be deemed to be the fair and reasonable
rental value for the part or the whole of the premises so re-let during the term
of the re-letting. Nothing herein contained shall limit or prejudice the right
of the Owner to prove for and obtain as liquidated damages by reason of such
termination, an amount equal to the maximum allowed by any statute or fule of
law in effect at the time when, and governing the procedings in which, such
damages are to be proved, whether or not such amount be greater, equal to, or
less than the amount of the difference referred to above.
Default:
17. (1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if the
demised premises becomes vacant or deserted" or if this lease be rejected under
ss. 235 of Title 11 of the U.S. Code (bankruptcy code);" or if any execution or
attachment shall be issued against Tenant or any of Tenant's property whereupon
the demised premises shall be taken or occupied by someone other than than
Tenant; or if Tenant shall make default with respect to any other lease between
Owner and Tenant; or if Tenant shall have failed, after five (5) days written
notice, to redeposit with Owner any portion of the security deposited hereunder
which Owner has applied to the payment of any rent and additional rent due and
payable hereunder or failed to move into or take possession of the premises
within thirty (30) days after the commencement of the term of this lease, of
which fact Owner shall be the sole judge; then in any one or more of such
events, upon Owner serving a written fifteen (15) days notice upon Tenant
specifying the nature of said default and upon the expiration of said fifteen
(15) days, if Tenant shall have failed to comply with or remedy such default, or
if the said default or omission complained of shall be of a nature that the same
cannot be completely cured or remedied within said fifteen (15) day period, and
if Tenant shall not have diligently commenced during such default within such
fifteen (15) day period, and shall not thereafter with reasonable diligence and
in good faith, proceed to remedy or cure such default, then Owner may serve a
written five (5) days' notice of cancellation of this lease upon Tenant, and
upon the expiration of said five (5) days this lease and the term thereunder
shall end and expire as fully and completely as if the expiration of such five
(5) day period were the day herein definitely fixed for the end and expiration
of this lease and the term thereof and Tenant shall then quit and surrender the
demised premises to Owner but Tenant shall remain liable as hereinafter
provided. (2) If the notice provided for in (1) hereof shall have been given,
and the term shall expire as aforesaid; or if Tenant shall make default in the
payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
Remedies of Owner and Waiver of Redemption:
18. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (a) the rent, and additional rent, shall
become due thereupon and be paid up to the time of such re-entry, dispossess
and/or expiration, (b) Owner may re-let the premises or any part or parts
thereof, either in the name of Owner or otherwise, for a term or terms, which
may at Owner's option be less than or exceed the period which would otherwise
have constituted the balance of the term of this lease and may grant concessions
or free rent or charge a higher rental than that in this lease, (c) Tenant or
the legal representatives of Tenant shall also pay Owner as liquidated damages
for the failure of Tenant to observe and perform said Tenant's covenants herein
contained, any deficiency between the rent hereby reserved and or covenanted to
be paid and the net amount, if any, of the rents collected on account of the
subsequent lease or leases of the demised premises for each month of the period
which would otherwise have constituted the balance of the term of this lease.
The failure of Owner to re-let the premises or any part or parts thereof shall
not release or affect Tenant's liability for damages. In computing such
liquidated damages there shall be added to the said deficiency such expenses as
Owner may incur in connection with re-letting, such as reasonable attorney's
fees, brokerage, advertising and for keeping the demised premises in good order
or for preparing the same for re-letting. Any such liquidated damages shall be
paid in monthly installments by Tenant on the rent day specified in this lease
and any suit brought to collect the amount of the deficiency for any month shall
not prejudice in any way the rights of Owner to collect the deficiency for any
subsequent month by a similar proceeding. Owner, in putting the demised premises
in good order or preparing the same for re-rental may, at Owner's option, make
such alterations, repairs, replacements, and/or decorations shall not operate or
be construed to release Tenant from liability hereunder as aforesaid. Owner
shall in no event be liable in any way whatsoever for failure to re-let the
demised premises, or in the event that the demised premises are re-let, for
failure to collect the rent thereof under such re-letting, and in no event shall
Tenant be entitled to receive any excess, if any, of such net rents collected
over the sums payable by Tenant to Owner hereunder. In the event of a breach by
Tenant of any of the covenants or provisions hereof, Owner may have the right of
injuction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not herein provided for.
Mention in this lease of any particular remedy, shall not preclude Owner from
any other remedy, in law or in equity.
Fees and Expenses:
19. If Tenant shall default in the observance or performance of any term or
covenant on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in any article of this lease, after reasonable notice
if required and upon expiration of any applicable grace period if any, (except
in an emergency), then, unless otherwise provided elsewhere in this lease, Owner
may immediately or at any time thereafter and without notice perform the
obligation of Tenant thereunder. If Owner, in connection with the foregoing or
in connection with any default by Tenant in the covenant to pay rent hereunder,
make any expenditures or incurs any obligations for the payment of money,
including but not limited to reasonable attorney's fees, in instituting,
prosecuting or defending any action or proceedings, and prevails in any such
action or proceeding, then Tenant will reimburse Owner for such sums so paid or
obligations incurred. The foregoing expenses incurred by reason of Tenant's
default shall be deemed to be additional rent hereunder and shall be paid by
Tenant to Owner within ten (10) days of rendition of any bill or statement to
Tenant therefor. If Tenant's lease term shall have expired at the time of making
of such expenditures or incurring of such obligations, such sums shall be
recoverable by Owner as damages.
Building Alterations and Management:
20. Owner shall have the right at any time without the same constituing an
eviction and without incurring liability to Tenant therefor to change the
arrangement and or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public parts of the building and
to change the name, number or designation by which the building may be known.
There shall be no allowance to Tenant for diminution of rental value and no
liability on the part of Owner by reason of inconvenience, annoyance or injury
to business arising from Owner or other Tenant making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition of
any controls of the manner of access to the building by Tenant's social or
business visitors as the Owner may reasonably deem necessary for the security of
the building and its occupants. However, the Owner agrees to make it's best
efforts to expedite such work and perform same in a diligent and unobtrusive
manner.
<PAGE>
No Representations by Owner:
21. Neither Owner nor Owner's agents have made any representations or promises
with respect to the physical condition of the building, the land upon which it
is erected or the demised premises, the rents, leases, expenses of operation or
any other matter or thing affecting or related to the demised premises or the
building except as herein expressly set forth and no rights, easements or
licenses are acquired by Tenant by implication or otherwise except as expressly
set forth in the provisions of this lease. Tenant has inspected the building and
the demised premises and is thoroughly acquainted with their condition and
agrees to take the same "as is" on the date possession is tendered and
acknowledges that the taking of possession of the demised premises by Tenant
shall be conclusive evidence that the said premises and the building of which
the same form a part were in good and satisfactory condition at the time such
possession was so taken, except as to latent defects. All understanding and
agreements heretofore made between the parties hereto are merged in this
contract, which alone fully and completely expresses the agreement between Owner
and Tenant and any executory agreement hereafter made shall be ineffective to
change, modify, discharge or effect an abandonment of it in whole or in part,
unless such executory agreemnt is in writing and signed by the party against
whom enforcement of the change, modification, discharge or abandonment is
sought.
End of Term:
22. Upon the expiration or other termination of the term of this lease, Tenant
shall quit and surrender to Owner the demised premises, broom clean, in good
order and condition, ordinary wear and damages which Tenant is not required to
repair as provided elsewhere in this lease excepted, and Tenant shall remove all
its property from the demised premises. Tenant's obligation to observe or
perform this covenant shall survive the expiration or other termination of this
lease. If the last day of the term of this Lease or any renewal thereof, falls
on Sunday, this lease shall expire at noon on the preceding Saturday unless it
be a legal holiday in which case it shall expire at noon on the preceding
business day.
Quiet Enjoyment:
23. Owner covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to, Article 34
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure to Give Possession:
24. If Owner is unable to give possession of the demised premises on the date of
the commencement of the term hereof, because of the holding-over or retention of
possession of any tenant, undertenant or occupants or if the demised premises
are located in a building being constructed, because such building has not been
sufficiently completed to make the premises ready for occupancy or because of
the fact that a certificate of occupancy has not been procured or if Owner has
not completed any work required to be performed by Owner, or for any other
reason, Owner shall not be subject to any liaiblity for failure to give
possession on said date and the validity of the lease shall not be impaired
under such circumstances, nor shall the same be construed in any wise to extend
the term of this lease, but the rent payable hereunder shall be abated (provided
Tenant is not responsible for Owner's inability to obtain possession or complete
any work required) until after Owner shall have given Tenant notice that Owner
is able to deliver possession in the condition required by this lease. If
permission is given to Tenant to enter into the possession of the demised
premises or to occupy premises other than the demised premises prior to the date
specified as the commencement of the term of this lease, Tenant covenants and
agrees that such possession and/or occupancy shall be deemed to be under all the
terms, covenants, conditions and provisions of this lease, except the obligation
to pay the fixed annual rent set forth in page one of this lease. The provisions
of this article are intended to constitute "an express provision to the
contrary" within the meaning of Section 223-a of the New York Real Property Law.
No Waiver:
25. The failure of Owner to seek redress for violation of, or to insist upon the
strict performance of any covenant or condition of this lease or of any of the
Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation. The receipt by Owner of rent
with knowledge of the breach of any covenant of this lease shall not be deemed a
waiver of such breach and no provision of this lease shall be deemd to have been
waived by Owner unless such waiver be in writing signed by Owner. No payment by
Tenant or receipt by Owner of a lesser amount than the monthly rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement of any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Owner may accept such check or payment without prejudice to
Owner's right to recover the balance of such rent or pursue any other remedy in
this lease provided. All checks tendered to Owner as and for the rent of the
demised premises shall be deemed payments for the account of Tenant. Acceptance
by Owner of rent from anyone other than Tenant shall not be deemed to operate as
an attornment to Owner by the payor of such rent or as a consent by Owner to an
assignment or subletting by Tenant of the demised premises to such payor, or as
a modification of the provisions of this lease. No act or thing done by Owner or
Owner's agents during the term hereby demised shall be deemed an acceptance of a
surrender of said premises and no agreement to accept such surrender shall be
valid unless in writing signed by Owner. No employee of Owner or Owner's agent
shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
26. Waiver of Trial by Jury:
(Text Omitted)
Inability to Perform:
27. This Lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in no wise be affected, impaired or excused because Owner is
unable to fulfill any of its obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment,
fixtures or other materials if Owner is prevented or delayed from doing so by
reason of strike or labor troubles or any cause whatsoever beyond Owner's sole
control including, but not limited to, government preemption or restrictions or
by reason of any rule, order or regulation of any department or subdivision
thereof of any government agency or by reason of the conditions which have been
or are affected, either directly or indirectly, by war or other emergency.
Bills and Notices:
28. Except as otherwise in this lease provided, a bill statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail addressed to Tenant at the
building of which the demised premises form a part or at the last known
residence address or business address of Tenant or left at any of the aforesaid
premises addressed to Tenant, and the time of the rendition of such bill or
statement and of the giving of such notice or communication shall be deemed to
be the time when the same is delivered to Tenant, mailed, or left at the
premises as herein provided. Any notice by Tenant to Owner must be served by
registered or certified mail addressed to Owner at the address first hereinabove
given or at such other address as Owner shall designate by written notice.
Water Charges:
29. If Tenant requires, uses or consumes water for any purpose in addition to
ordinary lavatory purposes Owner may install a water meter and thereby measure
other Tenant's water consumption for all reasonably and proportionately
purposes. Tenant shall pay Owner for the cost of the meter and the cost of the
installation, thereof and throughout the duration of Tenant's occupancy Tenant
shall keep said meter and installation equipment in good working order and
repair at Tenant's own cost and expense in default of which Owner may cause such
meter and equipment to be replaced or repaired and collect the cost thereof from
Tenant, as additional rent. Tenant agrees to pay for water consumed, as shown on
said meter as and when bills are rendered, and on default in making such payment
Owner may pay such charges and collect the same from Tenant, as additional rent.
Tenant agrees to pay for water consumed, as shown on said meter as and when
bills are rendered, and on default in making such payment Owner may pay such
charges and collect the same from Tenant, as additional rent. Tenant covenants
and agrees to pay, as additional rent, the sewer rent, charge or any other tax,
rent, leevy or charge which now or hereafter is assessed, imposed or a lien upon
the demised premises or the realty of which they are part pursuant to law, order
or regulation made or issued in connection with the use, consumption,
maintenance or supply of water, water system or sewage or sewage connection or
system. If the building or the demised premises or any part thereof is supplied
with water through a meter through which water is also supplied to other
premises Tenant shall pay to Owner, as additional rent, on the first day of each
month, % ($ ) of the total meter charges as Tenant's portion. Independently of
an in addition to any of the remedies reserved to Owner hereinabove or elsewhere
in this lease, Owner may sue for and collect any monies to be paid by Tenant or
paid by Owner for any of the reasons or purposes hereinabove set forth.
Sprinklers:
30. Anything elsewhere in this lease to the contrary notwithstanding, if the New
York Board of Fire Underwriters or the New York Fire Insurance Exchange or any
bureau, department or official of the federal, state or city government
recommend or require the installation of a sprinkler system or that any changes,
modifications, alterations, or additional sprinkler heads or other equipment be
made or supplied in an existing sprinkler system by reason of Tenant's business,
or the location of partitions, trade fixtures, or other contents of the demised
premises, or if any such sprinkler system installations, modifications,
alterations, additional sprinkler heads or other such equipment, become
necessary to prevent the imposition of a penalty or charge against the full
allowance for a sprinkler system in the fire insurance rate set by any said
Exchange or by any fire insurance company, due to Tenant's tenancy or use of the
demised premises Tenant shall, at Tenant's expense, promptly make such sprinkler
system installations, changes, modifications, alterations, and supply additional
sprinkler heads or other equipment as required whether the work involved shall
be structural or non-structural in nature. Tenant shall pay to Owner as
additional rent the sume of $___, on the first day of each month during the term
of this lease, as Tenant's portion of the contract price for sprinkler
supervisory service.
Elevators, Heat, Cleaning:
31. As long as Tenant is not in material or material monetary default under any
of the covenants of this lease beyond the applicable grace period provided in
this lease for the curing of such defaults, Owner shall: (a) provide necessary
passenger elevator facilities on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m.; (b) and have at least one (1) passenger
elevator in service at all other times if freight elevator service is provided,
same shall be provided only on regular business days Monday through Friday
inclusive, and on those days only between the hours of 9 a.m. and 12 noon and
between 1 p.m. and 5 p.m.; (c) furnish heat, water and other services supplied
by Owner to the demised premises, when and as required by law, on business days
from 8 a.m. and on Saturdays from 8
<PAGE>
a.m. to 1 p.m.; (d) clean the public halls and public portions of the building
which are used in common by all tenants. Tenant shall, at Tenant's expense,
keep the demised premises, including the windows, clean and in order, to the
reasonable satisfaction of Owner, and for that purpose shall employ the person
or persons, or Corporation approved by Owner. Tenant shall pay to Owner the cost
of reasonable removal of any of Tenant's refuse and rubbish from the building.
Bills for the same shall be rendered by Owner to Tenant at such time as Owner
may elect and shall be due and payable hereunder, and the amount such bills
shall be deemed to be, and be paid as, additional rent. Tenant shall, however,
have the option of independently contracting for the removal of such rubbish and
refuse in the event that Tenant does not wish to have same done by employees of
Owner. Under such circumstances, however, the removal of such refuse and rubbish
by others shall be subject to such rules and regulations as, in the judgment of
Owner, are necessary for the proper operation of the building. Owner reserves
the right to stop service of the heating, elevator, plumbing and electric
systems, when necessary, by reason of accident, or emergency, or for repairs,
alterations, replacements or improvements, in the judgment of Owner necessary
to be made, until said repairs, alterations, replacements or improvements shall
have been completed. If the building of which the demised premises are a part
supplies manually operated elevator service, Owner may proceed diligently with
alterations necessary to substitute automatic control elevator service without
in any way affecting the obligations of Tenant hereunder.
Security:
32. Tenant has deposited with Owner the sum of $33,333.34 as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any material rent and additional rent or any other
sums to which Tenant is in default or for any sum which Owner may expend or may
be required to expend by reason of Tenant's default with respect of any of the
terms, covenants and conditions of this lease, including, but not limited to,
any damages or deficiency in the reletting of the premises, whether such damage
or deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall comply with all of the terms, provisions,
covenants and conditions of this lease, the security shall be returned to Tenant
within fourteen (14) days after the date fixed as the end of the Lease and after
delivery of entire possession of the demised premises to Owner. In the event of
the sale of the land and building or leasing of the building, of which the
demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for the return of such security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further convenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
Captions:
33. The Captions are inserted only as a matter of convenience and for reference
and in no way define, limit or describe the scope of this lease nor the intent
or any provision thereof.
Definitions:
34. The term "Owner" as used in this lease means only the owner of the fee or of
the leasehold of the building, or the mortgagee in possession, for the time
being of the land and building (or the owner of a lease of the building or of
the land and building) of which the demised premises form a part, so that in the
event of any sale or sales of said land and building or of said lease, or in the
event of a lease of said building, or of the land and building, the said Owner
shall be and hereby is entirely freed and relieved of all covenants and
obligations of Owner hereunder, and it shall be deemed and construed without
further agreement between the parties or their successors in interest, or
between the parties and the purchaser, at any such sale, or the said lessee of
the building, or of the land and building, that the purchaser or the lessee of
the building has assumed and agreed to carry out any and all covenants and
obligations of Owner hereunder. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term "rent"
includes the annual rental rate whether so expressed or expressed in monthly
installments' and "additional rent." "Additional rent" means all sums which
shall be due to Owner from Tenant under this lease, in addition to the annual
rental rate. The term "business days" as used in this lease, shall exclude
Saturdays, Sundays and all days observed by the State or Federal Government as
legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service. Wherever it is expressly
provided in this lease that consent shall not be unreasonably withheld, such
consent shall not be unreasonably delayed.
Adjacent Excavation-Shoring:
35. If an excavation shall be made upon land adjacent to the demised premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the demised premises
for the purpose of doing such work as said person shall deem necessary to
preserve the wall or the building of which demised premises form a part from
injury or damage and to support the same by proper foundations without any claim
for damages or indemnity against Owner, or diminution or abatement of rent.
Rules and Regulations:
36. Tenant and Tenant's servants, employees, agents, visitors, and licensees
shall observe faith fully, and comply with, the Rules and Regulations annexed
hereto and such other and further reasonable Rules and Regulations as Owner or
Owner's agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of any additional Rule or Regulation hereafter made
or adopted by Owner or Owner's agents, the parties hereto agree to submit the
question of the reasonableness of any additional Rule or Regulation for decision
to the New York office of the American Arbitration Association, whose
determination shall be final and conclusive upon the parties hereto. The right
to dispute the reasonableness of any additional Rule or Regulation upon Tenant's
part shall be deemed waived unless the same shall be asserted by service of a
notice, in writing upon Owner within fifteen (15) days after the giving of
notice thereof. Nothing in this lease contained shall be construed to impose
upon Owner any duty or obligation to enforce the Rules and Regulations or terms,
covenants or conditions in any other lease, as against any other tenant and
Owner shall not be liable to Tenant for violation of the same by any other
tenant, its servants, employees, agents, visitors or licensees.
Glass:
37. Owner shall replace, at the expense of the Tenant, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the demised
premises. Owner may insure, and keep insured, all plate and other glass in the
demised premises for and in the name of Owner. Bills for the premiums therefor
shall be rendered by Owner to Tenant at such times as Owner may elect, and shall
be due from, and payable by, Tenant within thirty (30) days of receipt of such
amount thereof shall be deemed to be, and be paid, as additional rent.
Estoppel Certificate:
38. Tenant, at any time, and from time to time, upon at least 10 days' prior
notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any
other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified in full force and effect (or, if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications), stating the dates to which the rent and additional rent have
been paid, and stating whether or not there exists any default by Owner under
this Lease, and, if so, specifying each such default.
Directory Board Listing:
39. If, at the request of and as accommodation to Tenant, Owner shall place
upon the directory board in the lobby of the building, one or more names of
persons other than Tenant, such directory board listing shall not be construed
as the consent by Owner to an assignment or subletting by Tenant to such person
or persons.
Successors and Assigns:
40. The covenants, conditions and agreements contained in this lease shall bind
and inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns. Tenant shall look only to Owner's estate
and interest in the land and building for the satisfaction of Tenant's remedies
for the collection of a judgment (or other judicial process) against Owner in
the event of any default by Owner hereunder, and no other property or assets of
such Owner (or any partner, member, officer or director thereof, disclosed or
undisclosed), shall be subject to levy, execution or other enforcement procedure
for the satisfaction of Tenant's remedies under or with respect to this lease,
the relationship of Owner and Tenant hereunder, or Tenant's use and occupancy of
the demised premises.
- ----------
>Space to be filled in or deleted.
ATTACHED hereto is Rider containing Articles No. 41 to 56 incl., which are
incorporated with a made part of this lease.
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
WILLIAM COLAVITO, INC. AAF
Witness for Owner: 149 FIFTH AVENUE CORPORATION
(CORP. SEAL)
/s/ ILLEGIBLE BY: /s/ STEVEN T. COLAVITO [L.S.]
- ------------------------------ ---------------------------
Steven T. Colavito, Vice President
Witness for Tenant iVILLAGE, INC.
(CORP. SEAL)
/s/ Aimee Feuer BY: /s/ Steve Elkes [L.S.]
- ------------------------------ ---------------------------
Please print name & title
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated JUNE 30, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Entire 5th floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
41. It is mutually understood and agreed that Tenant herein will obtain its
electricity for the demised premises through the presently existing wiring and
equipment servicing the demised premises, either on a "submetering" basis or on
a "rent inclusion" basis. Initially, the parties agree, electricity distribution
shall be on a "submetering" basis, utilizing existing submeter(s) serving the
Floor, however if for any reason beyond the Owner's control, including action by
government or other authority asserting jurisdiction over the matter tenant can
no longer obtain its electricity supply on a "submetering" basis, then and in
such events Owner will redistribute to Tenant the electricity for the demised
premises, on a "rent inclusion" basis, as hereinafter provided for in this
article.
(A) Submetering: If and so long as Landlord provides electricity to the demised
premises on a submetering basis, Tenant covenants and agrees to purchase the
same from Landlord or Landlord's designated agent at Landlord's Cost (as
hereinafter defined), for Tenant's submetered electricity consumption plus 10%
thereof. Where more than one meter measures the service of Tenant in the
Building, the KWHR and the KW recorded by each meter shall be added, and billed
as if billed from a single meter. Bills therefor shall be rendered at such time
as Landlord may elect and the amount, as computed from a meter or meters and
determined by Landlord's electrical consultant, in accordance with this Article,
shall be deemed to be, and be paid as, additional rent.
Landlord's Cost for such redistributed electricity shall be equal to Landlord's
Cost Rates (as hereinafter defined) for the relevant billing period multiplied
by Tenant's electricity consumption (i.e., energy and demand) based on the meter
readings as herein provided.
(B) Landlord's Cost Rates Shall be determined as follows:
Landlord's Electricity Consumption Cost", (Landlords' cost per KWHR) for any
given Utility Billing Period, shall mean the amount arrived at by dividing (i)
Landlord's KWHR cost, as indicated on the applicable utility bill (inclusive of
any taxes. including any taxes included in the computation of said utility bill)
for Landlord's Electricity Consumption for said Utility Billing Period,
inclusive of any fuel adjustments or rate adjustments contained in said utility
bill allocable to Landlord's Electricity Consumption (provided that same have
not been included in the computation of Landlord's Electricity Demand Cost), by
(ii) Landlord's Electricity Consumption as indicated on said bill.
"Landlord's Electricity Demand Cost", (Landlord's cost per KW) for any given
Utility Billing Period, shall mean the amount arrived at by dividing (i)
Landlord's KW cost, as indicated on the applicable utility bill (inclusive of
any taxes, including any taxes included in the computation of said utility bill)
for Landlord's Electricity Demand for said Utility Billing Period, inclusive of
any rate adjustments contained in said utility bill allocable to Landlord's
Electricity Demand (provided that same have not been included in the computation
of Landlord's Electricity Consumption cost), by (ii) Landlord's Electricity
Demand as indicated on said bill. For purposes of determining Landlord's
Electricity Consumption Cost and Landlord's Electricity Demand Cost, each amount
appearing on any utility bill for demand, energy, fuel or rate adjustments shall
be taken into account (where it cannot be determined from the utility bill
whether such amount related to consumption or to demand, it shall be deemed to
relate to demand).
"Utility Billing Period" shall mean the respective period of electricity
consumption and demand for which Landlord is charged on each successive bill
from the utility company furnishing electricity to the Building.
For purposes of this Article, the following terms shall have the following
meanings:
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ Steve Elkes
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated JUNE 30, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Entire 5th floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
"Landlord's Electricity Consumption", for any given Utility Billing Period,
shall mean the number of kilowatt hours of electricity consumed in and for the
Building (including common areas, tenantable areas and mechanical areas) during
said Utility Billing Period, as indicated on the applicable utility bill.
"Landlord's Electricity Demand", for any given Utility Billing Period, shall
mean the number of kilowatts of electricity demanded in and for the Building
(including common areas, tenantable areas and mechanical areas) during said
Utility Billing Periods, as indicated on the applicable utility bill.
C) Rent inclusion If and so long as Landlord provides electricity to the demised
premises on a rent inclusion basis, Tenant agrees;
1 The fixed annual rent shall be increased by the amount of the Electricity
Rent Inclusion Factor ("ERIF"), as hereinafter defined. Tenant acknowledges and
agrees (i) that the fixed annual rents hereinabove set forth in this lease do
not yet but are to include an ERIF to compensate Landlord for electrical wiring
and other installations necessary for, and for its obtaining and making
available to tenant, the redistribution of, electric current as an additional
service; and (ii) that such ERIF, which is a potion of the fixed annual rent,
shall be subject to periodic adjustments as herein provided..
2. The ERIF shall be based on a survey of Tenant's consumption of
redistributed electricity, made as hereinafter provided, and shall be equal to a
sum equal to Landlord's cost ("Landlord's Cost") for such electricity, plus ten
percent (10%) thereof. (Landlords Cost for such redistributed electricity shall
be equal to Landlord's Cost Rates (as hereinabove defined) for the relevant
billing period (s) multiplied by Tenant's electricity consumption (i.e. .,
energy and demand) based on the most recent survey thereof, all as hereinafter
provided.) If after the start of the relevant billing period, the cost to
Landlord of electricity shall be increased or decreased, by change in Landlord's
electric rates or service classifications, or by electricity charges, including
changes to in market prices, or by changes in fuel adjustments, or by taxes or
charges of any kind imposed on Landlord's electricity purchases, or on
Landlord's electricity redistribution, then the ERIF, based on the most recent
survey, shall be redetermined, effective as of the date of such change in rates,
etc., by Landlord's electrical consultant, in accordance with the provisions
hereof.
3. The parties agree that a reputable, independent electrical consultant,
mutually selected by Landlord and Tenant ("electrical consultant") shall by
survey determine an estimate of Tenant's demand and energy in order to calculate
the ERIF in accordance with this article, and that electrical consultant shall
from time to time make surveys in the demised premises of the electrical
equipment and fixtures and the use of current in and for such space. The ERIF
portion of the fixed annual rent shall then be appropriately adjusted, effective
as of the date of each said survey, and in accordance with the provisions
hereof.
Pending the results of the first survey and determination to be made by
Landlord's consultant, as herein provided, Tenant shall pay to Landlord a
temporary ERIF at the rate of $2.50 per rentable square foot per year (which
temporary charge shall thereafter be adjusted by survey and computations as
hereinafter provided), for any portion of the demised premises receiving
electricity on a rent inclusion basis. Said temporary payments shall be adjusted
between Landlord and Tenant, by appropriate payments thereafter or by rent
credits, retroactive to Tenant's commencement of being provided electricity on a
rent inclusion basis, Landlord will cause such a survey and determination to be
made of the electricity consumption in and for said space : the initial survey's
ERIF shall be payable from the date of the start of rent inclusion thereunder.
Thereafter, the ERIF shall be adjusted in accordance with surveys and
determinations by Landlord's electrical consultant, retroactive to the date of
such survey subsequent to the initial survey of the demised premises.
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ Steve Elkes
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated JUNE 30, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Entire 5th floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
The parties understand and agree that in any survey of Tenant's electricity
consumption in and for the demised premises, the consultant's survey results
shall be calculated to reflect a proper demand (diversity) factor.
42. SORTING AND SEPARATION OF REFUSE AND TRASH
(1) Tenant covenants and agrees, at its sole cost and expense, to comply with
all present and future laws, orders, and regulations of all state, federal,
municipal, and local governments, departments, commissions, and boards regarding
the collection, sorting, separation, and recycling of waste products, garbage,
refuse, and trash. Tenant shall sort and separate such waste products, garbage,
refuse and trash into such categories as provided by law. Each separately sorted
category of waste products, garbage, refuse, and trash shall be placed in
separate receptacles reasonably approved by the Owner. Such separate receptacles
may, at the Owner's option, be removed from the demised premises in accordance
with a collection schedule prescribed by law.
(2) The Owner reserves the right to refuse to collect or accept from Tenant any
waste products, garbage, refuse, or trash that is not reasonably separated and
sorted as required by law, and to require Tenant to arrange for such collection
at Tenant's sole cost and expense, utilizing a contractor reasonably
satisfactory to the Owner. Tenant shall pay all costs, expenses, fines,
penalties, or damages that may be imposed on the Owner or Tenant by reason of
Tenant's failure to comply with the provisions of this Article, and at Tenant's
sole cost and expense, shall indemnify, defend, and hold the Owner harmless
(including legal fees and expenses) from and against any actions, claims, and
suits arising from such noncompliance, utilizing counsel reasonably satisfactory
to the Owner.
43. The Owner shall in no event be responsible for the maintenance or upkeep of
any existing installation in the demised premises and/or any installation to be
made by the Tenant in the demised premises, except for otherwise provided for
herein.
44. The Tenant has examined the demised premises, knows its physical condition,
and agrees to accept same "as is"., except the owner shall, at its sole cost and
expense do the following work:
1.] Paint the demised premise ( Excluding the ceiling), and bathrooms in a
building standard color and manner.
2.] Shampoo the existing carpet throughout the premises.
3.] Deliver the three (3) existing finished bathrooms in good working order and
repair any broken bathroom fixtures. thereafter the maintenance and upkeep
of the bathroom shall be the Tenant's responsibility
4.] Deliver the existing air conditioning unit, in good working order and the
Owner shall maintain same at its sole cost and expense throughout the term
of this lease.
45. In the event that any monthly installment of rent, or any other payment
required to be made by Tenant under this Lease shall be overdue, on the tenth
(10th) day a late charge of two cents ($0.02) for each dollar so overdue may be
charged by the Owner for each month, or fraction of each month, from its due
date until paid, for the purpose of defraying the expense (exclusive of legal
costs) incurred in handling delinquent payments.
46. (a) Tenant covenants and agrees that it will indemnify and save the Owner
free and harmless from and against any and all claims, liability, loss or
damage, whether for injury to persons or loss of life or damage to property
arising out of Tenant's use or occupancy of the demised premises during the term
of this Lease caused by or arising out of Tenant's negligence only. Tenant
further covenants and agrees that throughout the term of this Lease, it will
carry general public liability insurance for the benefit of the Owner, Owner's
Agent and Tenant in single limits of $1,000,000.00.
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ ILLEGIBLE
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated JUNE 30, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Entire 5th floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
(b) All policies of insurance provided for herein, or certificates,
thereof, shall be delivered to the Owner forthwith upon issuance and at least
thirty (30) days prior to the expiration of any such policy, Tenant shall
deliver to the Owner from time to time throughout the Lease term, new policies
or certificates of insurance in renewal or replacement thereof, all at Tenant's
own cost and expense. If the Tenant shall fail to obtain and deliver such
policies and renewals or certificates thereof to the Owner, after fifteen (15)
business days notice in writing by the Owner and/or its agent to the Tenant,
Owner may procure such insurance and collect from the Tenant the amount of any
premiums paid therefor as additional rent payable upon demand.
(c) The Owner shall at no time be responsible for the payment of any
insurance premiums on any of the above-mentioned policies and it shall be so
stated in any certificates of insurance supplied to the Owner.
47. The Tenant herein has been made aware that the Building is included within
the boundaries of the Ladies Mile Historic District, and therefore any
alteration or work requiring a Building Department Permit, whether exterior or
interior, must receive a Landmark Permit before the Building Department Permit
can be issued. The Tenant herein agrees to obtain said permit at its sole cost
and expense and Landlord agrees to cooperate with Tenant in connection
therewith.
48. Wherever the word "Landlord" shall appear in this Lease, it shall mean
"Owner and Landlord".
49. This Lease shall not be binding upon the Owner unless and until same is
approved and executed by the Owner.
50. Notwithstanding any other provisions of this lease or any rule or regulation
of the building, the Tenant shall not engage any contractor to do demolition,
construction or alterations or similar work in the demised premises without the
Owner's written approval, which will not be unreasonably withheld.
51. It shall be the Tenants obligation to obtain all necessary certificates and
approvals from all City, State or Governmental agencies having jurisdiction
thereof, and/or the New York Board of Fire Underwriters, Fire Insurance Rating
Organization as to all work being performed and completed by the Tenant.
52. The Tenant agrees that prior to the commencement of alterations, the Tenant
will arrange to have the contractor and/or contractors who are to perform the
alteration, obtain and deliver to the Owner and/or Owner's representative a
certificate of insurance indicating that the contractor and/or contractors are
insured against bodily injury and property damage, and further the contractor
and/or contractors will name the Owner as additional insured without cost to the
Owner.
53. Tenant shall have access to the demised premises 24 hours a day, 7 days a
week throughout the term hereof.
54. It is mutually understood and agreed that provided the tenant herein is not
in material or material monetary default of any of the terms, covenants, and
conditions of the Lease, Tenant shall have one (1) option to extend the Term of
this Lease effective 7/1/2000 upon giving to the Owner at least six (6) months
prior written notice by registered or certified mail, return receipt requested
of its intention to extend the term for one (1) year commencing July 1, 2000,
and ending June 30, 2001. All other provision of said lease shall continue to be
applicable to said extended term including the base rent.
55. Tenant represents that they negotiated for the within lease solely with
Insignia/Edward S. Gordon Co., Inc. as Broker and William Colavito, Inc.,
Managing Agent representing the Owner., and the Tenant further represents that
they did not hire or enlist the aid or negotiate with any other agent or broker
in connection with this lease, and agrees to indemnify and hold the Owner
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ ILLEGIBLE
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL CLAUSES attached to and forming a part of lease dated JUNE 30, 1998
between 149 FIFTH AVENUE CORPORATION, Owner
and-
iVILLAGE INC. Tenant,
Entire 5th floor 149 FIFTH AVENUE, NEW YORK
- --------------------------------------------------------------------------------
harmless from any and all suits arising from this transaction. If any such
claims are made, the Tenant herein further agrees, at its sole cost and expense
to defend the Owner.
56. The Tenant herein acknowledges that they have reviewed the Certificate of
Occupancy attached hereto and forming a part of this lease. It is mutually
understood and agreed by both parties of interest that in the event a violation
is issued because of the Tenant's use (office space) then the Owner shall have
the right but not the obligation, at its sole cost and expense within ten (10)
days of the issuance of said violation to hire the services of an expediter to
commence the process of amending the Certificate of Occupancy to include the use
of offices and to cure said violation.
In the event the Owner elects not to amend the Certificate of Occupancy then the
Tenant shall have the right but not the obligation, to amend said Certificate of
Occupancy at its sole cost and expense provided the Tenant commences the process
of amending the Certificate of Occupancy by hiring the services of an expediter
within ten (10) days of notification by the Owners of their decision not to
amend the Certificate of Occupancy which notice shall be sent to the Tenant by
certified mail return receipt requested.
If both the Owner and Tenant choose not to exercise their rights to amend the
Certificate of Occupancy then either party shall have the right to terminate the
within lease by giving thirty (30) days prior written notice, certified mail
return receipt requested, one to the other of its intention to terminate the
within lease and upon the date set forth in said notice this lease shall cease,
terminate and come to an end in the same manner and with the same force and
effect as if such date were the original expiration date of the lease and the
Tenant shall surrender complete possession of the demised premises leaving same
in good broom clean order and condition.
================================================================================
TO BE SIGNED BY THE LANDLORD AND TENANT
================================================================================
LANDLORD TENANT
WILLIAM COLAVITO, INC., AS AGENT FOR IVILLAGE, INC.
149 FIFTH AVENUE CORPORATION
BY: /s/ Steven T. Colavito BY: /s/ ILLEGIBLE
-------------------------------- ----------------------------
Steven T. Colavito, Vice President
- --------------------------------------------------------------------------------
<PAGE>
ACKNOWLEDGEMENTS
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of
On this ______ day of ____________________, 19__, before me personally came
____________________________________ to me known, who being by me duly sworn,
did depose and say that he resides in _________________________________________
that he is the __________________________ of __________________________________
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
.....................................
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of
On this ______ day of ____________________, 19__, before me personally came
____________________________________ to me known and known to me to be the
individual described in and who, as TENANT, executed the foregoing instrument
and acknowledged to me that _____________________ he executed the same.
.....................................
[GRAPHIC] IMPORTANT -- PLEASE READ [GRAPHIC]
RULES AND REGULATIONS ATTACHED TO AND
MADE A PART OF THIS LEASE IN
ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for
any purpose other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any
window of the building; and no Tenant shall sweep or throw or permit to be swept
or thrown from the demised premises any dirt or other substances in to any of
the corridors of halls, elevators, or out of the doors or windows or stairways
of the building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the demised premises, or permit or suffer
the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any bicycles, vehicles, animals, fish, or
birds be kept in or about the building. Smoking or carrying lighted cigars or
cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls
of the building without the prior written consent of the Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part
of the demised premises or the building of which they form a part. No boring,
cutting or stringing of wires shall be permitted, except with the prior written
consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or
other similar floor covering, so that the same shall come in direct contact with
the floor of the demised premises, and, if linoleum or other similar floor
covering is desired to be used an interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
fire doors or windows by any Tenant, nor shall any changes be made in existing
locks or mechanism thereof. Each Tenant must, upon the termination of his
Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either
furnished to, or otherwise procured by, such Tenant, and in the event of the
loss of any keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
lease of which these Rules and Regulations are a part.
9. No Tenants shall obtain for use upon the demised premises ice, drinking
water, towel and other similar services, or accept barbering or bootblacking
services in the demised premises, except from persons authorized by Owner, and
at hours and under regulations fixed by Owner, Canvassing, soliciting and
peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building all persons who
do not present a pass to the building signed by Owner. Owner will furnish passes
to persons for whom any Tenant requests the same in writing. Each Tenant shall
be responsible for all persons for whom he requests such pass and shall be
liable to Owner for all acts of such persons. Notwithstanding the foregoing,
Owner shall not be required to allow Tenant or any person to enter or remain in
the building, except on business days from 8:00 a.m. to 6:00 p.m. and on
Saturdays from 8:00 a.m. to 1:00 p.m. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.
11. Owner shall have the right to prohibit any advertising by any Tenant
which in Owner's opinion, tends to impair the reputation of the building or its
desirability as a loft building, and upon written notice from Owner, Tenant
shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the
demised premises, any inflammable, combustible, or explosive, or hazardous
fluid, material, chemical or substance, or cause or permit any odors of cooking
or other processes, or any unusual or other objectional odors to permeate in or
emanate from the demised premises.
13. Tenant shall not use the demised premises in a manner which disturbs
or interferes with other Tenants in the beneficial use of their premises.
Address 149-51 Fifth Ave. thru to
and incl. 921-5 Broadway
Premises Entire 5th Floor
================================================================================
149 FIFTH AVENUE CORPORATION
TO
iVILLAGE, INCORPORATED
================================================================================
STANDARD FORM OF
Loft
[LOGO] [LOGO]
Lease
The Real Estate Board of New York, Inc.
(c) Copyright 1994. All Rights Reserved.
Reproduction in whole or in part prohibited.
================================================================================
Dated June 30, 1998
Rent Per Year $200,000.00 (BASE)
Rent Per Month $16,666.67 (BASE)
Term 2 Years
From 7-01-1998
To 6-30-2000
Drawn by ..................................................
Checked by ................................................
Entered by ................................................
Approved by ...............................................
================================================================================
WILLIAM COLAVITO
INC.
510 MADISON AVENUE TENANT'S COPY
CORNER E. 53rd STREET
NEW YORK, N.Y. 10022
<PAGE>
MODIFICATION AGREEMENT
Agreement made this 8th day of July, 1998 by and between 149 Fifth Avenue
Corporation with offices in care of William Colavito, Inc. located at 510
Madison Avenue New York, N.Y. 10022 (hereinafter called "Owner") and iVillage,
Inc., a Deleware Corporation located at 170 Fifth Avenue New York, N.Y. 10010
(hereinafter called "Tenant").
WITNESSETH:
WHEREAS, by lease in writing (hereinafter called the "Lease"), dated March
5th, 1998 made by and between the "Owner" and the "Tenant", as affected by
Modification Agreement dated April 20th, 1998 the "Owner" leased to the
"Tenant" the Entire Second (2nd) Floor (10,000 Sq. Ft.) in the building known as
149 Fifth Avenue a/k/a 921/25 Broadway New York, N.Y. 10010 (hereinafter called
the "Premise") for a term of Two (2) Years And One-Half (1/2) Month commencing
March 15th, 1998 and ending March 31st, 2000; and
WHEREAS, the "Tenant" is presently in possession of the "Premise" and
WHEREAS, the "Tenant" and the "Owner" have agreed to modify and supplement
the "Lease";
NOW, THEREFORE, it is mutually agreed that effective as of the date first
above written the "Lease" shall be and the same is hereby modified in the
following respects:
A.) The term of the "Lease" shall be extended for a Three (3) Month Period with
a new expiration date of June 3 0th, 2000.
B.) Article #54 of the "Lease" shall be deleted and in its stead the following
article is inserted:
"54. It is mutually understood and agreed that provided the Tenant herein
is not in material or material monetary default of any of the terms, covenants,
and conditions of the Lease the Tenant shall have one (1) option to extend the
term of this lease effective July 1st, 2000 upon giving to the Owner at least
six (6) months prior written notice by registered or certified mail, return
receipt requested of its intention to extend the term for one (1) year
commencing July 1st, 2000 and ending June 30th, 2001. All other provisions of
said lease shall continue to be applicable to said extended term including the
base rent"
The "Lease" and this Modification Agreement are hereby ratified and
confirmed in all respects.
Neither the "Lease" nor this "Modification Agreement" can be changed,
supplemented, or terminated orally. There are no oral agreements or
understandings between the parties hereto and the Tenant further acknowledges
that neither the Owner nor any representative of the Owner has made any oral
representations, warranties, or promises to the Tenant of any kind, nature, or
description.
(1)
<PAGE>
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED AND DELIVERED THIS
AGREEMENT AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
WITNESS:
WILLIAM COLAVITO, INC. AGENT FOR
149 FIFTH AVENUE CORPORATION
BY:
- ------------------- -----------------------------------
Steven T. Colavito - Vice President
iVillage, Inc.
BY: /s/ Steve Elkes
- ------------------- -----------------------------------
Steve Elkes - VP Finance/Legal
(2)
<PAGE>
COMMERCIAL LEASE
THIS AGREEMENT made and entered into this 13th day of
August, 1997, between Grove Corporate Plaza, Inc. (hereinafter referred to
as "Lessor"), and iVillage, Inc. (hereinafter referred to as "Lessee").
WITNESSETH:
WHEREAS, the Lessor is the owner of a certain commercial
office building (hereinafter sometimes referred to as the "Building")
located at 585 Grove Street, 1st Floor, Herndon, Virginia 20170.
WHEREAS, the Lessor is desirous of leasing office space in
the above described building (hereinafter sometimes referred to as the
"Demised Premises") to the Lessee upon the terms and conditions hereinafter
provided; and
WHEREAS, the Lessee is desirous of leasing the Demised
Premises from the Lessor upon the terms and conditions hereinafter
provisions.
NOW, THEREFORE, in consideration of the promises and the
mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged
by the parties, it is agreed as follows:
1. Leased Premises
The Lessor hereby leases to the Lessee and the Lessee
accepts from the Lessor the Demised Premises, consisting of approximately
3,370 rentable square feet, located at 585 Grove Street, Herndon, Virginia,
described as Exhibit A, attached hereto and made a part of this Lease.
2. Term
This lease shall continue in full force for a term of
three (3) years, commencing on or about September 15, 1997 and ending on
September 30, 2000, the last day of the month in which occupancy occurs.
3. Rent
a. The Lessee covenants to pay as initial rent for said
premises, Annual Rent as follows: (Base Annual Rent for Year One is
calculated at sixteen dollars ($16.00) per square foot.)
<PAGE>
Minimum Rent Monthly Annually
-----------------------------------------------------------------------------
First Year $4,493.33 $53,920.00
Second Year 4,628.13 55,537.60
Third Year 4,766.98 57,203.73
The above rental payments are due on the first day of each and every
calendar month during the term of this lease without any set off on
deduction whatsoever and without any prior demand being made therefor.
Language intentionally deleted.
b. If the lease term begins on other than the first day of
a month, rent from such date until the first day of the next succeeding
month shall be prorated on the basis of the actual number of days in each
such month and shall be payable in advance.
c. All payments of rent shall be made in cash or by check
payable to Grove Corporation Plaza, Inc., at 555 Grove Street, Herndon,
Virginia 20170 or to such other person or place as may be designated by
notice in writing from Lessor to Lessee from time to time, as and when
applicable.
d. No payment by Lessee or receipt by Lessor of a lesser
amount than the monthly installments of rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated rent nor shall
any endorsement or statement on any check or any letter accompanying any
check or payment as rent be deemed an accord and satisfaction. Lessor may
accept such check for payment without prejudice to Lessor's right to recover
the balance of such rent or pursue any other remedy provided in this Lease
or under the existing law.
e. Any monthly installment of the Annual Rent not paid
within ten (10) days of due date shall be subject to a late charge of ten
percent (10%) per month. All other rent and all other payments becoming due
hereunder (including additional rent) shall bear interest at the rate of
twenty percent (20%) per annum after the first calendar day following the
date when the same shall become due and payable.
4. Additional Rent
a. If Lessor shall incur any charge or expense on behalf
of Lessee under the terms of this Lease, such charge or expense shall be
considered additional rent hereunder, in addition to and not in limitation
of any other rights and remedies which Lessor may have in case of the
failure by Lessee to pay such sums when due, such nonpayment shall entitle
Lessor the remedies available to it hereunder for nonpayment of rent. All
such charges or expenses shall be paid to Lessor at its office at 555 Grove
Street, Herndon, Virginia 20170, or such other place and to such other
person as Lessor may from time to time designate in writing.
b. At the end of each calendar year commencing after
January 1, 1998, if the total real estate taxes and operating expenses paid
by the Lessor with respect to this building exceed the actual amounts of
year 1997, then the Lessee shall pay to the Lessor within thirty (30) days
of invoice thereafter its proportionate share of the excess as additional
rent. The Lessee's proportionate share of increases is 8.83 percent of the
total.
2
<PAGE>
c. For purposes of this Paragraph 4, the term "real estate
taxes" shall mean all taxes, rates and assessments, general and special,
levied or imposed with respect to the building and land related thereto. If
the system of real estate taxation shall be altered or varied and any new
tax or levy shall be levied or imposed on the building and/or the land
and/or Lessor in addition to or in substitution for real estate taxes
presently levied or imposed on real estate in the County of Fairfax, and
including any taxes on rents, then any such new tax or levy shall be
included within the term "real estate taxes".
d. (i) For purposes of this Paragraph 5, the term
"operating expenses" shall mean any and all expenses incurred by Lessor in
connection with the servicing, operation, maintenance and repair of the
building and related interior and exterior appurtenances of the demised
premises and the cost of any services incurred in order to achieve a
reduction of or to minimize the increase in operating expenses, including
without limitation, capital expenditures for equipment or systems installed
to reduce or minimize increases in operating expenses and capital
expenditures required by any governmental ordinance, or depreciation or
amortization based on the useful life expectancy of such equipment or
systems or expenditures, and the cost of contesting the validity or amount
of real estate taxes.
(ii) Operating expenses shall not include capital
expenditures and depreciation of the building; interest and amortization of
mortgages, compensation paid to officers or executives of lessor; and
brokerage commissions.
5. Security Deposit
Lessor herewith acknowledges receipt from Lessee of four
thousand four hundred ninety-three dollars and thirty-three cents
($4,493.33) as a security deposit, which sum shall be held by the Lessor as
a security without liability for interest, for the faithful performance of
all covenants, conditions, and agreements of this Lease to be performed by
Lessee. In addition, both parties agree as follows:
a. In the event of a default by the Lessee under this
Lease, the Lessor shall not be required to return any portion of said
security. In this event, the Lessor may either retain the same and apply it
toward the actual damages sustained by Lessor by reason of the Lessee's
default. However, under no circumstances shall the Lessor be deprived of any
other remedy at law or in equity or as agreed upon in this Lease. In the
event that the damages exceed the amount of the security deposit, the Lessor
or its agent shall have the right to proceed against the Lessee to recover
the excess amount.
b. In the event that there has been no default of any kind
or nature whatsoever by the Lessee, upon expiration of the full term of this
Lease, said security deposit shall be returned by the Lessor to the Lessee,
less any expense, loss or damage suffered by the Lessor as a result of any
act or commission on the part of the Lessee, his agents, employees, or
licensees. When the Lessee is entitled to the return of the security
deposit, the Lessor shall have thirty (30) days from the date of the
expiration of this Lease in which to refund the security deposit.
c. In the event of bankruptcy or other creditor-debtor
proceedings against the Lessee, the security deposit shall be deemed to be
applied first to the payment of rent and other charges due to the Lessor for
any period to the filing of such proceedings.
3
<PAGE>
6. Use of Premises
a. It is understood and agreed that the leased premises
shall be used and occupied by the Lessor for general office purposes and for
no other purpose and that Lessee shall comply with all applicable laws,
ordinances, government regulations and all protective covenants and
restrictions of record affecting such use.
b. Lessee shall not place a load upon the floor of the
demised premises exceeding the floor load per square foot which such floor
was designed to carry and which is allowed by law. Lessee shall not keep
within or about the demised premises any dangerous material. Lessee shall
indemnify and hold Lessor harmless against any and all damage, injury, or
claims by third parties, resulting from the moving of Lessee's equipment,
furnishings, and/or materials into or out of the demised premises or from
the storage or operation of the same.
7. Failure to Give Possession
If the Lessor shall be unable to give possession of the
leased premises by the date set forth in Paragraph 2 because the
construction of the leased premises or the building containing the leased
premises has not been sufficiently completed to make the premises ready for
occupancy, or for any other reason beyond the control of the Lessor, the
Lessor shall not be subject to any claims, damages, or liability for its
failure to give possession by that date, and the Lessee's obligation to pay
rent shall be suspended and abated until possession of the premises is
delivered. In the event of such delay, it is understood and agreed that the
commencement of the term of this Lease shall also be postponed until
delivery of possession and that the termination date of the term shall be
correspondingly extended.
8. Observance of Laws
The Lessee shall duly obey and comply with all
Declarations, By-Laws, covenants, conditions and restrictions, and rules,
copies of which have been provided to Lessee and Lessee acknowledges receipt
of same, and additionally all regulations, public laws, ordinances, rules,
or regulations relating to the use of the lease premises.
9. Improvements/Alterations
a. The Lessor shall pay for all standard
improvements/alterations agreed to in Exhibit A. The Lessee agrees not to
make any improvements/alterations in or additions to the leased premises
without first procuring the Lessor's approval. All alterations, additions,
and improvements, which may be made or installed by the Lessee upon the
leased premises, shall, (I) comply with local city/county regulations and
(ii) at the termination of the Lease, become the property of the Lessor and
shall remain upon and be surrendered with the leased premises as part
thereof, without disturbance at the expiration or termination of the term of
this Lease, all without compensation or credit to Lessee.
b. Lessee shall not install any equipment of any kind that
will require any alterations or additions to or the use of the water system,
heating system, plumbing system, air conditioning system, or the electrical
system without prior written consent of the Lessor. Lessor may correct or
remove them and Lessee shall be liable for any and all expenses incurred by
Lessor in the performance of this work.
4
<PAGE>
10. Repairs and Maintenance
a. Lessee shall, at its own cost and expense, keep the
premises in good order and condition. Lessee further agrees and covenants,
at its own cost, when attributable to tenant's negligence, to maintain the
premises, including but not limited to, plumbing, electrical and lighting
facilities and equipment, fixtures, walls, ceilings, windows, doors, and
plate glass. If Lessee fails to make such repairs or replacements promptly
after written demand, Lessor may, at its option, make such repairs or
replacements without incurring liability for any loss or damages that may
accrue to Lessee's property or business by reason thereof, and Lessee shall
repay the cost thereof to Lessor on demand as additional rent, with interest
at the rate of twenty percent (20%) per annum from the date of commencement
of said repairs.
Lessor shall keep the foundations, exterior walls and roof
in good repair, as well as the HVAC system, underground pipes and conduits
on the property, and the sprinkler system, and elevator system, except that
Lessor shall not be required to make any such repairs which become necessary
or desirable by reason of the negligence of Lessee, its agents, servants, or
employees and in all other respects, the leased premises shall at all times
be kept in good order, condition, and repair by Lessee. If the Lessee
refuses or neglects to repair promptly and adequately after written demand,
Lessor may make the repairs without liability to Lessee for any loss or
damage that may accrue to Lessee's stock or business by reason thereof, and
if Lessor makes such repairs, Lessee will pay to Lessor, on demand, as
additional rent, the cost thereof, with interest at the rate of twenty
percent (20%) per annum from the date of commencement of said repairs. The
Lessor reserves the right to promulgate reasonable rules and regulations
relating to the use of building area, including such limitations as may, in
the opinion of the Lessor, be necessary and desirable.
b. At the expiration or termination of the tenancy hereby
created, Lessee shall surrender the leased premises in good condition,
reasonable wear and tear excepted, and shall surrender all keys for the
leased premises to the Lessor at the place then fixed for the payment of
rent.
11. Services Provided by Lessor
Except as otherwise provided herein, Lessor agrees, at its
cost, to furnish Lessee, during the term of the Lease:
a. Hot and cold water at those points of supply provided
for general use of other tenants in the building;
b. Central heat and air conditioning in season, at such
times as Lessor normally furnishes these services to other tenants in the
building, and at such temperatures and in such amounts as are considered by
Lessor to be standard. Building operation hours are from 7:00AM - 7:00PM
Monday through Friday, except legal holidays. The legal holidays are: New
Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
c. Janitorial and trash removal service;
d. Electric current;
e. Routine lighting service for all Common Areas and
special areas of the building in the manner and to the extent deemed by
Lessor to be standard.
5
<PAGE>
In the event Lessee requests use of heating or air
conditioning services beyond the normal building hours of operation, Lessee
will be charge for electric at the rate of thirty dollars ($30.00) per hour
for each hour or partial hour of overtime use.
Failure by Lessor to any extent to furnish these defined
services, or any cessation thereof, resulting from causes beyond the control
of Lessor, shall not render Lessor liable in any respect for damages to
either person or property, nor be construed as an eviction of Lessee, nor
entitle Lessee to an abatement of rent, nor relieve Lessee from fulfillment
of any covenant or agreement hereunder. Should any of the equipment of
machinery break down, or for any cause cease to function properly, Lessor
shall use reasonable diligence to repair the same promptly, but Lessee shall
have no claim for rebate of rent or damages on account of any interruptions
in service occasioned thereby or resulting therefrom.
Lessee agrees to pay for telephone service and all other
charges not specifically assumed herein by Lessor.
12. Lessor's Insurance
The Lessor agrees to maintain at its expense, such fire
and extended coverage insurance on the building and in such amounts as
Lessor shall deem appropriate. Lessee agrees not to do or permit anything to
be done, in or about the leased premises, that will in any way impair or
invalidate the obligation of any policy of insurance with respect to the
leased premises or the building in which the leased premises are situated.
Lessee agrees to pay, upon demand, as additional rent, any increase in
insurance premiums resulting from the business carried on in the leased
premises, even though Lessor has consented to same. If Lessee installs any
electrical equipment that overloads the electrical facilities, Lessee agrees
to, at its own expense, to make whatever changes are necessary to comply
with governmental authorities having jurisdiction. However, no such changes
shall be made by Lessee without Lessor's written approval.
13. Lessee's Insurance
a. Lessee agrees that it will indemnify and save Lessor
harmless from any and all liabilities, damages, causes of action, suits,
claims, judgments, costs and expenses of any kind (including reasonable
attorneys fees): (i) relating to or arising from or in connection with the
possession, use, occupation, management, repair, maintenance or control of
the demised premises, or any portion thereof; or (ii) resulting from any
default, violation or injury to person or property or loss of life sustained
in or about the demised premises; or (iii) arising from or in connection
with any act or omission of Lessee or Lessee's agents, employees or invitee.
To assure such indemnity, Lessee shall carry and keep in full force and
effect at all times during the term of this Lease for the protection of
Lessor and Lessee herein, public liability insurance with limits of at least
One Million Dollars ($1,000,000) for each accident and Five Hundred Thousand
Dollars ($500,000) for each separate injury, and property damage insurance
in the amount of Fifty Thousand Dollars ($50,000).
b. Said public liability and property damage insurance
policies and any other insurance policies carried by Lessee with respect to
the demised premises shall: (i) be issued in form acceptable to Lessor by
good and solvent insurance companies qualified to do business in the State
of Virginia and reasonably satisfactory to Lessor; (ii) be issued in the
names of Lessor, Lessee, and any other parties in interest from time to time
designated in writing by notice from Lessor to Lessee; (iii) be written as
primary policy coverage and not contributing with or in excess of any
coverage
6
<PAGE>
which Lessor may carry; and (iv) contain an express waiver of any right of
subrogation by the insurance company against Lessor, if same is available
from the insurance company. Neither the issuance of any insurance policy
required hereunder, nor the minimum limits specified herein with respect to
Lessee's insurance coverage, shall be deemed to limit or restrict in any way
Lessee's liability arising under or out of this Lease. On or before the rent
commencement date and before any such insurance policy shall expire, Lessee
shall deliver to Lessor certificates of insurance, or certified copies of,
or duplicate originals of each such public liability and property damage
policy or renewal thereof, as the case may be, together with evidence of
payment of all applicable premiums. Any insurance required to be carried
hereunder may be carried under a blanket policy covering the demised
premises and other locations of Lessee, and if Lessee includes the demised
premises in such blanket coverage, Lessee shall deliver to Lessor, as
aforesaid, a duplicate original or certified copy of such insurance policy
or a certificate evidencing such insurance. The public liability and
property damage insurance policies required to be carried hereunder by or on
behalf of Lessee shall provide that, unless Lessor shall first have been
given ten (10) days prior written notice thereof; (i) such insurance
policies shall not be canceled and shall continue in full force and effect;
(ii) the insurance carrier shall not, for any reason whatsoever, fail to
renew such insurance policies; and (iii) no material change may be made in
such insurance policies. In the event that Lessee shall fail promptly to
furnish any insurance coverage herein required to be procured by Lessee, or
shall fail to pay any premium under such policies when due, Lessor, upon
three (3) days written notice, at its sole option, shall have the right to
pay such delinquent premium on behalf of Lessee, or to obtain such required
policy and pay the premium therefor for a period not exceeding one (1) year
in each instance, and any premium so paid by Lessor shall be immediately
payable by Lessee to Lessor as additional rent hereunder with twenty percent
interest (20%) per annum thereon from the date of payment by Lessor.
14. Lessee's Waiver of Claims
Lessee covenants that no claim shall be made against
Lessor by Lessee or any agent or servant of Lessee or by others claiming the
right to be in the premises or in said building through or under Lessee, for
any injury, loss or damage to person or property occurring upon the premises
from any cause other than the gross negligence of Lessor, and Lessee shall
hold Lessor harmless therefrom.
15. Occupancy Standards
Lessee agrees to comply with and to require its agents,
employees, invitee, and visitors to comply with all occupancy standards of
the building and the Rules and Regulations set forth in Exhibit B and made a
part of this lease. The Lessor shall have the right from time to time to
change, amend, or add to such occupancy standards in any reasonable manner
deemed advisable by the Lessor for the mutual safety and convenience of all
occupants and the cleanliness of the premises and preservation of good order
therein. Notice of all such changes and amendments will be sent by Lessor to
Lessee in writing, and Lessee further agrees thereafter to comply therewith.
16. Access to Premises
a. The Lessor reserves for itself and its representatives
the right to enter upon the leased premises at all reasonable hours for the
purpose of inspecting the same, making repairs, additions, alterations to
the building and exhibiting the leased premises to prospective tenants,
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purchasers, or others. The exercise by Lessor of any of its rights under
this Paragraph shall not be deemed an eviction or disturbance of Lessee's
use and possession of the leased premises.
b. Lessor may within ninety (90) days next preceding the
expiration of the term, enter the premises, to place and maintain notices
for letting, free from hindrance or control of Lessee, and to show the
premises to prospective tenants thereof at times which will not unreasonably
interfere with Lessee's business. If Lessee shall vacate the premises during
the last month of the term of this lease, Lessor shall have the unrestricted
right to enter the same after Lessee's moving to commence preparations for
the succeeding tenant or for any other purpose whatever, without affecting
Lessee's obligation to pay rent for the full term.
17. Mechanic's Liens
Lessee agrees not to permit any mechanic's, materialmen's,
or other liens to be fixed or placed against the leased premises and agrees
to immediately discharge (either by payment or by filing of the necessary
bond, or otherwise) any mechanic's, materialmen's, or other lien which is
fixed or placed against the building arising from any obligation allegedly
owed by Lessee. In the event Lessee does not discharge such lien or liens
within ten (10) days after Lessee is requested to do in writing by Lessor
then Lessor may discharge such lien or liens. Any such sums of money paid by
Lessor and expenses, including reasonable attorneys fees, incurred by
Lessor, together with interest thereon at the rate of twenty percent (20%)
per annum from the date of any such payment, shall be deemed to be
additional rent hereunder and shall be due from Lessee to Lessor on the
first day of the month following the payment of such respective sums and
expenses.
18. Eminent Domain
In the event the leased premises are wholly or partially
taken by any governmental, quasi-governmental authority or any other person
possessing the power of eminent domain pursuant to such power of eminent
domain, this Lease shall terminate when title to the leased premises is
taken by the condemning authority. Lessee shall have no claim or rights to
any portion of the amount that may be awarded as damages or paid as a result
of any such condemnation. Upon termination of the Lease because of any such
condemnation, Lessee shall have no claim against Lessor for the value of any
unexpired term of this Lease.
19. Damages by Fire or Casualty
This Lease is made on condition that, if the premises or
any part thereof, or the elevators, hallways, stairways, or other approaches
thereto, be damaged or destroyed by fire or other casualty from any cause,
so as to render said premises and/or approaches unfit for use and to the
nature and extent of the injury to said premises and approaches have been
put in as good condition for use and occupancy as at the time immediately
prior to such damage or destruction, Lessor will proceed at its expense and,
as expeditiously as may be practicable, to repair the damage, unless,
because of the substantial extent of the damage or destruction, Lessor
should decide not to repair or restore the building, in which event, and at
Lessor's sole option, Lessor may terminate this Lease forthwith, by giving
Lessee a written notice of its intention to terminate within ninety (90)
days after the date of the causality without incurring any liability of
damages for loss of business to the Lessee. Notwithstanding the foregoing,
any such fire or causality caused by Lessee's negligence shall be Lessee's
responsibility.
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20. Subordination
Lessee hereby covenants and agrees to subject and
subordinate this Lease, upon request of Lessor, to any paramount lease, deed
of trust or other financing method that may now or hereafter affect the
leased premises, and to all renewals, modifications, consolidations,
replacements, and extensions thereof. Lessor shall, however, use its best
efforts to have included in any paramount lease, deed of trust or other
financing arrangements to which this Lease is subordinated, a provision that
such subordination shall not adversely affect Lessee's right of use and
occupancy hereunder so long as Lessee is not in default under any of the
provisions hereof. To effect this subordination and in connection with such
financing, Lessee agrees to execute promptly any certificate, assignment of
rents or other document that Lessor may request and hereby appoints Lessor
its attorney-in-fact to do such things and execute such documents on behalf
of Lessee upon Lessee's failure to act promptly when so requested by the
Lessor.
21. Assignment of Lease
Lessee will not assign, transfer, mortgage or otherwise
encumber this Lease or sublet or rent (or permit occupancy or use of) the
premises, or any part thereof, without obtaining the prior written consent
of Lessor which shall not be unreasonably withheld, nor shall any assignment
or transfer of this Lease or the right of occupancy hereunder be effectuated
by operation of law or otherwise without the prior written consent of
Lessor. The consent by Lessor to any assignment or subletting shall not be
construed as a waiver or release of Lessee from the terms of any covenant or
obligation under this Lease, nor shall the collection or acceptance of rent
from any such assignee, subtenant or occupant constitute a waiver or release
of Lessee of any covenant or obligation contained in this Lease, nor shall
any such assignment or subletting be construed to relieve Lessee from
obtaining the consent in writing of Lessor to any further assignment or
subletting. In the event that Lessee defaults hereunder, Lessee hereby
assigns to Lessor the rent due from any subtenants, assignee or any other
occupant holding the premises or any portion thereof under the Lessee, and
hereby authorizes each such subtenant to pay said rent directly to Lessor.
In the event that Lessee desires to sublet all or a portion of the demised
premises, Lessee shall give to Lessor thirty (30) days written notice of
Lessee's intention so to do. Within thirty (30) days after receipt of said
notice, Lessor shall have the right to sublet that portion of the demised
premises from the Lessee at the same rent stipulated herein. If Lessee
desires to sublet all of the demised premises, Lessor shall also have the
right to terminate this Lease on a date to be agreed upon by Lessor and
Lessee. In the event Lessor has not exercised its right to sublet the
demised premises or terminate this Lease as heretofore provided, Lessee may
sublet the demised premises after first obtaining the written consent of the
Lessor. For purposes of this Paragraph, if Lessee is a partnership or
corporation, any change in the ownership thereof that exceeds, during the
term of this Lease, forty (40%) shall be deemed an assignment of this Lease.
22. Signs
The Lessee agrees not to install, place or cause to be
placed any exterior advertising signs or awnings upon the premises, not to
place advertising signs or posters on the interior of any windows. All
signs, if any, agreed to by the Lessor shall also conform to all applicable
codes and regulations.
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23. Rental Commissions
The Lessor recognizes Joanne Harwood of NOVA Commercial
Realty, Inc. as the agent representing iVillage, Inc. and Larry Craft of
NOVA Commercial Realty, Inc. as the agent representing Grove Corporate
Plaza, Inc. and agrees to pay a commission as stipulated under a separate
agreement.
24. Events of Default and Remedies
a. Lessor may terminate this Lease upon ten (10) days
written notice to Lessee upon the happening of any one or more of the
following events: (i) the institution in a court of competent jurisdiction
of proceedings for the reorganization, liquidation or involuntary
dissolution of Lessee or any guarantor, or for its adjudication as a
bankrupt or insolvent or for the appointment of a receiver of the property
of Lessee or any guarantor, and if said proceedings are not then dismissed,
and any receiver, trustee or liquidator appointed therein discharged, thirty
(30) days after the institution of said proceedings; (ii) the insolvency of
the Lessee or any guarantor or the making by Lessee or any guarantor of an
assignment or disposition for the benefit of creditors; (iii) the levying of
a writ of execution or attachment on or against the property of Lessee or
any guarantor; (iv) the taking of any action for the voluntary dissolution
of Lessee or any guarantor or its consolidation with or merger into another
corporation; (v) the failure of Lessee or any guarantor to pay an
installment of rent or any other payment, or charge herein provided for when
due; and (vi) the violation by Lessee of or its failure to perform or threat
to break any covenant or agreement herein contained, if such continues after
ten (10) days written notice from Lessor, or, if it cannot be cured within
such ten (10) days, if the lessee does not within such period commence to
cure such violation, failure or threat and thereafter diligently complete
the same.
b. Upon such termination of this Lease, Lessor may
re-enter the leased premises with or without process of law, using such
force as may be necessary, and remove all persons and chattels therefrom and
Lessor shall not be liable for damage or otherwise by reason of re-entry or
termination of this Lease nor shall such re-entry or termination waive, bar
or any way prejudice any other remedies available to Lessor. Notwithstanding
such termination, the liability of Lessee for the rent provided for herein
shall not be extinguished for the balance of the term remaining after said
termination, and Lessor shall be entitled to recover immediately as
liquidated damages an amount equal to the rent for the said balance of the
term, less the fair rental value of the leased premises for the said balance
of the term, as determined by rental of, or responsible offers to rent the
leased premises.
c. In the event of any breach hereunder by Lessee, Lessor
may immediately or at any time thereafter, without notice, cure such breach
for the account and at the expense of Lessee. If Lessor at any time, by
reason of such breach, is compelled to pay or elects to pay any sum of
money, or is compelled to incur any expense, including reasonable attorney's
fees, in instituting or prosecuting any action or proceeding to enforce
Lessor's rights hereunder, the sum or sums paid by Lessor, with interest
thereon at the rate of twenty percent (20%) per annum from the date of
payment thereof, shall be deemed to be additional rent hereunder and shall
be due from Lessee to Lessor on the first day of the month following the
payment of such respective sums or expenses.
d. When this Lease is terminated in accordance with this
Paragraph, Lessee will yield up possession to Lessor on the date of
termination, and failing so to do, will pay as liquidated
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damages for each day possession is withheld, an amount equal to double the
amount of the daily base rent, computed on a thirty (30) day month basis.
e. In order to secure the performance of Lessee's
obligation under this Lease, Lessee hereby grants to Lessor, in addition to
any statutory lien available to Lessor, a lien on all furniture,
furnishings, equipment, fixtures, merchandise and other personal property
placed on the leased premises by Lessee. Lessee hereby specifically waives
any and all exemptions allowed by law; and such lien may be enforced on the
nonpayment of any installment of rent by the taking and selling of such
property, in the same manner as in the case of chattel mortgages on default
thereunder; said sale to be made upon ten (10) days notice served upon the
Lessee by posting upon the premises or by leaving same at the place of
residence of Lessee's principal(s); or such lien may be enforced in any
other lawful manner at the option of the Lessor.
f. All rights and remedies of Lessor herein enumerated
shall be cumulative and none shall exclude any other right or remedy allowed
by law and said rights and remedies may be exercised and enforced
concurrently and whenever and as often as occasion therefor arises. Any Base
Rent, additional rent or other payment or charge herein provided for may be
recovered by the Lessor from the Lessee by distress action or by any legal
process as may at the time be in operation and force in like cases relating
to proceedings between landlords and tenants.
25. Storage of Lessee's Property
If on termination of this Lease, by expiration or
otherwise, or on abandonment of the leased premises, Lessee shall fail to
remove any of Lessee's property from the leased premises, Lessee hereby
authorizes Lessor, at Lessor's option, to cause such property to be removed
and placed in storage or on such termination, to sell such property at
public or private sale, within ten (10) days notice, and to apply the
proceeds thereof, after payment of all expenses of removal, storage or sale,
to the indebtedness, if any, of the Lessee to Lessor, the surplus, if any,
to be paid to Lessee upon demand. Lessor shall in no event be responsible
for the value, accounting, preservation or safekeeping of such property.
Lessor's inventory of abandoned or stored property shall be final and
incontestable. Lessee shall pay to the Lessor upon demand, any and all
expenses incurred in such removal and all storage charges against such
property so long as the same shall be in the Lessor's possession or under
the Lessor's control.
26. Lessee Holding Over
If Lessee shall not immediately surrender the demised
premises on the day after the end of the term hereby created, the Lessee
shall, by virtue of this Agreement, become a Lessee by the month at twice
the rental agreed by said Lessee to be paid as aforesaid, commencing said
monthly tenancy with the first day next after the end of the term above
demised; and said Lessee as a monthly tenant, shall be subject to all of the
conditions and covenants of this Lease as though the same had originally
been a monthly tenancy. Each party hereto shall give to the other at least
thirty (30) days written notice to quit the demised premises, except in the
event of non-payment of rent in advance or of the other additional rents
provided in which event Lessee shall not be entitled to any notice to quit,
the usual thirty (30) days notice to quit being expressly waived, provided,
however, that in the event that Lessee shall hold over after the expiration
of the term aforesaid, then at any time prior to the acceptance of the rent
by Lessor from Lessee, as monthly Lessee hereunder, Lessor, at its election
or option, may re-enter and take possession of the demised premises
forthwith, without process, or by any legal action or process in force in
the State of Virginia.
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27. Rights Reserved by Lessor
Lessor shall have the following rights, exercisable
without notice and without liability to Lessee for damage or injury to
property, person or business and without effecting in eviction, constructive
or actual, or disturbance of Lessee's use or possession or giving rise to
any claim for set-off or abatement of rent:
a. To change the building's name and address;
b. To install, affix and maintain any and all signs on the
exterior of the building;
c. To designate and/or approve, disapprove, prior to
installation, all types of window shades, blinds, drapes, awnings, window
ventilators and other similar equipment, and control the design and location
of all internal lighting that may be visible from the exterior of the
building;
d. To retain at all times, and to use in appropriate
instances, keys to all doors within and into the leased premises; and
e. To make repairs, alterations, additions or
improvements, whether structural or otherwise, in and about the building, or
any part thereof, for the Lessee, if need be, and for such purposes to enter
upon the leased premises, and, during the continuance of any of said work,
to temporarily close doors, entry-ways, public space and corridors in the
building and to interrupt or temporarily suspend building services and
facilities, all without abatement of rent or affecting any of Lessee's
obligations hereunder, so long as the leased premises are reasonably
accessible.
Lessor, at Lessor's expense, has the right to relocate
Lessee to equal or greater space in the building.
28. Notice and Demands
Any notice or demand required or permitted under this
Lease, shall be in writing and shall be sent by registered or certified mail
to Lessee at the address of the leased premises and to Lessor at the address
then fixed for the payment of rent, and either party may, by like notice at
any time and from time to time, designate a different address to which
notice shall be sent. Notice given in accordance with these provisions shall
be deemed given when mailed.
29. General
a. Nothing contained in this lease shall be deemed or
construed by the parties hereto or any third party to create the
relationship of principal and agent or of partnership or of joint venture or
of any association between Lessor and Lessee other than the relationship of
landlord and tenant. The invalidity or unenforceability of any provision
hereof shall not affect or impair any other provisions. The necessary
grammatical changes required to make the provisions of this Lease apply in
the plural sense where there is more than one tenant and to either
corporations, associations, partnerships or individuals, males or females,
shall in all instances be assumed as though in each case fully expressed.
The laws of the State of Virginia shall govern the validity, performance and
enforcement of this Lease.
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b. This Lease contains the entire agreement between the
parties with respect to the subject matter hereof and each party
acknowledges that it did not, in entering into this Lease, rely upon any
representation or promises made by or on behalf of the other except as
expressly set forth herein.
c. In the event that the Lessee is a corporation or a
partnership, or any other business association aside from an individual, the
Lessor may, at its option, require that the principals of the said
corporation, partnership or business association, and their spouses,
personally guarantee the performance of the said corporation, partnership or
other business association under this Lease Agreement. In the event that the
Lessor exercised its option under this Paragraph, the principals of the
corporation, partnership or other business association shall within five (5)
days cause their signatures and the signatures of their spouses to be
affixed to an appropriate guarantee agreement, and said agreement shall be
delivered within five (5) days to the lessor at the address as designated by
Lessor.
30. Successors and Assigns
The terms, covenants and conditions hereof shall be
binding upon and inure to the successors in interest and assigns of the
parties hereto.
31. No Option
The submission of this Lease for examination does not
constitute a reservation of or option for the demised premises except as
expressly set forth herein, and this Lease becomes effective only upon
execution and delivery thereof by Lessor.
32. Quiet Enjoyment
Lessor covenants and agrees with Lessee that upon Lessee
paying the rent and additional rent and observing and performing all the
terms, covenants and conditions, Lessee may peaceably and quietly enjoy the
premises hereby demised, subject, nevertheless, to the terms and conditions
of this Lease, and to the mortgages and deeds of trust hereinbefore
mentioned.
33. Waiver of Trial by Jury
Lessor and Lessee each agree to and they hereby do waive
trial by jury in any action, proceeding or counterclaim brought by either of
the parties hereto against the other on any matters whatsoever arising out
of or in any way connected with this Lease, the relationship of Lessor and
Lessee, Lessee's use or occupancy of said premises and/or any claim of
injury or damage, and any statutory remedy.
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34. Governing Law
This Lease shall be construed and governed by the laws of
the State of Virginia. Should any provision of this Lease and/or its
conditions be illegal or not enforceable under the laws of the said state,
such provisions shall be considered severable, and the remaining portion of
this Lease and its conditions shall remain in full force and effect and be
binding upon the parties as though such provisions had never been included.
WITNESS / ATTEST: Lessor
/s/ Wael Alkhairo 9/5/97
- ------------------------------------- ------------------------------------
Signature Date Wael F. Alkhairo Date
Grove Corporate Plaza, Inc.
Wael F. Alkhairo
- ------------------------------------- ------------------------------------
Please Print Name Print Name Here
WITNESS / ATTEST: Lessee
/s/ Steven Elkes 10/28/97
- ------------------------------------- ------------------------------------
Signature Date Signature Date
Steven Elkes
- ------------------------------------- ------------------------------------
Please Print Name Please Print Name
V.P. Finance
------------------------------------
Title
14
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Preliminary Exhibit A
[Floor Plan]
<PAGE>
EXHIBIT B
RULES AND REGULATIONS
1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or other parts of the Building not occupied by
Lessee shall not be obstructed or encumbered by any Lessee or used
for any purpose other than ingress and egress to and from the
demised premises. Lessor shall have the right to control and
operate the public portions of the Building, and the facilities
furnished for the common use of the Lessees, in such manner as
Lessor deems best for the benefit of the demised premises of
persons in such numbers or under such conditions as to not
interfere with the use and enjoyment by other Lessees of the
entrances, corridors, elevators and other public parts or
facilities of the Building.
2. No awnings or other projections shall be attached to the outside
walls of the Buildings without the prior written consent of the
Lessor. No drapes, blinds, shades or screens shall be attached to
or hung in, or used in connection with any window or door of the
demised premises, without the prior written consent of the Lessor.
Such awnings, projections, curtains, blinds, shades, screens or
other fixtures must be of a quality type, design and color, and
attached in a manner approved by the Lessor.
3. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Lessee on any part
of the outside or inside of the demised premises or building
without the prior written consent of the Lessor. In the event of
the violation of the foregoing by any tenant, Lessor may remove
same without any liability and may charge the expense incurred by
such removal to the tenant or tenants violating this rule. Interior
signs on doors and directly tablet shall be inscribed, painted or
affixed for each tenant by the Lessor at the expense of such
Lessee, and shall be of a size, color and style acceptable to the
Lessor.
4. No show cases or other articles shall be out in front of or affixed
to any part of the exterior of the building, nor placed in the
halls, corridors, or vestibules without the prior written consent
of the Lessor.
5. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were
constructed; and no sweepings, rubbish, rages or other substances
shall be thrown therein. All damages resulting from any misuses of
the fixtures shall be borne by Lessee who, or whose servants,
employees, agents, visitors or licensees, shall have caused the
same.
6. There shall be no marking, painting, drilling into or in any way
defacing any part of the demised premises or the Building. No
boring, cutting or stringing of wires shall be permitted. Lessee
shall not construct, maintain, use or operate within the demised
premises or elsewhere within or on the outside of the building, any
electrical device, wiring or apparatus in connection with a loud
speaker or other sound system.
7. No bicycles, vehicles or animals, birds or pets of any kind shall
be brought into or kept in or about the premises, and no cooking
shall be done or permitted by any tenant on said premises. No
tenant shall cause or permit any unusual or objectionable odors to
be produced upon or permeate from the demised premises.
8. Space in the building shall not be used for manufacturing, for the
storage of merchandise, or for the sale of merchandise, goods or
property of any kind at auction, except for minor assembly, repair
and selling activities.
Exhibit B
1 of 3
<PAGE>
9. No tenant shall make, or permit to be made, any unseemingly or
disturbing noises or disturb or interfere with occupants of this or
neighboring buildings or premises of those having business with
them by the use of any musical instrument, radio, talking machine,
unmusical noise, whistling, or in any other way. No tenant shall
throw anything out of the doors or windows or down the corridors or
stairs.
10. No inflammable, combustible or explosive fluid, chemical or
substance shall be brought into or kept upon the demised premises.
11. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows by any tenant nor shall any changes be made
in existing locks or the mechanism thereof. The doors leading to
the corridors or main halls shall be kept closed during business
hours except as they may be used for ingress or egress. Each tenant
shall, upon the termination of his tenancy, restore to Lessor all
keys of building, stores, offices, storage, and toilet rooms either
furnished to, or otherwise procured by, such tenant, and in the
event of the loss of any keys so furnished, such tenant shall pay
to the Lessor the cost thereof.
12. All removals or the carrying in or out of any safes, freight,
furniture or bulky mater of any description must take place during
the hours which the Lessor or its Agent may determine from time to
time. The Lessor reserves the right to inspect all freight to be
brought into the building and to exclude from the building all
freight which violates any of these Rules and Regulations or the
lease of which these Rules and Regulations are a part.
13. Any person employed by any tenant to do janitor work within the
demised premises must obtain Lessor's consent and such person
shall, while in the Building and outside of said demised premises,
comply with all instructions issued by the Lessor or the Lessor's
Building Manager. No tenant shall engage or pay any employees on
the demised premises, except those actually working for such tenant
on said premises.
14. INTENTIONALLY DELETED
15. Lessor shall have the right to prohibit any advertising by any
tenant which, in Lessor's opinion, tends to impair the reputation
of the building or its desirability as a building for offices, and
upon written notice from Lessor, tenant shall refrain from or
discontinue such advertising.
16. The Lessor reserves the right to exclude from the building at all
times any person who is not known or does not properly identify
himself to the Building Management or security personnel. Each
tenant shall be responsible for all persons for whom he authorizes
entry into or exit our of the building, and shall be liable to the
Lessor for all acts of such person.
17. The premises shall not be used for lodging or sleeping or for any
immoral or illegal purpose.
18. Each tenant, before closing and leaving the demised premises at any
time, shall see that all windows are closed and all lights turned
off.
19. The requirements of tenants will be attended to only upon
application to the Lessor's Building Manager. Employees shall not
perform any work or do anything outside of the regular duties,
unless under special instruction from the Lessor's building
Manager.
20. Canvassing, soliciting and peddling in the building are prohibited
and each tenant shall cooperate to prevent the same.
21. No water cooler, plumbing or electrical fixtures shall be installed by
the Lessee.
Exhibit B
2 of 3
<PAGE>
22. There shall not be used in any space, or in the public halls, of
the Building, either by any Lessee or by jobbers or others, in the
delivery or receipt of merchandise, any hand trucks, except those
equipped with rubber tires and side guards.
23. Mats, trash, or other objects shall not be placed in the public
corridors.
24. The Lessor does not maintain or clean suite finishes which are
non-standard: such as kitchens, bathrooms, wallpaper, special
lights, etc. However, should the need for repairs arise, the Lessor
will arrange for the work to be done at the Lessee's expense.
25. Drapes installed by the Lessee for their use which are visible from
the exterior of the building must be approved by Lessor in writing
and be cleaned by the Lessee.
26. The Lessor will furnish and install light bulbs for the building
standard florescent or incandescent fixtures only; for special
fixtures the Lessee will stock his own bulbs, which will be
installed by the Lessor when so required by the Lessee.
27. Violation of these rules and regulations, or any amendments
thereto, shall be sufficient cause for termination of this Lease at
the option of the Lessor.
28. The Lessor may, upon request by any tenant waive the compliance of
such tenant of any of the foregoing rules and regulations, provided
that (i) no waiver shall be effective unless signed by Lessor or
Lessor's authorized agent, (ii) any such waiver shall not relieve
such tenant from the obligation to comply with such rule or
regulation in the future unless expressly consented to by Lessor,
and (iii) no waiver granted to any tenant shall relieve any other
tenant from the obligation of complying with the foregoing rules
and regulations unless such other Lessee has received a similar
waiver in writing from Lessor.
Exhibit B
3 of 3
<PAGE>
ADDENDUM
1. In the event the suite is ready for occupancy but installation of
the plumbing and kitchenette is not completed, Lessee may occupy
the space while the installation and appropriate code inspection(s)
are completed. Such completing shall take place within thirty (30)
days of occupancy. Lessor will not be liable in any way should a
timely completion not be met which was caused by forces or events
beyond the control of the Lessor.
2. Improvements: Attached is Preliminary Exhibit A, subject to
finalization by Lessor's architect.
(1) Kitchenette to have a sink with counter top with
overhead and baseboard cabinets. Each cabinet will
have two (2) doors.
(2) Lessor will provide additional outlets to compensate
for those removed during space demolition.
(3) Lessor will paint and carpet in Lessee's choice of
color, using building standard grade.
(4) Lessor shall repair the broken tile located in the
entrance into the suite.
3. Entry Cards: Lessor will provide fifteen (15) building entry cards to
Lessee upon occupancy.
4. Option to Renew: Lessee shall have a one three (3) year option to
renew its lease with a one hundred twenty (120) day written notice
to the Lessor before lease expiration. The rate shall be at then
market lease rates.
5. Parking: Lessee and Lessee's employees shall park in the spaces
behind or to the sides of the building, but not in front of the
building in the visitor's parking spaces.
6. Signage: Lessor shall provide Lessee with suite and directory signage.
Exhibit B
1 of 3
<PAGE>
RENTAL AGREEMENT
THIS AGREEMENT, entered into this 8th day of September, 1997 between Jack May
hereinafter referred to as "Management" and iVillage, a Corporation, hereinafter
referred to as "Resident."
Management does hereby rent to Resident(s), Apartment Number 928 located at 928
Waverly Street and Downstairs studio California, on a month-to-month tenancy and
under to following terms and conditions.
TERM, RENT AND DEPOSIT
1. It is agreed that the monthly rental shall commence on the 15th day of
September, 1997.
2. Resident(s) agreed to pay rent to Management for each month, in advance, by
check or money order, but not in cash, on the first day of each month,
during the full term of this rental agreement the sum of $2590.00 for the
apartment as described (gas, electricity and telephone are not included).
In addition to all other payment s required of Resident(s) hereunder.
Resident(s) agrees to pay the following:
$2590 Security Deposit (to secure faithful performance of Rental Agreement)
$______ Key Deposit
$______ Pet Deposit
$______ Other deposit for ______________________________ .
3. Resident(s) understands that adjustments in rental rates are inevitable.
Management reserves the right to increase of adjust rental rates based on
market conditions, operating costs, expenses, finance costs, or any other
factor at the sole discretion of the Management.
The frequency of increases will be set by Management and Resident(s) will
receive at least sixty (60) day notice in advance of any rental rate
change.
4. RESIDENT(S) AGREES TO PAY LATE CHARGES ON ALL RENT NOT PAID BY THE FOURTH
(4th) OF THE MONTH. LATE CHARGES WILL BE $10.00 PLUS $2.00 FOR EACH
ADDITIONAL DAY (AFTER FOURTH (4th) OF THE MONTH) THAT THE RENT IS LATE. IN
ADDITION, IF ANY CHECKS ARE RETURNED BY THE BANK FOR ANY REASON, THERE WILL
BE A FURTHER CHARGE OF $25 FOR EACH CHECK.
5. Resident(s) agrees that 2 payments of late rent, specifically, rent that is
received on or after the 2nd calendar day for 2 consecutive months, will
cause rental payments to be made on a bi-monthly basis, or, 2 months in
advance. Resident(s) agrees to this change upon 30 days notice from
Management. All other terms and conditions of this Rental Agreement remain
unchanged. All notices pursuant to law or this rental Agreement will
continue to be given on the basis of a month to month tenancy, including
but not limited to a notice of termination of tenancy from the Management
to the Resident(s). This notice will continue to be required as a 30 day
notice by either party.
AGREEMENTS REGARDING OCCUPANCY
6. Resident(s) shall not sublet or assign this apartment without the prior
written consent of Management. Said premises are to be occupied solely as
housing accommodations by (no limit) adults and (no limit) children only,
and for no other purpose whatsoever. In the event of additional occupants
added as Resident(s) under this agreement without written consent of
Management, then the Resident(s) agrees to pay the sum of $25.00 per day
for each additional occupant.
7. Resident(s) shall keep said premises in a good state of preservation.
8. Resident's absence from the premises for fourteen (14) consecutive days,
while all or any other portion of the rent is unpaid, shall be deemed an
abandonment of said premises, and the tenancy shall, at the option of the
<PAGE>
Management, terminate without further notice in such event. Management may
dispose of all Resident(s) property remaining on said premises and re-rent
said premises without any liability to Resident(s) whatsoever as provided
by law.
9. Resident(s) agrees at the commencement of this rental agreement that the
apartment is clean and in good condition and repair. Resident(s) agrees to
leave the apartment in a reasonably clean condition and repair when
vacating, it being understood that Resident(s) shall not be responsible for
reasonable wear and tear (due solely to the passage of time), acts of God
and the elements.
10. Resident(s) agrees not to keep any animal, bird, fowl, pet or piano in the
apartment without written consent of Management, and only after paying to
Management an additional deposit as required and after complying with any
pet policies in effect at that time.
11. Violation by Resident(s) of any applicable ordinance or statute shall be
deemed sufficient cause for termination of tenancy. Resident(s)
representations made in the rental application shall be considered
inducement to Management to execute this agreement. Misrepresentations in
the application shall be considered as cause to terminate this agreement.
Each and every term, covenant and agreement herein contained shall be
deemed a condition hereof. Management would not have entered into this
agreement except in sole reliance that Resident(s) shall fully perform each
and every condition. No oral agreement have been entered into and this
Agreement shall not be modified unless such modification is reduced to
writing. Waiver by Management of any singular breach of any singular term
or singular condition of this Agreement shall not constitute a waiver of
subsequent breaches. Time shall be of the essence of this Agreement. The
invalidity or partial invalidity of any provision of this Agreement shall
not render the remainder of the Agreement invalid or unenforceable.
12. All prorations or rent shall be made based on the number of days in the
particular month to be prorated for partial occupancy, except in the case
of an unlawful detainer where rent shall be prorated on the basis of a 30
day month.
13. Resident(s) agrees not to make any alteration, installations, repairs or
redecorations of any kind whether permitted by law or otherwise to the
premises without written permission by Management. Any items attached to
the walls or woodwork, including shelving, brackets, hooks, chainlocks, but
excluding pictures and art objects, are to remain as the property of the
building.
14. Resident(s) acknowledges that the leased premises and the building of which
the leased premises is a part is not a "security" building. Management
makes no representations nor warranties that the leased premises of the
building of which the leased premises are a part is secure from theft or
any other criminal activity perpetrated by any Resident(s) or others.
Security officers to the extent that they may be on the premises or other
security facilities provided by the Management are for the Resident(s)
convenience only, and Management makes no warranty or representations as to
the effectiveness of any such security officers or facilities as a
deterrent against any criminal activity, damage, or injury to Resident(s)
or any invitee of the Resident(s) or the personal property of the
Resident(s) or any invitee of the Resident(s).
15. Management shall not be liable to Resident(s) or to any other person who
suffers damage, nor shall Management be deemed in default hereunder for any
interruption or reduction in utilities or services caused by other than
Management and due solely to its negligence. Resident(s) shall not be
entitled to any statement of rent by reason of any such interruptions of
utilities or service and/or any reduction or utility service.
16. Resident(s) agrees to comply with any energy conservation programs
implemented by Management.
17. Absent specific written instructions to the contrary, Resident(s) hereby
grants to Management authorization to enter the leased premises subject to
the following conditions
a. By having requested maintenance service within the unit.
b. By receipt of a 24 Hours Notice from Management requiring entry to the
unit.
2
<PAGE>
c. Emergency situations where a notice is clearly impractical.
d. Verify continuing occupancy if rent is unpaid and it is believed tat
the Resident(s) has vacated the premises.
e. To show the premises for the purpose of re-leasing after a Notice to
Vacate has been given by the Resident(s) to Management.
TERMINATION OF TENANCY
18. RESIDENT(S) AGREES TO DELIVER TO MANAGEMENT WRITTEN NOTICE OF INTENTION TO
VACATE AT LEAST SIXTY (60) DAYS PRIOR TO THE TERMINATION OF HIS/HER
TENANCY.
19. Management will inspect the premises, setting the requirements for
janitorial, cleaning, carpet steam cleaning, drapery dry cleaning, and
interior repainting, upon termination of tenancy to determine whether there
are any charges to the Resident(s) with regard to the deficiencies in the
condition of the apartment. Resident(s) may be present during this
inspection. In the event there is any charge to the Resident(s), security
deposit will be used to offset Management's charges and the balance will be
refunded to the Resident(s) or if said security deposits are insufficient
to cover the charges, Resident(s) shall promptly pay any deficiency.
Management's obligations with respect to the cleaning and security deposits
are those of a debtor and not a trustee: said deposits shall not bear
interest and can be commingled with Management's general funds.
20. Thirty (30) days prior to the expiration of this Agreement, or in the event
Resident(s) terminates his tenancy as herein provided, Management shall
have the right to immediately show said premises to prospective
Resident(s) at times convenient to the Resident(s).
21. Resident(s) agrees that a hold over tenancy past the ending date of a
proper notice to terminate by either party shall be a hold over tenancy
commencing with the first (1st) day after the expiration of the notice
period, and that the rental rate shall be at a rate of TREBLE the then
current rate until the apartment is vacated.
22. Resident(s) agrees to pay costs for cleaning and refurbishing the apartment
and returning said apartment to the condition in which it was delivered to
Resident(s), plus a factor of 20% to offset overhead cost of Management,
the actual amount of which it is impractical to ascertain. This charge is
intended to offset costs incurred by Management contracting and supervising
the refurbishing work, for which the Resident(s) is responsible.
23. Resident(s) understands and agrees that a charge of $7.50 will be assessed
against each apartment for the purpose of re-keying locks.
24. Any refund of deposits will be made jointly in the made of the Resident(s)
of record at the time of termination of tenancy and that any sharing or
division of the settlement __________ these deposits among the Resident(s)
shall be the responsibility of the Resident(s) not the Management.
INSURANCE-LIABILITY
25. Resident(s) understands and agrees that any insurance in effect for the
premises does not cover property, possessions or personal liability of
Resident(s) or their invitees. Resident(s) desiring insurance protection
against fire, theft, or other catastrophies should consult their personal
insurance agents.
26. It is agreed that Management at its sole option may terminate this Rental
Agreement immediately where and when a destruction of the premises has
occurred and the ______ or restoration of said premises cannot be
reasonably completed within 7 days after the t is commenced, or where the
loss is not covered by the Management's then in effect _______ and extended
insurance policy.
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<PAGE>
27. Resident(s) releases Management from any liability for loss or damage to
Resident(s) property while stored on the said premises. No property shall
be stored outside the apartment unit without the prior written consent of
Management. Any property so stored shall be removed from the premises
immediately upon termination of tenancy. In the event that such property is
not so removed, Management may dispose of same without any liability of
Resident(s) whatsoever as allowed by law.
28. Resident(s) shall not cause, suffer or permit any act to be committed which
will increase the existing sale of insurance upon the building in which the
leased premises are located or violate any provision of or cause the
cancellation of any insurance policy covering said building and shall not
keep any articles on the leased premises which may be prohibited to be
kept by the standard lease form. Local government codes or any provision of
the insurance policy then in effect.
The undersigned agrees to indemnify and hold harmless Management from and
against any and all claims arising out of Resident(s) use of the premises
or any part thereof by its guests, invitees, or visitors or any active
negligence of Resident(s), its agents, servants or invitee or any guest
Resident(s) and in each case from and against any and all damages losses,
liabilities, lawsuits, judgements and costs or expenses (including without
limitation reasonable attorney's fees) arising in connection with any such
claim or claims as described herein.
DEFAULT AND REMEDIES
29. In the event of default by Resident(s), Resident(s) agrees to pay all
costs of collection or enforcement of any form of this agreement
whether or not suit or recovery is filed, including but not limited to
reasonable attorney's fees and all charges for services for but not
limited to any notices, court costs, filing fees, attorney's fees,
interest, discounts for assignment to collection agencies.
30. In the event that it is necessary for either party to retain an attorney
or to bring suit to enforce this Agreement, the prevailing party shall
be entitled to all attorney's fees and court costs reasonable required
to enforce the Agreement, whether or not suit is filed. These costs
include, but are not limited to, attorneys fees, court costs,
miscellaneous legal charges, copying charges, courier fees, etc.
Interest shall accrue at a rate of 10% per annum on any unpaid amount
due, until said amount is fully paid.
NOTICES
31. Management employs from time to time management agents who are
authorized to act for and on behalf of the Management for the purposes
of services of process and for the purposes of receiving and receipting
legal notices and demands Resident(s) agrees to recognize and deal
through these agents only.
32. The name of the person authorized to manage the premises and further
authorized to act for and on behalf of the Management for the purpose
of service of process and receiving and receipting notices and demands
is
Jack May
2240 Ocean Street east
Santa Cruz, CA 95060
408-429-5255 (Home telephone and fax)
or the Resident(s) Manager at any time whose
address is the on-site Rental Office.
33. It is agreed that any notices which may be given from time to time by
Management to Resident(s) or that are required to be given under the terms
of this Agreement or under the terms of law, may be served to the
Resident(s) at the address of the rented premises, or by mailing first
class mail, postage prepaid to the Resident(s) at the address of the rental
premises.
MISCELLANEOUS
34. Resident(s) hereby acknowledges that any flat roofs, or portions of roof
area, adjacent to the rented premises are not designed to and should not be
used for walking upon nor to have any objects of any kind placed upon them
at any time, and that Resident(s) understands that any damage resulting
from the
4
<PAGE>
violation of this requirement including but not limited to water leaks
through, or damage to the roof, will be the sole responsibility of the
Resident(s). Damages shall be repaired, and Resident(s), in accordance with
the Rental Agreement, will be held responsible for, and will promptly pay
for the costs of the repairs.
35. If a fire protection device such as a smoke alarm of smoke detector is
installed within the unit, upon taking occupancy the Resident(s) assumes
responsibility for the maintenance of said device. This maintenance shall
include smoke detectors and fire extinguishers. Resident(s) assumes
liability for testing of devices or periodically inspecting pressure
gauges, if any, and promptly reporting any deficiencies to the Management.
Upon notification to the Management by the Resident(s), Management will
make the necessary repairs in a reasonable amount of time.
36. All Resident(s)s should be aware that storage of firewood, or other storage
item on patios, decks, and entry ways may cause damage to the building, and
any such damage is the responsibility of the Resident(s). Resident(s)
agrees to take precautions to prevent, remedy default if noticed, and pay
Management the cost of repairs.
37. Resident(s) acknowledges receipt of
_____________________ keys for____________________
_____________________ fire extinguisher(s)
_____________________ apartment door keys
_____________________ mail box keys
_____________________ smoke alarms
_____________________ TV cable
_____________________ ____________________________
_____________________ ____________________________
38. The undersigned acknowledges and understands that a large artificial
landscape waterway and lake is, or may be, constructed and maintained
throughout this project. The undersigned recognizes the presence of this
hazard for children and unsupervised minors, invitees, etc., and the
necessity for proper and adequate supervision by the Resident(s) of all
such persons in the area of this lake or waterway.
39. Resident(s) agrees to use designated parking space exclusively for the
parking of motor vehicles, including automobiles, motorcycles and pickup
trucks, but excluding trailers of any kind, boats, campers, buses or trucks
larger than a one-ton pickup or vehicles with commercial markings.
40. Each of the parties hereto acknowledges receipt of an executed duplicate
copy of this rental Agreement. All Resident(s) shall sign this agreement
and shall be jointly and severally liable thereunder, and any subtenant or
guest, whether or not considered to be by Management, by taking occupancy,
shall be deemed to have knowledge of and to have consented to the terms of
this Agreement.
/s/ JPM 9/8/97
----------------------------- -----------------------------------
Resident Date Management Date
/s/ Candice Carpenter 9/10/97
----------------------------- -----------------------------------
Resident Date Resident Date
-----------------------------
Resident Date
5
<PAGE>
September 11, 1997
Candice Carpenter
CEO
iVillage
170 Fifth Avenue, 5th Floor
New York, NY 10010
Jack May
236 N. Santa Cruz, Suite 228
Los Gatos, CA 95030
Re. 928 Waverly Lease
Attached is a copy of the signed lease. Also enclosed is the check for
$3885.00, which represents our security deposit and September's rent.
In addition, the following agreements are a part of the lease:
1. The bookshelf in the living room is to be moved to the office space.
2. The sliding doors below the kitchen sink are to be painted to match the
rest of the kitchen and touch-ups will be made to cabinet paint in the
kitchen where applicable.
3. The kitchen counter top will be replaced with a white formica top (2
counter tops, next to refrigerator and above sink.)
4. The paint is to be removed (scraped) from all windows where applicable.
5. All work is to be completed on or before September 20, 1997
We understand and agree to the facts outlined above in this second Addendum to
the Rental Agreement referenced above.
/s/ Candice Carpenter
- -------------------------------
- -------------------------------
<PAGE>
FAX COVER SHEET
DATE: September 11, 1997
TO: Candice Carpenter Via Fax - 212-352-1568
COMPANY: iVillage
FROM: Jack May, Los Gatos
CC: Jimmy Amato Via Fax - 415-325-6086
RE: 928 Waverley Lease Addendum
PAGES (including cover). 4
Attached is a copy of the revised executed lease of the above referenced
property by iVillage for a period of two years. The rental payment for the first
month will be the Security Deposit along with September's rent, or $3885. Rent
is due on the first for future months. Usually I ask for last month's rent also,
however given out discussions I am waving this requirement.
As part of your year lease I am having the following work completed.
1. Carpeting of the living room, dining room, two bedrooms with Karastan
Belladona carpet, cuddle color or an equivalent carpet.
2. The entry way will be recarpeted with a more durable yet good quality
carpet of a similar color.
3. A light formica top will be placed on the kitchen sink counter.
4. The dark woodwork and rear door will be painted the color of Empress
Ivory semi-gloss or an equivalent color.
5. The front porch floor will be repainted with a deck paint that is a
lightly darker color so as not to show any dirt.
6. All excess furniture will be removed.
7. Replaced the light fixture in the dining room with Copper Verde
fixture from Restoration. You are to provide that fixture along with
two others. I will reimburse you for the three. If you desire to
purchase additional fixtures, I will
<PAGE>
pay to have them installed if they are on the site at the time that
the existing fixture is removed (next Monday, 9/15/97).
8. On October 1, 1998 I-Village will pay the actual cost of repairs and
improvements needed that is over the $4,000 I am willing to
contribute.
9. All debris will be removed from around the house.
This work will be completed by 9/20 at the latest.
In addition the following agreements are a part of this lease:
1. I-Village may sublet with my approval of the tenant which will not be
unreasonably withheld.
2. I will inform Candice Carpenter about any possible interest in selling the
property before it is formally listed or advertised so that she may discuss
possibly purchasing the property.
3. At a future date determined by iVillage I will entertain making
improvements to the studio/office area in cooperation with iVillage. My
responsibility may be that of long-term generic improvements to the space
to the extent that I am able to economically. IVillage will be responsible
to those improvements that are tailored to the needs of iVillage.
This is my best attempt at summarizing the numerous discussions I have had with
Candice and Jimmy. Please let me know if there are any corrections or addition.
Please acknowledge below your agreement with these additional points.
Beat regards.
We understand and agree to the facts outlined above in this Addendum to the
Rental Agreement referenced above.
/s/ Candice Carpenter
----------------------------
----------------------------
8
<PAGE>
iVILLAGE INC.
170 Fifth Avenue
4th Floor
New York, Now York 10010
February 27, 1997
To Each of the Parties Named
on Schedule I Hereto (each,
a "Purchaser", and,
collectively, the "Purchasers")
Note and Warrant Purchase Agreement
-----------------------------------
Dear Sirs:
This letter will confirm the terms and conditions upon which
iVillage Inc., a Delaware corporation (the "Company"), agrees to sell to each
Purchaser (i) one or more convertible promissory notes of the Company in
substantially the form of Exhibit A hereto (each, a "Note" and, collectively,
the "Notes") (representing initially $1,600,000 aggregate principal amount of
Notes and subject to increase in principal amount as provided in Section 1
hereof) and (ii) stock subscription warrants of the Company, in substantially
the form of Exhibit B hereto (each, a "Warrant" and, collectively, the
"Warrants") to purchase shares of capital stock (the "Underlying Securities")
of the Company. Accordingly, the Company hereby agrees with the Purchasers as
follows:
SECTION 1. Purchase and Sale of the Securities.
----------------------------------------------
(a) Upon the terms and subject to the conditions of
this Agreement, on February 26, 1997, the Company is issuing and selling to
each Purchaser, and each such Purchaser is purchasing and acquiring from the
Company, a Note in the principal amount set forth opposite the name of such
Purchaser on Schedule I hereto and a Warrant to purchase up to that number of
shares of capital stock as is determined pursuant thereto for the aggregate
purchase price set forth opposite the name of such Purchaser on Schedule I
hereto. The purchase and sale of the Note and the Warrant with respect to each
Purchaser is being held at the offices of the Company or such other place as
the Company and each such Purchaser have agreed simultaneously with the
execution and delivery of this Agreement. The purchase price for the
applicable Note and Warrant to be purchased by each Purchaser are being paid
by wire transfer of funds to the account of the Company, and the Company is
issuing and delivering the Note and Warrant to each such Purchaser,
<PAGE>
registered in the name of the Purchaser, against receipt of the purchase price
therefore.
(b) Anything contained herein to the contrary
notwithstanding, America Online, Inc. ("AOL") may, upon the written request of
the Company and at AOL's sole option and discretion, elect to (but shall be
under no obligation to) fund up to an additional $450,000 on the terms and
conditions set forth herein (the "AOL Additional Funding"); provided, however,
that in the event that the Company receives one or more commitments from
potential investors (other than the current holders of Series B Preferred Stock,
$.0005 par value, of the Company ("Series B Preferred Stock")) for the purchase
of an aggregate of at least $10,000,000 of Series C Preferred Stock (the "Series
C Preferred Stock") of the Company as determined in the reasonable good faith
judgment of Bear Stearns & Co., Inc., the placement agent for the proposed
issuance and sale of the Series C Preferred Stock, then within five (5) days of
a written request of the Company, AOL shall be obligated to and shall fund an
additional $450,000 on the terms and conditions set forth herein (the "AOL
Mandatory Funding"); provided further, however, that if AOL shall make an AOL
Additional Funding or an AOL Mandatory Funding, then The Tribune Company
("Tribune") shall concurrently therewith fund an amount equal to 50% of such
AOL Additional Funding or Mandatory Funding, as the case may be, on the terms
and conditions set forth herein (the "Tribune Additional Funding"; and the AOL
Additional Funding, the AOL Mandatory Funding and the Tribune Additional
Funding, collectively, the "Additional Funding")). Any such Additional Funding
shall be evidenced by an amendment to the Note being issued and delivered to AOL
or Tribune (as the case may be) on the date hereof to reflect an increase in the
principal amount thereof equal to the amount of the Additional Funding, and the
Additional Funding shall not require the consent or approval of any other
Purchaser hereunder.
SECTION 2. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Purchaser as follows:
(a) Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease
and operate the assets used in its business, to carry on its business
as presently conducted and as proposed to be conducted, to enter into
this Agreement and the Instruments (as hereinafter defined), to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. "Instruments" means the Notes and the
Warrants.
(b) Qualification; Good Standing. The Company is
qualified to do business as a foreign corporation in the State
2
<PAGE>
of New York and is not qualified to do business as a foreign corporation in
any other jurisdiction, no other jurisdiction has demanded or requested in
writing that the Company so qualify, the Company has no knowledge of the need
to so qualify and the failure to be so qualified does not have a material
adverse effect on the Company.
(c) Corporate Authorization; Enforceability. The
Company has taken all corporate action (including all action required of its
Board of Directors and stockholders) necessary to authorize its execution and
delivery of this Agreement and the Instruments, its performance of its
obligations hereunder and thereunder, and its consummation of the transactions
contemplated hereby and thereby. Each of this Agreement and the Instruments
have been executed and delivered by an officer of the Company in accordance
with such authorization. Each of this Agreement and the Instruments
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium, and similar laws affecting creditors' rights generally
and to general principles of equity.
(d) No Conflict. The execution and delivery by the
Company of this Agreement and the Instruments, its consummation of the
transactions contemplated hereby and thereby, and its compliance with the
provisions hereof and thereof, will not (a) violate or conflict with its
Certificate of Incorporation or By-laws, (b) violate, conflict with, or give
rise to any right of termination, cancellation, recision or acceleration under
any agreement, lease, security, license, permit, or instrument to which the
Company is a party, or to which it or any of its assets is subject, (c) result
in the imposition of any Encumbrance on any asset of the Company, (d) violate
or conflict with any Laws, or (e) require any consent, approval or other
action of, notice to, or filing with any entity or person (governmental or
private), except for those that have been obtained or made. "Encumbrance"
means any security interest, mortgage, lien, pledge, charge, easement,
reservation, restriction, or similar right of any third party; and "Laws"
means all laws, rules, regulations, ordinances, orders, judgments,
injunctions, decrees and other legislative, administrative or judicial
restrictions.
(e) No Consent or Approval Required. No authorization,
consent, approval or other order of, or declaration to or filing with, any
governmental agency or body or other person or entity is required for the
valid authorization, execution and delivery by the Company of this Agreement
and the Instruments, or for the consummation of the transactions contemplated
hereby or thereby or, if required, the same has been obtained or effected.
3
<PAGE>
(f) No Material Adverse Change. Since May 6, 1996 (the
date of the Closing (as defined in, and pursuant to the Series B Convertible
Preferred Stock Purchase Agreement dated as of May 6, 1996 (the "Stock
Purchase Agreement"), among the Company and the Investors (as such term is
defined therein)), there has been no material adverse change in the assets,
liabilities, operations, result of operations, business, condition (financial
or otherwise) or affairs of the Company, except that the Company has continued
to utilize the proceeds from the sale of Series B Preferred Stock issued and
sold under the Stock Purchase Agreement and to incur losses.
(g) Use of Proceeds. The net proceeds received by the
Company from the sale of the Notes and Warrants shall be used by the Company
for working capital and general corporate purposes.
SECTION 3. Representations and Warranties of the Purchaser.
------------------------------------------------
Each Purchaser, as to itself, himself or herself, as the case
may be, represents and warrants to the Company as follows:
(a) Organization. Such Purchaser is a corporation or
partnership, as the case may be, duly organized, validly existing and in good
standing under the laws of its jurisdiction and has all requisite power and
authority to enter into the Instruments to which it is a party, to perform its
obligations thereunder, and to consummate the transactions contemplated
thereby.
(b) Authorization. Such Purchaser has taken all
corporate or partnership action necessary to authorize its execution and
delivery of this Agreement and the Instruments to which it is a party, its
performance of its obligations hereunder and thereunder, and its consummation
of the transactions contemplated hereby and thereby. Each of this Agreement
and the Instruments to which the Purchaser is a party has been executed and
delivered by an officer of the Purchaser in accordance with such
authorization. Each Document to which the Purchaser is a party constitutes a
valid and binding obligation of the Purchaser, enforceable in accordance with
its terms, subject to bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting creditors, rights generally and to general principles
of equity.
(c) Investment Representations and Warranties.
-----------------------------------------
(i) Such Purchaser is acquiring the Instruments,
and it will acquire any underlying securities issuable upon exercise or
exchange thereof, for its own account, for investment and not with a view to
the
4
<PAGE>
distribution thereof, nor with any present intention of distributing the same.
(ii) Such Purchaser understands that the Instruments,
and any underlying securities issuable upon exercise or exchange thereof, will
not be registered under the Securities Act or registered or qualified under
any state securities or "blue-sky" laws, by reason of their issuance in a
transaction exempt from the registration and/or qualification requirements
thereof, and that they must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or registered or
qualified under any applicable state securities or "blue-sky" laws or is
exempt from registration and/or, qualification.
(iii) Such Purchaser understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions and that, if applicable, Rule 144 may only afford the basis
for sales under certain circumstances only in limited amounts.
(iv) Without limitation of the representations and
warranties of the Company contained herein, such Purchaser acknowledges that
such Purchaser has met with representatives of the Company and has had the
opportunity to ask questions and receive answers concerning the terms and
conditions of the offering of the Securities, and to obtain any additional
information which the Company possessed or could acquire without unreasonable
effort or expense, and has generally such knowledge and experience in business
and financial matters and with respect to investments in securities of
privately held companies as to enable such Purchaser to understand and
evaluate the risks of such investment and form an investment decision with
respect thereto.
(v) Such Purchaser has no need for liquidity in its
investment in the Company, and is able to bear the economic risk of such
investment for an indefinite period and to afford a complete loss thereof.
(vi) Such Purchaser is an "accredited purchaser" as such
term is defined in Rule 501 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act.
SECTION 4. Amendment to Registration Rights Agreement.
Reference is hereby made to the Amended and Restated Registration Rights
Agreement, dated as of May 6, 1996 (the "Registration Rights Agreement"),
among the Company and the
5
<PAGE>
Investors (as defined therein). Simultaneously herewith, the Company and each
Purchaser are executing and delivering an Amendment No. 1 to the
Registration Rights Agreement, substantially in the form attached hereto as
Exhibit C, conferring on each Purchaser registration rights as provided
therein with respect to the Underlying Securities issuable upon exercise or
exchange of the Warrants or conversion of the Notes.
SECTION 5. Amendment to Amended and Restated Stockholders'
Agreement. Reference is hereby made to the Amended and Restated Stockholders'
Agreement, dated as of May 6, 1996 (the "Stockholders' Agreement"), among the
Company and the investors (as defined therein). Simultaneously herewith, the
Company and each Purchaser are executing and delivering an Amendment No. 2 to
the Stockholders' Agreement, substantially in the form attached hereto as
Exhibit D, conferring on each Purchaser the rights as provided therein with
respect to the Underlying Securities issuable upon exercise or exchange of the
Warrants or conversion of the Notes and providing for the right to designate
additional directorships under the circumstances provided therein.
SECTION 6. Certain Covenants.
-----------------
(a) Sufficient Shares. The Company shall take or cause
to be taken all action (including, without limitation, appropriate amendments
to the Certificate of Incorporation of the Company or otherwise) necessary to
assure that there exists a sufficient number of authorized shares of capital
stock of the Company to permit the full and complete conversion, exercise or
exchange of the Notes and Warrants.
(b) Underlying Securities. The securities of the Company
which shall be issuable upon conversion of the Notes and/or exercise or
exchange of the Warrants (collectively, the "Underlying Securities"), upon
their issuance in compliance with the respective terms of the Notes and the
Warrants, shall be duly authorized, validly issued and outstanding, fully paid
and non-assessable, free of any liens or encumbrances, except as provided in
the applicable agreements governing all purchasers of such Underlying
Securities, provided that such securities may be subject to restrictions on
transfer under state and/or federal securities laws as set forth therein. The
Company shall ensure that the original issuance by the Company of the
Underlying Securities will not be subject to any pre-emptive rights, rights of
first refusal or similar rights.
(c) Waiver of Right of First Refusal. Each Purchaser
hereby irrevocably waives its right of first refusal and any rights to notice
thereof provided in Section 3.4 of the Stockholders' Agreement to which it
was, is or may be entitled with respect to the offer, issuance and sale of the
Notes and Warrants hereunder or the Underlying Securities issuable upon
6
<PAGE>
conversion, exercise or exchange thereof or the issuance of any stock
subscription warrants issued by Company to the Purchasers pursuant to the
Notes as the result of the occurrence of a Trigger Event (as such term is
defined in the Notes) and any shares of capital stock of the Company issued or
issuable upon conversion, exercise or exchange thereof or issued or issuable
upon conversion of any such capital stock.
SECTION 7. Survival of Representations, Warranties and
Acreements, Etc. All representations and warranties hereunder shall survive
the execution and delivery of the Agreement. All covenants and agreements
contained herein shall survive indefinitely until, by their respective terms,
they are no longer operative.
SECTION 8. Exchanges; Lost, Stolen or Mutilated
Certificates. Upon surrender by any Purchaser to the Company of any
certificate representing Underlying Securities, the Company at its expense
will issue in exchange therefor, and deliver to such Purchaser, a new
certificate or certificates representing such shares, in such denominations as
may be requested by such Purchaser. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
any certificate representing any Underlying Securities purchased by a
Purchaser and in case of any such loss, theft or destruction, upon delivery of
any indemnity agreement satisfactory to the Company, or in case of any such
mutilation, upon surrender and cancellation of such certificate, the Company
at its expense will issue and deliver to such Purchaser a new certificate for
such Underlying Securities of like tenor, in lieu of such lost, stolen or
mutilated certificate.
SECTION 9. Fees and Expenses. Each party hereto shall bear
its own costs and expenses incurred on its behalf in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
Instruments and the preparation for and consummation of the transactions
contemplated hereby and thereby.
SECTION 10. Assignment; Parties in Interest. This
Agreement and the rights and obligations of the parties hereunder shall not be
assignable, except that a Purchaser may assign its rights hereunder (a) if
such Purchaser is a partnership, to any partner thereof (in the case of a pro
rata distribution by a Purchaser that is a partnership to its partners) (b) if
such Purchaser is a corporation, to any majority-owned subsidiary of such
Purchaser (provided that such rights may be exercised by such subsidiary only
for so long as such subsidiary continues to be majority-owned by such
Purchaser) or (c) if such Purchaser is a natural person, to the spouse or
descendants of such person or any trust for the benefit of any thereof;
provided, however, that the Company is given written notice at the time of
such assignment stating the name and address of the assignee and
7
<PAGE>
identifying the securities with respect to which the rights and benefits
hereunder are being assigned and such assignee expressly agrees in writing
with the Company and the other Purchasers to be bound by and to comply with
all applicable provisions of this Agreement. Anything contained herein to the
contrary notwithstanding, no Purchaser (or permitted assignee of a Purchaser)
shall, without the consent of the Company, be permitted to assign any rights
and/or benefits hereunder to a person that is then actively engaged in a
business that is directly competitive with the business then primarily and
actively conducted or engaged in by the Company other than, in the case of a
Purchaser that is a corporation, a majority-owned subsidiary thereof. Any
assignment pursuant to this Section 9 shall not relieve, release or otherwise
discharge the Purchaser effecting such assignment from its obligations under
this Agreement. This Agreement shall bind and inure to the benefit of the
Company, each Purchaser, and its or his respective successors, permitted
assigns, heirs and legal representatives.
SECTION 11. Entire Agreement. This Agreement contains the
entire understanding of the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings among the parties with
respect to such subject matter.
SECTION 12. Notices. All notices, claims, certificates,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company:
iVillage Inc.
170 Fifth Avenue
New York, New York 10010
Fax: (212) 604-9133
Telephone: (212) 604-0963
Attention: Candice Carpenter
Chairman of the Board and
Chief Executive Officer;
if to a Purchaser, to such address as is specified on
Schedule I hereto;
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case
of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day
8
<PAGE>
after the date when sent, (c) in the case of telecopy transmission, when
received, and (d) in the case of mailing, on the third business day following
that on which the piece of mail containing such communication is posted.
SECTION 13. Amendments. The terms and provisions of this
Agreement may only be modified or amended, or the performance thereof waived,
pursuant to an instrument signed by (a) the Company and (b) the holders of at
least 80% of the principal amount of all the Notes then outstanding (the
"Requisite Holders").
SECTION 14. Counterparts. This Agreement may be executed in
any number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 15. Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 16. Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of New York,
without giving effect to any law or rule that would cause the laws of any
jurisdiction other than the State of New York to be applied.
9
<PAGE>
Please indicate your agreement with the foregoing, and acknowledge
your receipt Of the Note and Warrant issued to you hereunder, by executing and
returning the enclosed counterpart of this letter agreement to the Company.
Very truly yours,
iVILLAGE INC.
By: /s/ Candice Carpenter
-----------------------------
Candice Carpeneter
Chairman of the Board
and Chief Executive Officer
ACCEPTED AND AGREED TO BY:
AMERICA ONLINE, INC.
By: /s/ Illegible
-------------------------------
Name:
Title:
TRIBUNE COMPANY
By: /s/ David D. Hiller
-------------------------------
Name: David D. Hiller
Title: Sr. Vice President-Development
KLEINER PERKINS CAUFIELD & BYERS VII
By: /s/ Douglas J. Mackenzie
-------------------------------
Name: Douglas J. Mackenzie
Title: General Partner
KPCB INFORMATION SCIENCES ZAIBATSU FUND II
By: /s/ Douglas J. Mackenzie
-------------------------------
Name: Douglas J. Mackenzie
Title: General Partner
10
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE E
TO VOTE AND
WARRANT PURCHASE
AGREEMENT
---------
Name and Addresses Principal Purchase Price for
of Purchaser Amount Of Note Notes and Warrants
- ------------ -------------- ------------------
<S> <C> <C>
America Online, Inc. $ 900,000 $ 900,000
22000 AOL Way
Dulles, Virginia 20166
Attention: Miles R.
Gilburne
Tribune Company $ 450,000 $ 450,000
475 North Michigan Avenue,
Ste . 600, Chicago,
Illinois 60611
Attention: Donn Davis
Kleiner Perkins Caufield & $ 243,750 $ 243,750
Byers VII
2750 Sand Hill Road
Menlo Park, California
94025
Attention: Douglas J.
Mackenzie
KPCB Information Sciences $ 6,250 $ 6,250
Zaibatsu Fund II
2750 Sand Hill Road
Menlo Park, California
94025
Attention: Douglas J.
Mackenzie
TOTAL S 1,600,000 $ 1,600,000
</TABLE>
11
<PAGE>
EXHIBIT A TO THE
----------------
NOTE AND WARRANT
----------------
PURCHASE AGREEMENT
------------------
FORM OF SECURED CONVERTIBLE PROMISSORY NOTE
-------------------------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. ADDITIONALLY, THE
TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION
13 OF THE AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, DATED AS OF MAY
6, 1996, AS AMENDED, AMONG iVILLAGE INC. AND THE OTHER SIGNATORIES THERETO
AND THE AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF MAY 6, 1996,
AS AMENDED, AMONG iVILLAGE AND THE OTHER SIGNATORIES THERETO (THE
"STOCKHOLDERS' AGREEMENT"), AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID
OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. UPON THE FULFILLMENT
OF CERTAIN OF SUCH CONDITIONS, iVILLAGE INC., HAS AGREED TO DELIVER TO THE
HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS LEGEND, FOR THE SECURITIES
REPRESENTED HEREBY REGISTERED IN THE NAME OF SUCH HOLDER. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF iVILLAGE INC.
iVILLAGE INC.
Convertible Secured Promissory Note
$_______
(Maximum Amount) February , 1997
iVILLAGE INC., a Delaware corporation (the "Company"), for value
received, hereby promises to pay [insert name of holder], (the "Holder"), or
permitted registered assigns, $ and to pay interest from the date hereof at
the rate specified below. The principal amount outstanding hereon shall be
convertible into such shares of capital stock of the Company as shall be
determined in accordance with Section 2 hereof (the securities into which this
Note is convertible being referred to as the "Underlying Securities") pursuant
to Section 2 below. This Note is one of a series of convertible notes (the
"Notes") issued pursuant to the Note and Purchase Agreement dated as of
February , 1997 (the "Purchase Agreement") among the Company and the other
signatories thereto and is subject to the provisions thereof. Terms used but
not defined herein shall have the meanings set forth herein the Purchase
Agreement.
<PAGE>
1. Principal and Interest
----------------------
Unless converted pursuant to Section 2, the principal amount of
this Note shall be payable upon demand at any time on or after May 1, 1997
(the "Demand Date"); provided, however, that if the Company has not then
consummated a Qualified Financing but in the good faith reasonable judgment of
the Purchasers the consummation of the Qualified Financing is imminent, the
Demand Date shall be extended by thirty days; provided further, however, that
if the Company prior thereto is unable to fulfill its payroll obligations (a
"Payroll Event"; and the date thereof being herein referred to as the "Payroll
Date"), the Demand Date shall be the Payroll Date. The unpaid principal amount
of this Note shall bear interest at the rate of twelve (12%) percent per
annum. Interest shall be payable upon demand at any time on or after the
Demand Date. The Holder hereof may apply any portion of unpaid principal and
interest to the payment of the exercise price under the Warrant.
2. Conversion
----------
(a) Conversion Upon Closing of a Qualified Financing. If the
Company shall consummate an equity financing (or series of related financings)
involving the issuance and sale of Series C Convertible Preferred Stock (the
rights, preferences and privileges of which are to be designated by the Board
of Directors of the Company) (the "Series C Preferred Stock") prior to the
Demand Date, yielding aggregate proceeds of at least $12,000,000 (the
"Qualified Financing"), then the principal amount of this Note shall
automatically and without any action on the part of the Holder be converted
into that number of fully paid and nonassessable shares of Series C Preferred
Stock as are purchasable with the principal amount of this Note (the principal
of this Note being treated as if it were cash consideration), on the identical
terms and conditions and at the same price as the Series C Preferred Stock is
issued and sold in the Qualified Financing
(b) Conversion on or after Demand Date.
----------------------------------
(i) If the Company does not consummate a Qualified Financing
before the Demand Date, then, if the Note shall not theretofore have
been converted pursuant to Section 2(b)(ii) hereof, the principal
amount of this Note shall, at the option of the Holder, exercisable
at any time, be convertible into that number of fully-paid and
nonassessable shares of preferred stock (which may be Series C
Preferred Stock issued in a Qualified Financing occurring after the
Demand Date) issued in connection with the first private placement of
equity for cash completed by the Company (the "Non-Qualified
Preferred Stock") on or after the date hereof, equal to (A) the
amount of the then outstanding principal hereof divided by (B) the
price per share at which
-2-
<PAGE>
the Company shall have issued and sold such shares of Non-Qualified
Preferred Stock
(ii) Anything contained in Sections 2(a) or (b)(i) to the
contrary notwithstanding, if the Company does not consummate a
Qualified Financing before the Demand Date, the principal of this
Note shall, at the option of the Holder, exercisable at any time, be
convertible, in full and not in part, into that number of fully-paid
and nonassessable shares of Senior Series B-2 Preferred Stock, $.0005
par value, of the Company, equal to (A) the amount of the then
outstanding principal hereof divided by (B) $2.50.
(c) Conversion on Qualified Public Offering. Simultaneously with
the closing of the Qualified Public Offering, the principal of this Note shall
automatically and without any action on the part of the Holder be converted
into that number of fully-paid and nonassessable shares of Common Stock equal
to (A) the amount of the then outstanding principal hereof by (B) $2.50.
(d) Mechanics of Conversion. Before any holder of this Note shall
be entitled to receive evidence of the Underlying Securities into which this
Note has been converted, such holder shall surrender this Note duly endorsed,
at the office of the Company, and shall give written notice by mail, postage
prepaid, to the Company at its principal corporate office stating therein the
name or names in which the certificate or certificates for the Underlying
Securities are to be issued. The Company shall, promptly thereafter, issue and
deliver to such holder at the address specified by such holder, or to the
nominee or nominees of such holder, a certificate or certificates for the
Underlying Securities to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the
close of business on the date of such conversion as provided in paragraph (a),
(b) or (c) above, as the case may be, and the person or persons entitled to
receive the Underlying Securities issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Underlying
Securities as of such date.
(e) No Fractional Shares and Certificate as to Adjustment. No
fractional shares shall be issued upon conversion of this Note and the number
of the Underlying Shares to be issued shall be rounded up to the nearest whole
share.
(f) Interest. Upon conversion of the principal amount of this
Note as provided in this Section 2, the Company shall simultaneously therewith
pay to the holder of this Note all accrued and unpaid interest on this Note in
cash.
-3-
<PAGE>
3. Trigger Event Warrants
----------------------
If the Company shall not have consummated a Qualified Financing on
or prior to the Demand Date and this Note is outstanding (the "Trigger Event"),
then the Company shall issue to the holder of this Note a stock subscription
warrant of the Company, in substantially the form of Exhibit A hereto (a
"Warrant") to purchase that number of shares of Senior Series B-2 Preferred
Stock of the Company as shall be determined in accordance with Section 1
thereof, with the designation, preferences and rights thereof set forth in a
Certificate of Designation of Rights, Preferences and Privileges of Senior
Series B-2 Preferred Stock (the "Certificate of Designation") in substantially
the form of Exhibit B attached hereto; provided, however, that no such warrant
shall be issued to any Purchaser (as such term is defined in the Purchase
Agreement) that has not committed to the Qualified Financing that amount set
forth opposite such Purchaser's name on Schedule-B attached hereto. In the event
of the occurrence of a Trigger Event, the Company shall forthwith file (i) the
Certificate of Designation with the Secretary of State of the State of Delaware
and (ii) the Certificate of Amendment to the Amended Certificate of
Incorporation of the Corporation in substantially the form attached hereto as
Exhibit C.
4. No Rights as Shareholder
------------------------
Nothing contained in this Note shall be construed as conferring
upon the holder hereof or its transferee, prior to the conversion of this
Note, the right to vote or to receive dividends or to consent or to receive
notice as a shareholder in respect of any meeting of shareholders for the
election of directors of the Company or of any other matter, or any other
rights as a shareholder of the Company.
5. Security Interest
-----------------
Payment and performance of this Note is being secured pursuant
to, and by the collateral described in, the Security Agreement dated the date
hereof among the Company and the Purchasers.
6. Optional Prepayment
-------------------
At any time on or after the Demand Date after giving two days
prior written notice to the Holder, the Company may prepay the outstanding
principal amount of this Note, together with interest thereon, in whole or in
part, provided that (a) any prepayment in part must be for a minimum amount
equal to the lesser of $10,000 or the outstanding principal and interest hereof
and (b) all Notes (including this Note) then outstanding shall simultaneously be
prepaid by the Company on a pro rata
-4-
<PAGE>
basis among all such Notes in accordance with the respective Outstanding
principal amounts thereof.
7. No Impairment
------------
The Company will not, by amendment of its Certificate of
Incorporation or through reorganization, consolidation, merger, dissolution,
sale of assets or another voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Note against impairment.
8. Restrictions on Transfer
------------------------
(a) The Company shall keep at its principal executive office a
register (herein sometimes referred to as the "Note Register"), in which,
subject to such reasonable regulations as it may prescribe, but at its expense
(other than transfer taxes, if any), the Company shall provide for the
registration and transfer of this Note.
(b) Whenever this Note shall be surrendered at the principal
executive office of the Company for transfer, accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company duly
executed by the holder of his attorney duly authorized in writing, the Company
shall execute and deliver in exchange therefor a new Note or Notes, as may be
requested by such holder, in the same aggregate unpaid principal amount and
payable on the same date as the principal amount of the Note or Notes so
surrendered; each such new Note shall be dated as of the date to which
interest has been paid on the unpaid principal amount of the Note or Notes so
surrendered and shall be in such principal amount and registered in such name
or names as such holder may designate in writing. As a condition to any such
transfer, the Company may require representations and opinions of like tenor
and effect to those it may require pursuant to Section 13 of the Registration
Rights Agreement.
(c) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Note
and of indemnity reasonably satisfactory to it, and upon reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of this Note (in case of mutilation), the Company will make and
deliver in lieu of this Note a new Note of like tenor and unpaid principal
amount and dated as of the date to which interest has been paid on the unpaid
principal amount of this Note in lieu of which such new Note is made and
delivered.
-5-
<PAGE>
9. Remedies for Default
--------------------
(a) Event of Default. The occurrence of any of the following
shall constitute an "Event of Default":
(i) if the Company shall fail to pay principal or interest on
this Note when due, after the expiration of any applicable grace period; or
(ii) if the Company shall fail to pay when due any dividend
required to be paid on any share of Preferred Stock or to make any payment
required in respect of liquidation of the Company or redemption of any capital
stock of the Company; or
(iii) if the Company shall fail to perform or observe any term,
covenant or provision of (x) Section 7.1 of the Series B Preferred Stock
Agreement dated as of May 6, 1996 (the "Series B Purchase Agreement"), among
the Company and the other signatories thereto for 5 days after notice thereof
has been given to the Company by the Requisite Holders or (y) Sections 7.3 or
7.4 of the Purchase Agreement for 30 days after notice thereof has been given
to the Company by the Requisite Holders; or
(iv) if the Company shall fail to perform or observe in any
material respect any other term, covenant or agreement contained in the
Purchase Agreement or this Note; or
(v) if the Company shall fail to pay any indebtedness or
obligation of the Company in excess of $50,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand or-otherwise) after the
expiration of any applicable grace period, or to perform or observe any
material term, covenant or condition under any agreement or instrument
relating to any such indebtedness or obligation when required to be performed
or observed; provided however, that it shall not be an Event of Default if the
Company shall fail to pay any such indebtedness or obligation of the Company
if such indebtedness or obligation is being contested in good faith by
appropriate proceedings and adequate provision therefor has been made; or
(vi) if any representation, warranty or statement made by or on
behalf of the Company in the Purchase Agreement or which is contained in any
certificate, document, opinion, financial or other statement furnished at any
time under or in connection with the Purchase Agreement shall prove to have
been incorrect in any material respect on or as of the date made; or
-6-
<PAGE>
(vii) if one or more judgments, decrees or orders for the payment
of money in excess of $50,000 shall be rendered against the Company, any such
judgments, decrees, or orders shall continue unsatisfied and in effect for a
period of thirty (30) consecutive days without being vacated, discharged,
satisfied or stayed or bonded pending appeal; or
(viii) if the Company shall become insolvent, or is adjudicated
insolvent or bankrupt; or
(ix) if the Company admits in writing its inability to pay its
debts; or
(x) if the Company shall come under the authority of a
custodian, receiver or trustee for it or for substantially all of its
property; or
(xi) if the Company makes an assignment for the benefit of
creditors, or suffers proceedings under any law related to bankruptcy,
insolvency, liquidation or the reorganization, readjustment or the release of
debtors to be instituted against it and if contested by it not dismissed or
stayed within sixty (60) days; or
(xii) if proceedings under any law related to bankruptcy,
insolvency, liquidation or the reorganization, readjustment or the release of
debtors are instituted or commenced by the Company; or
(xiii) if any order for relief is entered relating to any of the
foregoing proceedings under subsections (vii) through (xi).
(b) Upon the occurrence of an Event of Default, the Holder,
acting jointly with the Requisite Holders, shall have the option to demand
full and immediate payment of the then outstanding principal amount of this
Note and to protect and enforce its right or remedy as may be available.
(c) Cost of Collection. In the event of any default under this
Note, the Company shall pay any costs of collection incurred by the Holder
(including reasonable attorney's fees and expenses).
10. Waivers
-------
(a) The Company and all endorsers, sureties and, guarantors of
this Note hereby jointly and severally waive presentment, demand for payment,
notice of dishonor, notice of protest, and protest in connection with the
delivery, acceptance, performance, default, endorsement or guaranty of this
Note.
-7-
<PAGE>
(b) No delay by the Holder in exercising any power or right
hereunder shall operate as a waiver of any power or right, nor shall an single
or partial exercise of any power or right preclude other or further exercise
thereof, or the exercise of any other power or right hereunder or otherwise.
No waiver or modification of the terms hereof shall be valid unless set forth
in writing by the Holder.
11. General
-------
(a) Successors and Assigns. This Note and the obligations and
rights of the Company hereunder shall be binding upon and inure to the benefit
of the Company and the Holder and their respective successors and assigns.
This Note is assignable in whole, but not in part.
(b) Changes. Changes in or additions to this Note may be made or
compliance with any term, covenant, agreement, condition or provision set
forth herein may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively) upon written consent of
the Company and the Holder.
(c) Currency. All payments shall be made in such coin or currency
of the United States of America as at the time of payment shall be either
legal tender therein for the payment of public and private debts.
(d) Notices. All notices, request, consents and demands shall be
made in writing and shall be mailed postage prepaid, or delivered by hand, to
the Company or the Holder at their respective addresses as set forth in the
records of the Company or to such other address as may be furnished in writing
to the other party hereto.
(e) Severability. If any term or provision of this Note shall be
held invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
(f) Saturdays, Sundays, Holidays. If any date that may at any
time be specified in this Note as a date for the making of any payment of
principal or interest under this Note shall fall on Saturday, Sunday or on a
day which in Vienna, Virginia, shall be a legal holiday, then the date for the
making of that payment shall be the next subsequent day which is not a
Saturday, Sunday, or legal holiday.
12. Governing Law
-------------
This Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the
-8-
<PAGE>
laws of the State of New York, without regard to choice of law principles.
-9-
<PAGE>
IN WITNESS WHEROF, this Note has been executed and delivered on
the date first above written by the duly authorized representative of the
Company.
iVILLAGE INC.
By: /s/ Steven Elkes
-------------------------------
Name: Steven Elkes
Title: Vice-President
Attest:
- ----------------------------
Secretary
<PAGE>
SCHEDULE B
Purchaser Commitment Amount
America Online, Inc. $2,900,000
The Tribune Company $1,500,000
Kleiner Perkins Caufield & $ 750,000
Byers VII and
KPCB Information Sciences
Zaibatsu Fund VII
<PAGE>
EXHIBIT A TO THE
----------------
SECURED CONVERTIBLE
-------------------
PROMISSORY NOTE
---------------
FORM OF STOCK SUBSCRIPTION WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. ADDITIONALLY, THE
TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION
13 OF THE REGISTRATION RIGHTS AGREEMENT DATED AS OF MAY 6, 1996, AS AMENDED,
AMONG iVILLAGE, INC. AND THE OTHER SIGNATORIES THERETO (THE "REGISTRATION
RIGHTS AGREEMENT") AND THE AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED
AS OF MAY 6, 1996, AS AMENDED, AMONG iVILLAGE INC. AND THE OTHER SIGNATORIES
THERETO (THE "STOCKHOLDERS AGREEMENT"), AND NO TRANSFER OF THESE SECURITIES
SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. UPON
THE FULFILLMENT OF CERTAIN OF SUCH CONDITIONS, iVILLAGE INC., HAS AGREED TO
DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS LEGEND, FOR
THE SECURITIES REPRESENTED HEREBY REGISTERED IN THE NAME OF SUCH HOLDER.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF iVILLAGE INC.
_________________ ___, 1997*
iVILLAGE INC.
STOCK SUBSCRIPTION WARRANT
THIS CERTIFIES that, for value received, [Insert name of
holder], or assigns, is entitled to subscribe for and purchase from iVILLAGE
INC., a Delaware corporation (the "Company"), that number of shares (the
"Warrant Shares") of Senior Series B-2 Preferred Stock, $.0005 par value, of
the Company as shall be determined in accordance with the provisions of
Section 1 hereof at the price per share (the "Warrant Price") determined in
accordance with the provisions of Section 1 hereof, at any time or from time
to time during the period (the "Exercise Period") commencing with the date
hereof and terminating on the fifth anniversary of the date hereof. This
Warrant is being issued pursuant to a Secured Convertible Promissory Note
dated as of February , 1997 (the "Note"), issued by the Company to the holder
of this Warrant and is one of a series of stock subscription warrants
(including this Warrant, the "Warrants") being issued pursuant to one or more
secured convertible
- -------------------
* This Warrant will be issued on the Demand Date (as such term is defined in the
Note).
<PAGE>
promissory notes issued by the Company. Terms used but not defined herein shall
have the meanings set forth in the Note.
SECTION 1. Warrant Shares and Warrant Price.
-------------------------------------------
The Warrant Shares and the Warrant Price shall be established as
follows:
(a) The Warrant Shares shall consist of the Company's Senior
Series B-2 Preferred Stock, $.0005 par value, (the "Senior Series B-2
Preferred Stock"), and the Warrant Price shall equal $.01.
(b) The number of Warrant Shares for which this Warrant is
exercisable shall be equal to (1) the product of (x) the quotient of (A) the
principal amount of the Note plus accrued interest (calculated on a weekly
basis) divided by (B) $1,000,000 and (y) four (4%) percent of the number of
shares of voting capital stock of the Company outstanding on the date of
calculation after giving effect to the exercise, exchange or conversion of all
then outstanding securities, rights, options, warrants, that are, directly or
indirectly, exercisable or exchangeable for, or convertible into or otherwise
represent the right to purchase or otherwise receive, directly or indirectly,
any such capital stock (collectively, the "Fully-Diluted Shares"),
multiplied by the number of thirty-day periods during which the Note shall be
outstanding (the "Multiple"), commencing with the earlier of (x) the date of
issuance of this Warrant (the "Issue Date") or (y) in the event of the
occurrence of a Payroll Event, 10 days prior to the Payroll Date, and ending
with the date as of which the Note shall no longer be outstanding, divided by
(2) the Warrant Price, minus the number of Warrant Shares for which this
Warrant was previously exercised; provided however, that in the event of a
partial period, the Multiple shall be increased by a fraction the numerator of
which shall be the number of days from the end of the prior full thirty-day
(or shorter) period to the date of exercise of this Warrant and the
denominator of which shall be thirty (30). The number of Warrant Shares for
which this Warrant is exercisable shall increase as aforesaid at the end of
each thirty-day period during which the Note (as defined herein) shall be
outstanding.
SECTION 2. Exercise of Warrant.
--------------------
The rights represented by this Warrant may be exercised by
the holder hereof, in whole or in part, at any time during the Exercise
Period, by the surrender of this Warrant (properly endorsed) at the office of
the Company, or at such other agency or office of the Company in the United
States of America as it may designate by notice in writing to the holder
hereof at the address of such holder appearing on the books of the Company,
and by payment to the Company of the Warrant Price in cash or by check (or by
cancellation of indebtedness evidenced by the Note
-2-
<PAGE>
issued by the Company to such holder which, for such purpose, shall be valued
at the principal amount thereof and interest thereon so canceled) for each
share being purchased. In the event of the exercise of the rights represented
by this Warrant, a certificate or certificates for the shares of Senior Series
B-2 Preferred Stock so purchased, registered in the name of the holder, and if
such Warrant Exercise shall not have been for all Warrant Shares, a new
Warrant, registered in the name of the holder hereof, of like tenor to this
Warrant, shall be delivered to the holder hereof within a reasonable time, not
exceeding ten days, after the rights represented by this Warrant shall have
been so exercised. The person in whose name any certificate for shares of
Senior Series B-2 Preferred Stock is issued upon exercise of this Warrant
shall for all purposes be deemed to have become the holder of record of such
shares on the date on which the Warrant was surrendered and payment of the
Warrant Price and any applicable taxes was made, irrespective of the date of
delivery of such certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are closed,
such person shall be deemed to have become the holder of such shares at the
close of business on the next succeeding date on which the stock transfer
books are open.
SECTION 3. Exchange of Warrant.
(a) At any time and from time to time during the Exercise Period,
the holder may, at its option, exchange this warrant, in whole or in part (a
"Warrant Exchange"), into the number of Warrant Shares determined in
accordance with paragraph (b) below, by the surrender of this Warrant,
accompanied by a properly completed and executed Notice of Exchange in the
form attached, at the agency or office of the Company referred to in Section
2.
(b) In connection with any Warrant Exchange, this Warrant shall
represent the right to subscribe for and acquire the excess (rounded to the
next higher integer) of (i) the number (the "Total Number") of Warrant Shares
specified in the Notice of Exchange over (ii) the number of Warrant Shares
equal to the quotient obtained by dividing (A) the product of the Total Number
and the existing Warrant Price by (B) the Fair Market Value.
(c) "Fair Market Value" as of a particular date (the
"Determination Date") shall mean:
(i) if the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities
Dealers, Inc., Automated Quotation ("NASDAQ") National Market
System, then the average of the closing or last sale prices,
respectively, reported for the twenty (20) trading days ended
immediately preceding the Determination Date; or if the Company's
-3-
<PAGE>
Common Stock is not traded on an exchange or on the NASDAQ
Nationl Market System but is traded in the over-the-counter
market, then the mean of the average of the closing bid and asked
prices reported for the twenty (20) trading days ended
immediately preceding the Determination Date;
(ii) in the event of a Warrant Exchange in
connection with a merger or consolidation of the Company or a
sale of all outstanding capital stock or sale of all or
substantially all of the assets, the value of the consideration
received or receivable by the stockholders of the Company for
each share of Common Stock held (assuming, in the case of a sale
of assets, the Company is liquidated immediately following such
sale and the consideration paid to the Company is immediately
distributed to its stockholders); and
(iii) in all other circumstances, the fair market
value per share of outstanding Common Stock as determined by a
nationally recognized independent investment banking firm jointly
selected by the Company and the holders of a majority-in-interest
of all Warrants then outstanding or, if such selection cannot be
made within five days after delivery of the Notice of Exchange, by
a nationally recognized independent investment banking firm
selected by the American Arbitration Association in accordance with
its rules.
(d) The closing of any Warrant Exchange shall take place at the
offices of the Company on the date specified in the Notice of Exchange (the
"Exchange Date"), which shall be not less than five and not more than 30 days
after the delivery of such Notice. At such closing, the Company shall issue and
deliver to the holder or its designee a certificate or certificates for the
Warrant Shares to be issued upon such Warrant Exchange, registered in the name
of the holder or such designee, and if such Warrant Exchange shall not have been
for all Warrant Shares, a new Warrant, registered in the name of the holder, of
like tenor to this Warrant for the number of shares still subject to this
Warrant following such Warrant Exchange (i.e., the excess of (i) the number of
shares subject to this Warrant immediately before such Warrant Exchange over
(ii) the Total Number).
SECTION 4. Adjustment of Warrant Price.
---------------------------
If, at any time during the Exercise Period, the number of
outstanding shares of Senior Series B-2 Preferred Stock is (i) increased by a
stock dividend payable in shares of such class of capital stock or by a
subdivision or split-up of shares of such class of capital stock, or (ii)
decreased by a combination of shares of such class of capital stock, then,
following the record
-4-
<PAGE>
date fixed for the determination of holders of such class of capital stock
entitled to receive the benefits of such stock dividend, subdivision,
split-up, or combination, the Warrant Price shall be adjusted to a new amount
equal to the product of (A) the Warrant Price in effect on such record date
and (B) the quotient obtained by dividing (x) the number of shares of such
class of capital stock outstanding on such record date (without giving effect
to the event referred to in the foregoing clause (i) or (ii), by (y) the number
of shares of such class of capital stock which would be outstanding
immediately after the event referred to in the foregoing clause (i) or (ii),
if such event had occurred immediately following such record date.
SECTION 5. Adjustment of Warrant Shares.
----------------------------
Upon each adjustment of the Warrant Price as provided in Section
4, the Holder shall thereafter be entitled to subscribe for and purchase, at
the Warrant Price resulting from such adjustment, the number of Warrant Shares
equal to the product of (i) the number of Warrant Shares existing prior to
such adjustment and (ii) the quotient obtained by dividing (A) the Warrant
Price existing prior to such adjustment by (B) the new Warrant Price resulting
from such adjustment. No fractional shares of capital stock of the Company
shall be issued as a result of any such adjustment, and any fractional shares
resulting from the computations pursuant to this paragraph shall be eliminated
without consideration.
SECTION 6. Covenants as to Senior Series B-2 Preferred Stock and
Common Stock.
(a) The Company covenants and agrees that all shares of capital
stock which may be issued upon the exercise of the rights represented by this
Warrant, and all shares of Common Stock of the Company which may be issued
upon the conversion of Senior Series B-2 Preferred Stock if issued upon
exercise of this Warrant (collectively, the "Underlying Securities") will,
upon issuance, be validly issued, fully paid and non-assessable and free from
all taxes, liens and charges with respect to the issue thereof. The Company
further covenants and agrees that the Company will from time to time take all
such action as may be requisite to assure that the stated or par value per
share of the Underlying Securities is at all times equal to or less than the
then effective Warrant Price per share of the Underlying Securities issuable
upon exercise of this Warrant. The Company further covenants and agrees that
the Company will at all times have authorized and reserved, free from
preemptive rights, a sufficient number of (a) shares of its Underlying
Securities to provide for the exercise of the rights represented by this
Warrant and (b) shares of Common Stock to provide for the conversion of Senior
Series B-2 Preferred Stock if issuable upon exercise of this Warrant. The
Company further covenants and agrees that if any shares of capital stock to be
reserved for the
-5-
<PAGE>
purpose of the issuance of shares of capital stock upon the exercise of this
Warrant or the conversion of Senior Series B-2 Preferred Stock if issuable
upon exercise of this Warrant require registration with or approval of any
governmental authority under any Federal or state law before such shares may
be validly issued or delivered upon exercise, then the Company will in good
faith and expeditiously as possible endeavor to secure such registration or
approval, as the case may be. If and so long as the capital stock issuable
upon the exercise of this Warrant or the Common Stock issuable upon conversion
of the Senior Series B-2 Preferred Stock if issuable upon exercise of this
Warrant is listed on any national securities exchange, the Company will, if
permitted by the rules of such exchange, list and keep listed on such
exchange, upon official notice of issuance, all shares of such capital stock.
(b) The Company further covenants and agrees that the holder
hereof will be entitled to the benefits of any adjustment prior to the
exercise hereof pursuant to any anti-dilution protection afforded to holders
of Senior Series B-2 Preferred Stock if issuable upon exercise of this
Warrant.
SECTION 7. No Shareholder Rights.
----------------------
This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a shareholder of the Company.
SECTION 8. Restrictions on Transfer, Rights Under Purchase
-----------------------------------------------
Agreement; Etc.
- ---------------
The holder of this Warrant by acceptance hereof agrees that the
transfer of this Warrant or any of the Underlying Securities are subject to
the provisions of Section 13 of the Registration Rights Agreement and this
Warrant. The Underlying Securities issuable upon exercise of this Warrant and
the shares of Common Stock issuable upon conversion of shares of Senior Series
B-2 Preferred Stock if issuable upon exercise of this Warrant shall be
entitled to all rights and benefits accorded thereto in the Purchase
Agreement, and the applicable provisions of the Purchase Agreement are hereby
incorporated herein by reference.
SECTION 9. Transfer of Warrant; Amendment.
-------------------------------
(a) This Warrant and all rights hereunder are transferable, in
whole, or in part, in accordance with the Stockholders' Agreement, at the
agency or office of the Company referred to in Section 2, by the holder hereof
in person or by duly authorized attorney, upon surrender of this Warrant
properly endorsed. Each taker and holder of this Warrant, by taking or holding
the same, consents and agrees that this Warrant, when endorsed in blank,
shall be deemed negotiable, and, when so endorsed the holder hereof may be
treated by the Company and all
-6-
<PAGE>
other persons dealing with this Warrant as the absolute owner hereof for any
purposes and as the person entitled to exercise the rights represented by this
Warrant, or to the transfer hereof on the books of the Company, any notice
to the contrary notwithstanding; but until each transfer on such books, the
Company may treat the registered holder hereof as the owner hereof for all
purposes.
(b) The terms and provisions of this Warrant may not be modified
or amended, except under the written consent of the Company and the Holders of
a majority of Warrant Shares issuable upon exercise hereof.
SECTION 10. Reorganizations, Etc.
---------------------
In case, at any time during the Exercise Period, of any
capital reorganization, of any reclassification of the stock of the Company
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the continuing operation and which does not result in
any change in the Underlying Securities) or of the sale of all or
substantially all the properties and assets of the Company as an entirety to
any other corporation, this Warrant shall, after such reorganization,
reclassification, consolidation, merger or sale, be exercisable for the kind
and number of shares of stock or other securities or property of the Company
or of the corporation resulting from such consolidation or surviving such
merger or to which such properties and assets shall have been sold to which
such holder would have been entitled if he had held the Underlying Securities
issuable upon the exercise hereof immediately prior to such reorganization,
reclassification, consolidation, merger or sale.
SECTION 11. Lost, Stolen, Mutilated or Destroyed Warrant.
---------------------------------------------
If this Warrant is lost, stolen, mutilated or destroyed, the
Company may, on such terms as to indemnity or otherwise as it may in its
discretion impose (which shall, in the case of a mutilated Warrant, include
the surrender thereof), issue a new Warrant of like denomination and tenor as
the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant
shall constitute an original contractual obligation of the Company, whether or
not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any
time enforceable by anyone.
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Warrant to be
executed by its duly authorized officer on the date first above written.
iVILLAGE INC.
By:
------------------------------
Name:
Title:
ATTEST:
--------------------------------
Secretary
<PAGE>
PROMISSORY NOTE
$500,000 June 5, 1998
(Maximum Amount) New York, New York
FOR VALUE RECEIVED, the undersigned, Candice Carpenter (the
"Borrower"), hereby promises to pay to the order of iVillage Inc., a Delaware
corporation ("iVillage"), at its office at 170 Fifth Avenue, New York, New York
10010, the principal sum of Five Hundred Thousand Dollars ($500,000) or such
lesser amount as shall equal the sum of all loans made by iVillage to the
Borrower, in lawful money of the United States of America, together with
interest thereon (calculated on the basis of the actual number of days elapsed
over a 360 day year) from the date hereof on the unpaid balance of such
principal amount to the Maturity Date (as hereinafter defined) equal to 5.58%,
payable on an annual basis on December 31 of each year commencing on December
31, 1998.
The Borrower hereby authorizes iVillage to record on the
attached Schedule A the principal amount of each loan made by iVillage to the
Borrower; provided, however, that (i) Borrower may only request such loans at
the end of each calendar quarter and that the principal amount of each such loan
shall in no event be less than Fifty Thousand Dollars ($50,000)(up to a maximum
aggregate principal amount of $500,000 for all loans by iVillage to the
Borrower), and (ii) as a condition to each such borrowing and prior to or
simultaneous with each such loan request by the Borrower, the Borrower shall
pledge in favor of iVillage, pursuant to the Pledge Agreement (as hereinafter
defined) that number of additional shares of common stock, $.0005 par value (the
"Common Stock"), of iVillage as shall equal one share (subject to equitable
adjustment for stock splits, dividends, combinations and like events) for each
$1.00 of principal amount proposed to be loaned to the Borrower. Any failure by
iVillage to record any such loan shall not affect the Borrower's obligation to
repay any such loan, together with interest thereon, in accordance with this
note.
Principal on this Note shall be payable on June 5, 2001 (the
"Maturity Date") and interest shall be payable as above provided, in each case,
subject to prepayment or acceleration of the maturity hereof as provided in this
Note. The Borrower may prepay the Note in full or in part at any time without
penalty; provided, however, that as a condition to and concurrently with any
sale by the Borrower subsequent to the date hereof of any shares of Common Stock
of iVillage, the Borrower shall make a prepayment of this Note in an amount
equal to the net proceeds received by the Borrower from any such sale.
Payment of the indebtedness evidenced by this Note shall be
secured by a security interest in the Collateral (as such term is defined in the
Pledge Agreement dated the date hereof (the "Pledge Agreement"), between
iVillage and the Borrower) and iVillage is entitled to the rights and benefits
of the Pledge Agreement.
<PAGE>
The Borrower hereby waives presentment, demand for payment,
notice of dishonor, notice of protest, and protest, and all other notices of
demands in connection with the delivery, acceptance and performance of this
Note.
No delay by the holder of this Note in exercising any power or
right hereunder shall operate as a waiver of any power or right, nor shall any
single or partial exercise of any power or right preclude other or further
exercise thereof, or the exercise of any other power or right hereunder or
otherwise; and, subject to the other provisions of this Note respecting waivers,
no waiver or modification of the terms hereof shall be valid unless set forth in
writing by the holder of this Note and then only to the extent set forth
therein.
This Note is made and delivered in, and shall be governed by
and construed in accordance with, the laws of the State of New York (without
reference to any principles of conflicts of law).
THIS NOTE IS A NON-RECOURSE, PROMISSORY NOTE AND THE BORROWER
AND HER HEIRS, EXECUTORS, PERSONAL OR LEGAL REPRESENTATIVES, ADMINISTRATORS OR
ASSIGNS SHALL HAVE NO PERSONAL LIABILITY ON THIS NOTE IN ANY RESPECT EXCEPT AS
HEREIN SET FORTH. The Borrower is pledging shares of common stock, $.0005 par
value, of iVillage (the "Pledged Stock") pursuant to the terms of the Pledge
Agreement as security for payment of this Note. Anything contained herein to the
contrary notwithstanding, iVillage, by acceptance of this Note, hereby agrees,
for itself, its representatives, successors and assigns, that (a) neither the
Borrower nor her heirs, executors, personal or legal representatives,
administrators or assigns shall ever be personally liable for the payment of any
sums whatsoever by reason of the making of this Note or by reason of default on
the performance of the terms of this Note, and the sole remedy of this iVillage
or its successors or assigns in the event the Borrower fails to pay any sums
that become payable hereunder shall be to foreclose upon the Pledged Stock
pledged pursuant to the Pledge Agreement to secure payment of this Note and (b)
in the event of a default hereunder, the Borrower and any successor or assign
shall look for payment of all amounts due under this Note solely to the Pledged
Stock pledged pursuant to the Pledge Agreement to secure this Note and will not
make any claim or institute any suit, action or proceeding against the Borrower,
or her heirs, executors, personal or legal representatives, administrators or
assigns for the payment of this Note which includes or extends to the seeking or
obtaining of personal liability against the foregoing parties.
/s/ Candice Carpenter
---------------------
Candice Carpenter
2
<PAGE>
SCHEDULE A
SCHEDULE OF LOANS
<TABLE>
<CAPTION>
- --------------------------------------- -------------------------------------- --------------------------------------
Principal Amount of Loan Date of Loan Aggregate Principal Amount
Outstanding
<S> <C> <C>
$500,000 June 5, 1998 $500,000
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
- --------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
3
<PAGE>
===============================================================================
FOURTH AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMONG
iVILLAGE INC.
AND
EACH OF THE
SIGNATORIES HERETO
Dated as of December 4, 1998
===============================================================================
<PAGE>
FOURTH AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT dated as of
December 4, 1998, among (i)
iVILLAGE INC., a Delaware
Corporation (the "Corporation"),
(ii) each of the signatories hereto
identified as an Investor on the
signature page of such signatory
(each, an "Investor and,
collectively, the "Investors"),
(iii) CANDICE CARPENTER, NANCY
EVANS and ROBERT LEVITAN (the
"Founders"), (iv) CANDICE
CARPENTER, as voting trustee (the
"Voting Trustee") under the Voting
Trust Agreement dated September 19,
1995, among the Founders and (v)
each of the other parties hereto
(the "Other Stockholders").
The Investors own and/or have the right to acquire upon the
exercise or exchange of stock subscription warrants, shares of Series A
Preferred Stock, $.0005 par value (the "Series A Preferred Stock"), Series B
Preferred Stock, $.0005 par value (the "Series B Preferred Stock"), Series B-1
Preferred Stock, $.0005 par value (the "Series B-1 Preferred Stock"), Series C
Preferred Stock, $.0005 par value (the "Series C Preferred Stock"), Series D
Preferred Stock, $.0005 par value (the "Series D Preferred Stock"), Series E
Preferred Stock, $.0005 par value (the "Series E Preferred Stock") and/or Tenet
Common Stock (as hereinafter defined) of the Corporation and each Founder owns,
on the date hereof, shares of Common Stock, $.0005 par value (the "Common
Stock"), of the Corporation. The parties wish to amend and restate the Amended
and Restated Stockholders' Agreement dated as of May 6, 1996 as amended and
restated by the Second Amended and Restated Stockholders' Agreement dated as of
May 28, 1997, as amended as of December 22, 1997, and as amended and restated by
the Third Amended and Restated Stockholders' Agreement dated February 24, 1998
as amended on May 26, 1998 (the "Old Stockholders' Agreement"), among the
Corporation, certain of the Investors, the Founders and the Voting Trustee and
to provide herein for the terms with respect to certain matters regarding the
relationship between the Corporation and its stockholders and among such
stockholders. Accordingly, the parties agree as follows:
ARTICLE 1
Definitions
1.1. Definitions.
The following terms shall have the following meanings:
(a) "Affiliate" shall mean any (a) corporation or other entity in
which the subject person owns, directly or indirectly, more than 50% of the
capital stock or other equity
<PAGE>
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
entity and (b) any other person that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with, the
subject person.
(b) "AOL" shall mean America Online, Inc., a Delaware
corporation.
(c) "AOL Warrants" shall mean the stock subscription warrants
dated September 19, 1995 and May 6, 1996 to purchase shares of Series B
Preferred Stock of the Corporation.
(d) "Board" means the Board of Directors of the Corporation.
(e) "Change-of-Control" means (i) any consolidation or merger of
the Corporation, other than any merger or consolidation resulting in the holders
of the capital stock of the Corporation entitled to vote for the election of
directors holding a majority of the capital stock of the surviving or resulting
entity entitled to vote for the election of directors, (ii) any person or entity
(including Affiliates thereof) becoming the holder of a majority of the capital
stock of the Corporation entitled to vote for the election of directors, or
(iii) any sale or other disposition by the Corporation of all or substantially
all of its assets to a third party.
(f) "Control" (including the terms "controlled by" and "under
common control with") shall mean the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise.
(g) "Election Notice" means any notice delivered by any Founder
to the Corporation stating that such Founder elects the benefit of additional
vesting in accordance with the definition of "Vested Shares" set forth in this
Agreement and acknowledges to be governed by an additional non-competition
period in accordance with the definition of "Competitive Period" set forth in
the Non-Competition, Non-Disclosure and Assignment of Inventions Agreement dated
September 19, 1995, between such Founder and the Corporation.
(h) "Equity Securities" means all shares of capital stock of the
Corporation, all securities convertible into or exchangeable for shares of
capital stock of the Corporation, and all options, warrants, and other rights to
purchase or otherwise acquire from the Corporation shares of such capital stock,
or securities convertible into or exchangeable for shares of such capital stock.
(i) "Founder Shares" means the shares of Common Stock held by the
Founders or the Voting Trustee on the date hereof, and any shares of capital
stock issued thereon as a stock dividend or upon any stock split or other
subdivision of shares of capital stock.
(j) "Future Stockholder" means any person or entity that acquires
Equity Securities from the Corporation after the date hereof, other than
Investor Shares, representing at least five (5%) percent of the outstanding
voting capital stock of the Corporation.
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(k) "Group" means:
(i) in the case of any Founder, (i) the spouse and lineal
descendants of such Founder, and (ii) all trusts for the benefit of any of the
foregoing;
(ii) in the case of any Investor, (i) all Affiliates of such
Investor, (ii) all partners of such Investor (if a partnership), and (iii) any
person or entity to which such Investor Transfers all or substantially all of
its assets;
(iii) in the case of any Future Stockholder that is an
individual, (i) the spouse and lineal descendants of such Future Stockholder,
and (ii) all trusts for the benefit of any of the foregoing;
(iv) in the case of any Future Stockholder that is an entity,
all Affiliates of such Future Stockholder; and
(v) in the case of Rho Management Trust I ("Rho"), to the
beneficial owners of such trust.
(l) "Independent Individual" means any individual who is not an
officer, director, employee, consultant, or stockholder of the Corporation.
(m) "Investor Shares" means at any time, with respect to any
Investor, the shares of Preferred Stock (as defined herein) or Tenet Common
Stock held by it on the date hereof or issuable upon exercise or exchange of the
AOL Warrants or the 1997 Warrants (as such term is defined in the Series C
Preferred Stock Purchase Agreement dated as of May 28, 1997 (the "Series C Stock
Purchase Agreement"), among the Company and the other parties thereto or
issuable pursuant to the Letter Agreement dated November 11, 1998 between the
Company and National Broadcating Company, Inc. (the "NBC Letter Agreement"), any
shares of Common Stock issued or issuable upon conversion thereof, and any
shares or other securities received in respect thereof, which are held by such
Investor and which have not previously been sold to the public pursuant to a
registration statement under the Securities Act or pursuant to Rule 144.
(n) "IPO" means an underwritten public offering of Common Stock
of the Company registered pursuant to the Securities Act of 1933, as amended.
(o) "Major Stockholder" means each Founder, the Voting Trustee,
each Future Stockholder that is an officer of the Corporation, and each Future
Stockholder.
(p) "Observer" shall have the meaning set forth in Section
2.1(d).
(q) "Preferred Stock" shall mean shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock.
(r) "Pro Rata Amount" means, with respect to any Stockholder, the
quotient obtained by dividing (i) the number of shares of Common Stock held by
such
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Stockholder (or with respect to NBC, the number of shares of Common Stock issued
or issuable pursuant to the NBC Letter Agreement) by (ii) (A) in the case of
Section 3.3(c), the aggregate number of shares of Common Stock held by all
Investors entitled to exercise the rights provided under said Section 3.3(c) and
(B) in the case of Section 3.5, the aggregate number of shares of Common stock
held by all Investors entitled to execute the rights provided under said Section
3.5 and by all Major Stockholders, in the case of each of clause (i) and (ii),
assuming the conversion, exercise or exchange of all securities held by such
parties that by their terms are convertible into or exercisable or exchangeable
directly or indirectly for Common Stock and the exercise of all options held by
such parties to purchase or rights to subscribe for Common Stock or such
securities.
(s) "Qualified Public Offering" means the first underwritten
public offering for the account of the Corporation of Common Stock pursuant to a
registration statement filed under the Securities Act of 1933, as amended, at an
offering price to the public (subject to equitable adjustment for stock splits,
stock dividends, stock combinations, recapitalization and like occurrences) of
not less than $3.93 per share of Common Stock and with aggregate proceeds (net
of underwriting discounts and commissions) to the Corporation of not less than
$20,000,000.
(t) "Repurchase Notice" is defined in Section 3.2(b).
(u) "Series B Investor" shall mean any Stockholder who or which
at the relevant time holds, or has the right to acquire (upon the conversion,
exercise or exchange of any rights, options, warrants or other securities that
are convertible into or exercisable or exchangeable for) any shares of Series B
Preferred Stock.
(v) "Series C Investor" shall mean any Stockholder who or which
at the relevant time holds, or has the right to acquire (upon the conversion,
exercise or exchange of any rights, options, warrants or other securities that
are convertible into or exercisable or exchangeable for) any shares of Series C
Preferred Stock.
(w) "Series D Investor" shall mean any Stockholder who or which
at the relevant time holds, or has the right to acquire (upon the conversion,
exercise or exchange of any rights, options, warrants or other securities that
are convertible into or exercisable or exchangeable for) any shares of Series D
Preferred Stock.
(x) "Series E Investor" shall mean any Stockholder who or which
at the relevant time holds, or has the right to acquire (upon the conversion,
exercise or exchange of any rights, options, warrants or other securities that
are convertible into or exercisable or exchangeable for) any shares of Series E
Preferred Stock.
(y) "Shares" means the Investor Shares, the Founder Shares, and
all Equity Securities acquired by any Future Stockholders.
(z) "Stockholders" means the Investors, the Founders, the Other
Stockholders, the Voting Trustee, and any Future Stockholders.
(aa) "Tenet Common Stock" means shares of common stock of the
Company, $.0005 par value, sold to Tenet Healthcare Corporation pursuant to the
Common
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Stock Purchase Agreement dated as of February 24, 1998, and any Additional
Shares (as such term is defined therein) issued thereunder.
(bb) "Termination of Employment" of any Founder means the
termination of the employment of such Founder with the Corporation.
(cc) "Termination Date" means the consummation of the earlier to
occur of (i) any Change-of-Control and (ii) any Qualified Public Offering.
(dd) "Third Party" means, with respect to any Stockholder, any
person or entity that is not a member of the Group of such Stockholder.
(ee) "Transfer" means to sell, transfer, assign, or otherwise
dispose of, either voluntarily or involuntarily and with or without
consideration.
(ff) "Unvested Shares" of any Founder means those Founder Shares
held by such Founder that are not Vested Shares.
(gg) "Vested Shares" of any Founder at any time means (i) prior
to any Change-of-Control, the sum of (A) 33% of the Founder Shares held by such
Founder, (B) the product of (x) 22.33% of the Founder Shares held by such
Founder and (y) the number of successive 12-month periods elapsed from September
19, 1995 through the date of the Termination of Employment of such Founder, and
(C) if such Termination of Employment occurred before September 19, 1998 as a
result of (1) such Founder's death or disability or (2) any termination without
cause by the Corporation and such Founder delivers an Election Notice no later
than 10 days after delivery of any Repurchase Notice, then 22.33% of the Founder
Shares held by such Founder, and (ii) upon any Change-of-Control, 100% of the
Founder Shares held by such Founder.
(hh) "Voting Shares" means the shares of capital stock of the
Corporation entitled to vote for the election of directors.
ARTICLE 2
BOARD REPRESENTATION
2.1. Board Representation.
(a) The Corporation and each Stockholder shall take such
corporate actions as may be reasonably required to ensure that (i) the number of
directors constituting the Board shall not exceed fifteen prior to an IPO, or
such higher number as shall be required to satisfy the provisions of Section
2.1(b) hereof, unless otherwise increased in accordance with the Certificate of
Incorporation and By-laws of the Corporation, and (ii) the presence of a simple
majority of the then directors in office is required to constitute a quorum of
the Board.
(b) Subject to the terms of this Agreement:
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(i) the holders of a majority in voting power of all
outstanding shares of Series A Preferred Stock shall be entitled (A) to nominate
one individual for election to the Board to serve as a director until his or her
successor is elected and qualifies, (B) to nominate such successor, and (C) if
such holders so determine to be appropriate, to propose the removal from the
Board of such director nominated under the foregoing clause (A) or (B);
provided, however that AOL, for so long as it shall hold at least a majority of
the shares of Series A Preferred Stock (or Common Stock issuable upon conversion
thereof) held by it on the date hereof, shall have the right to designate such
individual for such nomination;
(ii) the holders of a majority in voting power of all
outstanding shares of Series B Preferred Stock shall be entitled (A) to nominate
two individuals for election to the Board to serve as directors until their
successors are elected and qualify, (B) to nominate each such successor, and (C)
if such holders so determine to be appropriate, to propose the removal from the
Board of such directors nominated under the foregoing clause (A) or (B);
provided that Tribune Company, for so long as such party (together with its
Affiliates), shall hold at least a majority of the shares of Series B Preferred
Stock (or Common Stock issuable upon conversion thereof) held by it on the date
hereof, shall have the right to designate one of such individuals for such
nomination;
(iii) the holders of a majority in voting power of all
outstanding shares of Series C Preferred Stock shall be entitled (A) to nominate
two individuals for election to the Board to serve as directors until their
successors are elected and qualify, (B) to nominate each such successor, and (C)
if such holders so determine to be appropriate, to propose the removal from the
Board of such directors nominated under the foregoing clause (A) or (B); ;
provided that each of (x) CIBC Wood Gundy Ventures, Inc. ("CIBC") and (y) Cox
Interactive Media, Inc., for so long as each such party (together with their
respective Affiliates), respectively, shall hold at least a majority of the
shares of Series C Preferred Stock (or Common Stock issuable upon conversion
thereof) held by such party on the date hereof, shall, respectively, have, at
such party's discretion, the right to (i) designate one of such individuals for
such nomination or (ii) appoint an Observer to the Board if no such designation
is made;
(iv) the National Broadcasting Company, Inc. ("NBC"), shall
from and after the date hereof and thereafter, for so long as it (together with
its Affiliates), shall hold at least fifty percent (50%) of the highest number
of shares of Series E Preferred Stock (or Common Stock issuable upon conversion
thereof) at any time held by NBC shall be entitled (A) to nominate one
individual for election to the Board to serve as director until his or her
successor is elected and qualify, (B) to nominate each such successor, and (C)
if NBC so determines to be appropriate, to propose the removal from the Board of
such director nominated under the foregoing clause (A) or (B); notwithstanding
the foregoing, NBC's rights under this Section 2.1(b)(iv) shall cease and
terminate in the event that NBC shall have failed to telecast or otherwise
deliver in accordance with the terms of the Letter Agreement dated November 11,
1998 (the "Letter Agreement"), between the Corporation and NBC, the First
Tranche (as defined in the Letter Agreement) of advertising in accordance with
the Letter Agreement;
(v) the holders of a majority in voting power of all
outstanding shares of Series D Preferred Stock shall be entitled (A) to nominate
one individual for election to the Board to serve as a director until his or her
successor is elected and qualifies, (B) to nominate
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such successor, and (C) if such holders so determine to be appropriate, to
propose the removal from the Board of such director nominated under the
foregoing clause (A) or (B); provided, that Tenet Healthcare Corporation, for so
long as it (together with its Affiliates), shall hold at least a majority of
Series D Preferred Stock (or Common Stock issuable upon conversion thereof) held
by it on the date hereof, shall have the right to designate such individual for
such nomination;
(vi) the holders of a majority in voting power of all Founder
Shares shall be entitled (A) to nominate two individuals for election to the
Board to serve as directors until their successors are elected and qualify, (B)
to nominate each such successor, and (C) if such holders so determine to be
appropriate, to propose the removal from the Board of any director nominated
under the foregoing clause (A) or (B);
(vii) if the then Chairman of the Board at any time
determines in his or her discretion to recommend to the Board that an
Independent Individual be added to the Board and so recommends to the Board,
then each Stockholder shall vote all Voting Shares held by such Stockholder in
favor of increasing the authorized number the directors by one director if
necessary to effectuate the provisions of this Section 2.1(b)(vi) and the Board
(acting by majority vote) shall (A) be entitled to designate an Independent
Individual for election to the Board to serve as director until his or her
successor is elected and qualifies, (B) nominate each such successor and (C) if
the Board, acting by majority vote, so determines to be appropriate, to propose
the removal from the Board of the Independent Individual (the "Independent
Individual Election") (it being understood that the Independent Individual
Election may only occur as to one Independent Individual during the term of this
Agreement);
(viii) Intel Corporation ("Intel"), (A) for so long as Intel
(together with its Affiliates) shall hold shares of Series C Preferred Stock (or
Common Stock issuable upon conversion thereof) shall have, at its discretion,
the right to appoint an Observer to the Board and (B) for so long as Intel
(together with its Affiliates) shall hold at least a majority of the shares of
Series C Preferred Stock (or Common Stock issuable upon conversion thereof) held
by it on the date hereof the right to designate an Observer and upon the
occurrence of an Independent Individual Election and only for so long the
Independent Individual contemplated by Section 2.1(b)(vii) shall serve on the
Board, to convert its right to appoint an Observer, exercisable by written
notice to the Corporation and the other Stockholders, into the right (1) to
nominate an individual for election to the Board to serve as a director until
his or her successor is elected and qualifies, (2) to nominate each successor
and (3) if Intel so determines to be appropriate, to propose the removal from
the Board of any director nominated under the foregoing clause (1) or (2); and
in such event each Stockholder shall vote all Voting Shares held by such
Stockholder in favor of increasing the authorized number of directors, if
necessary, by one director if necessary to effectuate the provisions of this
Section 2.1(b)(viii);
(ix) as a result of the increase in the authorized number of
directors pursuant to Sections 2.1(b)(vii) and (viii) such authorized number of
directors shall be an even number, then if the Board (acting by majority vote)
determines to increase further the number of authorized directors by one
Independent Individual (so as to increase the authorized number of directors to
an odd number) (the "Odd Director"), then each Stockholder shall vote all Voting
Shares held by such Stockholders in favor of so further increasing the
authorized number of directors and the Board (acting by majority vote) shall be
entitled to (A) designate the Odd
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Director for election to the Board to serve until his or her successor is
elected and qualifies and (B) nominate each such successor.
(x) Rho, for so long as it (together with its Affiliates)
shall hold at least a majority of Preferred Stock (or Common Stock issuable upon
conversion thereof) held by it on March 6, 1998, shall be entitled (A) to
nominate one individual for election to the Board to serve as a director until
his or her successor is elected and qualifies, (B) to nominate such successor,
(C) if Rho so determines to be appropriate, to propose the removal from the
Board of such director nominated under the foregoing clause (A) or (B) and (D)
to appoint an Observer to the Board if no nomination is made pursuant to clause
(A) above; and
(xi) Following the consummation by the Corporation of an IPO
and for six months thereafter, a majority of the Venture Investors (as
hereinafter defined) acting together shall be entitled (A) to nominate two
individuals for election to the Board to serve as a director until his or her
successor is elected and qualifies, assuming that the Board consists of seven
directors, and, in the event the Board consists of more than seven directors,
such greater number of individuals as shall constitute two-sevenths of such
number of directors on the Board, (B) to nominate such successor, and (C) if
such holders so determine to be appropriate, to propose the removal from the
Board of such director nominated under the foregoing clause (A) or (B). As used
herein, "Venture Investors" means, each of the following stockholders of the
Company that holds (when aggregated with its affiliated entity or entities
identified below) at least two and one-half percent of the outstanding voting
capital stock of the Company immediately prior to an IPO: Rho Management Trust
I, CIBC Wood Gundy Ventures, Inc., Kleiner Perkins, Caufield & Byers VII., KPCB
Information Sciences Zaibatsu Fund II, Convergence Entrepreneurs Fund I,
Convergence Ventures I, L.P., Transatlantic Venture Partners C.V., TCV II
Strategic Partners, L.P., TCV II, (Q), L.P., TCV II, V.O.F., Technology
Crossover Ventures II, C.V., Technology Crossover Ventures II, L.P., Moore
Capital, National Bank of Kuwait, Boston Millennia Associates I Partnership and
Boston Millennia Partners Limited Partnership.
(c) Each nomination or any proposal to remove from the Board any
director shall be made by delivering to the Corporation a notice signed by the
party or parties entitled to such nomination or proposal. As promptly as
practicable after delivery of such notice, the Corporation shall take or cause
to be taken such corporate actions as may be reasonably required to cause the
election or removal proposed in such notice. Such corporate actions may include
calling a meeting or soliciting a written consent of the Board, or calling a
meeting or soliciting a written consent of the stockholders of the Corporation.
Anything contained herein to the contrary notwithstanding, no director may be
proposed for removal (other than for cause) by any Stockholder other than the
Stockholder entitled to nominate such individual in accordance with the
foregoing provisions of this Section 2.1(b).
(d) Each observer to the Board (an "Observer") who is appointed
pursuant to Sections 2.1(b), shall be entitled to attend all meetings of the
Board in a non-voting observer capacity and to receive from the Corporation
copies of all notices, minutes, consents, and other material that the
Corporation provides to its directors; provided, however, that such Observer
shall abide by the confidentiality provisions of Section 8.1 of the Series C
Stock Purchase Agreement and provided further that the Corporation reserves the
right to exclude any
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such Observer from attendance at any meeting or portion thereof or access to any
material or portion thereof with respect to agreements or transactions directly
involving the Stockholder (or its Affiliates) represented by such Observer.
2.2. Voting Agreement.
Each Stockholder shall vote all Voting Shares held by such Stockholder
for the election to the Board of all individuals nominated in accordance with
Section 2.1 and for the removal from the Board of all directors proposed to be
removed in accordance with Section 2.1. Each Stockholder shall use all
reasonable efforts to cause each director originally nominated by such
Stockholder (other than Independent Individuals) to vote for the election to the
Board of all individuals nominated as replacement directors in accordance with
Section 2.1.
2.3. Committees; Subsidiaries.
(a) Each Stockholder shall use all reasonable efforts to cause
each director of the Corporation originally nominated by such Stockholder to
take such corporate actions as may be reasonably required to ensure that the
Board has at all times an executive committee, a compensation committee and an
audit committee; provided, however, that the Board shall not create any
committee in the nature of an executive committee to which the Board delegates
substantially all of its powers.
(b) The Corporation and each Stockholder shall take, and each
Stockholder shall use all reasonable efforts to cause each director of the
Corporation originally nominated by such Stockholder (other than Independent
Individuals) to take, such corporate actions as may be reasonably required to
ensure that the composition of the board of directors of all direct and indirect
subsidiaries of the Corporation is identical to the composition of the Board.
2.4. Meetings.
(a) The Corporation shall convene meetings of the Board at least
once every quarter. Upon any failure by the Corporation to convene any meeting
required by this paragraph, any Investor or holder of a majority-in-voting power
of the Founder Shares may convene such meeting.
(b) The Corporation shall reimburse each director for his or her
reasonable out-of-pocket expenses incurred in connection with the attendance of
meetings of the Board or the performance of his or her other duties as a
director.
2.5. Termination.
The agreements set forth in this Article II shall terminate upon
the consummation of a Qualified Public Offering except for the agreement set
forth in Section 2.1(b)(xi) and Section 2.2 solely with respect to said Section
2.1(b)(xi) which shall terminate on the sixth month anniversary of the
consummation of an IPO.
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ARTICLE 3
SHARES
3.1. Future Stockholders.
The Corporation shall require each Future Stockholder, as a
condition to the effectiveness of such acquisition, to execute a counterpart to
this Agreement, agreeing to be treated as a Future Stockholder, whereupon such
person or entity shall be bound by, and entitled to the benefits of, the
provisions of this Agreement relating to Stockholders.
3.2. Termination of Employment.
(a) Upon any Termination of Employment of any Founder, the
Corporation shall have the right (but not the obligation) to repurchase from
such Founder (or his or her estate), upon the terms set forth in this Section,
all or a part of all Unvested Shares held by such Founder for a purchase price
equal to the price at which such Unvested Shares were originally issued by the
Corporation.
(b) The repurchase right of the Corporation under this Section
may be exercised by notice specifying the Unvested Shares to be repurchased (a
"Repurchase Notice"). The Repurchase Notice shall be delivered to the terminated
Founder during the period (the "Repurchase Period") ending 90 days after the
Termination of Employment. Upon the delivery of any Repurchase Notice, such
Founder shall be obligated to sell to the Corporation the Unvested Shares
specified in such Repurchase Notice.
(c) The closing of any repurchase of Unvested Shares under this
Section shall take place at the offices of the Corporation on a business day
designated by the Corporation. At such closing, (i) the terminated Founder shall
deliver to the Corporation the certificate or certificates evidencing the
Unvested Shares specified in the Repurchase Notice, duly endorsed for transfer
and free and clear of all liens, claims and other encumbrances, and (ii) the
Corporation shall deliver to such Founder the purchase price therefor in cash.
3.3. Limitations on Transfers.
(a) Founder Transfer Generally. Each Founder shall not (i)
Transfer any Unvested Shares, and (ii) until the earlier to occur of the
Termination Date and September 19, 1998, Transfer any Vested Shares.
Notwithstanding the foregoing, each Founder may Transfer any Founder Shares to
any other member of the Group of such Founder, and each such transferee may
Transfer such Founder Shares to any other member of the Group of such initial
Founder. Anything contained herein to the contrary notwithstanding, Candice
Carpenter may pledge up to 500,000 shares of Common Stock held by her to the
Corporation pursuant to a Pledge Agreement dated as of June 5, 1998, between
Candice Carpenter and the Corporation.
(b) Stockholder Transfer Generally. Each Transfer of any Shares
by any Stockholder before the Termination Date shall not become effective unless
and until the transferee executes and delivers to the Corporation a counterpart
to this Agreement, agreeing to
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be treated in the same manner as the transferring Stockholder. Upon such
Transfer and such execution and delivery, the transferee shall be bound by, and
entitled to the benefits of, this Agreement with respect to the transferred
Shares in the same manner as the transferring Stockholder.
(c) Founder Transfer to Series B Investor, Series C Investor,
Series D Investor or Series E Investor.
(i) If any Founder proposes to Transfer any Shares (the
"Subject Founder Shares") to any Series B Investor, Series C Investor, Series D
Investor or Series E Investor (the "Purchaser") prior to a Qualified Public
Offering, such Founder shall, prior to consummating such Transfer, deliver to
each of the Series B Investors, Series C Investors, Series D Investors and
Series E Investors other than the Purchaser (the "Other Preferred Investors") a
written offer (the "Founder First Refusal Offer") to sell to the Other Preferred
Investors the Subject Founder Shares other than the Purchaser's Pro Rata Amount
thereof (the "Net Subject Founder Shares") in accordance with this Section
3.3(c). The Founder First Refusal Offer shall state that such Founder proposes
to effect a Transfer of the Subject Founder Shares to the Series B Investor,
Series C Investor, Series D Investor or Series E Investor, as the case may be,
identified therein, the number of Net Subject Founder Shares proposed to be so
Transferred to the Other Preferred Investors and the terms and conditions of
such proposed Transfer.
(ii) Each Other Preferred Investor shall have the right,
exercisable by delivery to such Founder within 30 days after delivery of the
Founder First Refusal Offer (the "Acceptance Period") of a written notice (a
"Notice of Acceptance") to purchase from such Founder, at the price and on the
terms and conditions set forth in the Founder First Refusal Offer, up to such
Other Preferred Investor's Pro Rata Amount (excluding from the determination
thereof the Purchaser) of the Net Subject Founder Shares proposed to be
Transferred. Sales of Net Subject Founder Shares to Other Preferred Investors
shall be consummated on a mutually acceptable business day within 45 days after
delivery of the Founder First Refusal Offer at the price and on the terms and
conditions set forth therein.
(iii) If the Other Preferred Investors did not accept all Net
Subject Founder Shares offered in the Founder First Refusal Offer, such Founder
may Transfer to the Purchaser all or any portion of the Net Subject Founder
Shares not so accepted for purchase, at the price and on the terms and
conditions set forth in the Founder First Refusal Offer, at any time within 90
days after expiration of the Acceptance Period. If such Transfer is not made
within such 90-day period, the restrictions provided for in this Section 3.3(c)
shall again become effective.
(iv) Such Founder may consummate a Transfer to the Purchaser
of such Purchaser's Pro Rata Amount of the Subject Founder Shares originally
proposed to be Transferred to such Purchaser, either prior to, simultaneously
with or following the Transfer of Net Subject Founder Shares (if any are to be
so Transferred) to Other Preferred Investors as provided herein, so long as such
Founder complies with clauses (i) and (ii) of this Section 3.3(c).
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(d) Any Transfer of Shares by any Stockholder not permitted by
paragraph (a) above or not in accordance with paragraphs (b) or (c) above shall
be void.
3.4. Right of First Refusal.
(a) If at any time before (i) September 19, 1997 in the case of
AOL with respect to Series A Preferred Stock owned by it or shares of Common
Stock issued upon conversion thereof or (ii) May 6, 1998, in the case of all
Series B Investors with respect to Series B Preferred Stock owned by it or
shares of Common Stock issued upon conversion thereof or (iii) May 28, 1999, in
the case of all Founders with respect to Common Stock owned by him or her and
all Investors with respect to the Series C Preferred Stock owned by it or shares
of Common Stock issued upon conversion thereof or (iv) February 24, 2000 in the
case of all Series D Investors with respect to Series D Preferred Stock owned by
it or shares of Common Stock issued upon conversion thereof other than as
contemplated in the immediately preceding clauses (i) through (iii), or (v) the
second anniversary of the date hereof in the case of all Series E Investors with
respect to the Series E Preferred Stock owned by it or shares of Common Stock
issued upon conversion thereof other than as contemplated in the immediately
preceding clauses (i) through (iv), any Investor or Founder shall receive a bona
fide written offer (an "Offer") from a Third Party to purchase all or a portion
of the Investor Shares or Founder Shares, as the case may be, held by such
Investor or Founder, as the case may be, and such Investor or Founder, as the
case may be, desires to accept the offer, such Investor or Founder, as the case
may be, shall, before accepting the Offer, deliver to the Corporation an offer
(the "First Refusal Offer") to sell such Investor Shares or Founder Shares, as
the case may be, in accordance with this Section.
(b) The First Refusal Offer shall state that such Investor or
Founder, as the case may be, proposes to effect a sale of Investor Shares or
Founder Shares, as the case may be, to a Third Party, the number of Investor
Shares or Founder Shares, as the case may be, proposed to be sold, the terms and
conditions of the Offer, and the name and address of the Third Party. The
Corporation shall have the right to purchase all, but not a part, of such
Investor Shares or Founder Shares, as the case may be. Such right may be
exercised by the Corporation by delivery of a written notice to the Investor or
Founder, as the case may be, within 30 days after delivery of the First Refusal
Offer (the "Acceptance Period"). Upon delivery of such notice, the purchase of
such Investor Shares or Founder Shares, as the case may be, shall be consummated
on a business day designated by such Investor at the offices of the Corporation
within 60 days after the delivery of such notice on the terms of the First
Refusal Offer.
(c) If the Corporation did not accept all Investor Shares or
Founder Shares, as the case may be, offered in the First Refusal Offer, or if
the Corporation failed to purchase such shares within the 60 day period referred
to in Section 3.4(b) above, such Investor or Founder, as the case may be, may
sell such Investor Shares or Founder Shares, as the case may be, on the terms
and conditions of the Offer to the Third Party within 90 days after expiration
of the Acceptance Period or the 60-day period referred to in Section 3.4(b), as
the case may be. If such sale is not made within such 90-day period, the
restrictions provided for in this Section shall again become effective.
12
<PAGE>
3.5. Co-Sale.
(a) If (i) any Major Stockholder proposes to Transfer any Shares
or (ii) any Investor or group of Investors (the "Selling Investor(s)") proposes,
in one transaction or a series of related transactions, to Transfer, in the
aggregate, at least 25% of the then outstanding voting capital stock of the
Corporation (other than to a member of such Investor's Group), in each case to
any Third Party before the consummation of any Qualified Public Offering, such
Major Stockholder or Selling Investor(s), as the case may be, shall, at least 30
days before such Transfer, deliver a notice (the "Sale Notice") to all the
Investors other than the Selling Investor, if applicable, (the "Other
Investors") specifying the identity of the Third Party and disclosing in
reasonable detail the terms and conditions of the proposed Transfer. Within 30
days after delivery of the Sale Notice, each Other Investor may elect to
participate in the proposed Transfer by delivering to such Major Stockholder or
Selling Investor(s), as the case may be, a notice (the "Purchase Notice")
specifying the Investor Shares with respect to which the Other Investor
exercises its right under this Section. Each Other Investor shall be entitled to
Transfer, at the price and on the terms and conditions applicable to the
Transfer by such Major Stockholder or Selling Investor(s), as the case may be,
up to a number of shares of Common Stock equal to its Pro Rata Amount of the
aggregate number of shares of Common Stock subject to the Transfer, plus, in the
case of any Other Investor who or which indicated in its Purchase Notice its
intention to sell, if available, any Shares in excess of its Pro Rata Amount
thereof, such Other Investor's Pro Rata Amount of the balance of the Shares not
sold by the Other Investors(s) and/or Founder(s) (if in the latter case Section
3.5(b) is applicable) (excluding for purposes of determining such Pro Rata
Amount the Other Investor(s) electing not to sell or selling less than its Pro
Rata Amount and/or Founder (if in the latter case Section 3.5(b) is applicable).
(b) Without limiting the rights of the Investors under Section
3.5(a) hereof, if any Founder (a "Selling Founder") proposes to Transfer any
Shares to any Third Party before any Qualified Public Offering, such Founder
shall, at least 30 days before such Transfer, deliver a Sale Notice to the other
Founders (the "Other Founders") specifying the identity of the Third Party and
disclosing in reasonable detail the terms and conditions of the proposed
Transfer. Within 30 days after delivery of the Sale Notice, each Other Founder
may elect to participate in the proposed Transfer by delivering to such Selling
Founder a notice specifying the Founder Shares with respect to which such Other
Founders exercises his or her right under this Section. The Other Founder shall
be entitled to Transfer, at the price and on the terms applicable to the
Transfer by such Selling Founder, up to a number of shares of Common Stock equal
to his or her Pro Rata Amount of the aggregate number of shares of Common Stock
subject to the Transfer, plus, in the case of any Founder who indicated in his
or her Purchase Notice his or her intention to sell, if available, any Shares in
excess of his or her Pro Rata Amount thereof, such Founder's Pro Rata Amount of
the balance of the Shares not sold by the Other Founder(s) and Investors
(pursuant to Section 3.5(a) hereof) (excluding for purposes of determining such
Pro Rata Amount the non-selling Investor(s) and/or non-selling Founders).
(c) In the event that the provisions of Section 3.4 and 3.5 shall
both be applicable to the same transaction, the provisions of Section 3.5 shall
supersede the provisions of Section 3.4 and shall govern in such specific
instance.
13
<PAGE>
3.6. Change-of-Control Transaction.
Anything contained in this Agreement to the contrary
notwithstanding, in the event any Investor proposes to engage in a
Change-of-Control transaction (a "Change-of-Control Transaction") such Investor
shall, as a condition thereto, be obligated to offer, in the case of a
Change-of-Control Transaction involving a merger or consolidation or purchase of
capital stock or similar transaction, to acquire 100% of the outstanding equity
interests of the Corporation and, accordingly, to offer to each holder of an
equity interest in the Corporation the right and option to sell to such Investor
the entire equity interest of such holder in the Corporation on the same terms
and conditions, and for a purchase price per share that shall in no event be
less than the highest price paid within the preceding eighteen months (a) by
such Investor either to the Corporation or to any Third Party, or (b) by any
Third Party to the Corporation in a bona fide, arms-length sale, for equity
securities of the Corporation, and such Investor shall not be permitted to
consummate any such Change-of-Control Transaction without complying with this
Section 3.6. In the event this Section 3.6 shall be applicable, the provisions
of Section 3.3, 3.4 and 3.5 hereof shall not be applicable in such instance.
3.7. Transfer Among Series B Investors.
Anything contained in this Agreement to the contrary
notwithstanding, no Series B Investor shall Transfer any shares of Series B
Preferred Stock or any shares of Common Stock issued or issuable upon conversion
thereof, or any rights, options, warrants or other securities convertible into
or exercisable or exchangeable for, directly or indirectly, Series B Preferred
Stock, without the prior written approval of all Series B Investors.
3.8. Termination.
The agreements set forth in this Article III shall terminate upon
the consummation of a Qualified Public Offering.
ARTICLE 4
MISCELLANEOUS
4.1. Legend on Stock Certificates.
(a) Each certificate representing shares of capital stock that
are subject to this Agreement shall bear a legend substantially in the following
form:
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER
OF SUCH SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT
TO A FOURTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF
________________, 1998, AMONG iVILLAGE INC. AND CERTAIN HOLDERS OF ITS
OUTSTANDING CAPITAL STOCK. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST
14
<PAGE>
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY
OF iVILLAGE INC."
provided, however, that all certificates previously issued for capital stock
subject to this Agreement and held by any of the parties hereto may continue to
bear the legend set forth thereon that is substantially similar to the foregoing
legend.
(b) Each certificate issued pursuant to the Voting Trust
Agreement shall bear a legend substantially in the following form:
"THE RIGHTS OF THE HOLDER OF THIS CERTIFICATE ARE SUBJECT TO AND
LIMITED BY THE TERMS OF THE STOCKHOLDERS' AGREEMENT AMONG iVILLAGE INC.
AND ITS STOCKHOLDERS."
(c) Upon the consummation of a Qualified Public Offering, the
holders of any shares of capital stock bearing the legends described in
subsection (a) or (b) above shall be entitled to receive from the Corporation,
without expense, a new certificate not bearing the restrictive legends described
in subsection (a) or (b) and not containing any other reference to the
restrictions imposed by this Agreement.
4.2. Voting Trust.
Each Founder shall cause the Voting Trustee to, and the Voting
Trustee shall, vote all Voting Shares of such Founder in accordance, and
otherwise comply in all respects, with Article II and comply in all respects
with Article III with respect to the Founder Shares of such Founder.
4.3. Series B-1 Preferred Stock Voting Agreement.
On any matter on which the holders of Series B-1 Preferred Stock
shall be entitled to vote as a separate class or series under applicable law,
each Stockholder holding shares of Series B-1 Preferred Stock hereby agrees, for
itself and on behalf of its successors, assigns and transferees, that it shall
vote all shares of Series B-1 Preferred Stock owned or record or beneficially by
it (or consent in writing in lieu of such vote) in the same manner as a majority
of the shares of Series B Preferred Stock are voted (or consented to in writing
in lieu of such vote) by the holders thereof on any similar matter affecting the
Series B Preferred Stock. This provision shall be binding upon all current and
future holders of Series B-1 Preferred Stock and no transfer of shares of Series
B-1 Preferred Stock shall be effective unless the transferee thereof shall
expressly agree in writing to be bound by and comply with the provision. Each
certificate representing shares of Series B-1 Preferred Stock shall bear a
legend reflecting the existence of this provision.
4.4. Severability; Governing Law.
If any provision of this Agreement shall be determined to be
illegal and unenforceable by any court of law, the remaining provisions shall be
severable and enforceable in accordance with their terms. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Delaware.
15
<PAGE>
4.5. Assignments; Successors and Assigns.
Except in connection with any Transfer of Shares in accordance
with this Agreement, the rights of each party under this Agreement may not be
assigned. This Agreement shall bind and inure to the benefit of the parties and
their respective successors, permitted assigns, legal representatives and heirs.
4.6. Amendments.
This Agreement may only be modified or amended, or the
performance thereof waived, by an instrument in writing signed by the
Corporation, Stockholders (other than the Founders) holding at least sixty (60%)
percent of all Shares then held by all Stockholders (other than the Founders)
and the holders of at least 66-2/3% of the Founder Shares; provided, however,
that any amendment or modification that would (i) adversely affect the right of
NBC to appoint a director to the Board pursuant to Section 2.1(b)(iv), (ii)
increase the obligations of NBC with respect to NBC's right to appoint a
director to the Board pursuant to Section 2.1(b)(iv) or (iii) modify the
references to NBC in Sections 1.1(m) and 1.1(r) shall require the written
approval of NBC; provided further, however, that no modification or amendment
shall discriminate against any Stockholder without the consent of such
Stockholder. This Section may only be amended with the consent of all parties to
this Agreement.
4.7. Exempt Investors.
Intel Corporation ("Intel") shall be exempt from the obligations
set forth in Sections 3.4 and 3.5 and shall not be a beneficiary of the rights
set forth in Section 3.4 or 3.5; provided, however, that Intel may participate
in a proposed Transfer of Shares by any Major Stockholder pursuant to the terms
of Section 3.5. All references to "Investor(s)" in Sections 3.4 and 3.5 shall
exclude Intel.
4.8. Notices.
All notices, claims, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or if sent by nationally-recognized overnight courier, by
telecopy, or by registered or certified mail, return receipt requested and
postage prepaid, addressed as follows:
if to the Corporation:
iVillage Inc.
170 Fifth Avenue, 3rd Fl.
New York, New York 10010
Fax: (212) 604-9133
Telephone: (212) 604-0963
Attention: Candice Carpenter;
with a copy to:
16
<PAGE>
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, New York 10103
Fax: (212) 506-5151
Telephone: (212) 506-5325
Attention: Martin H. Levenglick, Esq.
if to an Investor, to the address specified on such Investor's
signature page hereto; and:
if to any Founder, to his or her address set forth on the books
of the Corporation;
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.
4.9. Headings.
The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
4.10. Nouns and Pronouns.
Whenever the context may require, any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of names and pronouns shall include the plural and vice versa.
4.11. Entire Agreement.
This Agreement contains the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior agreements
and understandings with respect to such subject matter, including, without
limitation, the Old Stockholders' Agreement, which is hereby terminated in its
entirety and of no further force or effect.
4.12. Counterparts.
This Agreement may be executed in any number of counterparts, and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
4.13. Limitation on Liability to General Electric Pension Trust.
Any monetary obligation of the Trustees of General Electric
Pension Trust shall be enforceable solely against the assets of such Pension
Trust and not against any Trustee
17
<PAGE>
individually, General Electric Pension Trust (other than as necessary to enforce
such rights against such assets) or GE Investment Management Incorporated.
18
<PAGE>
COUNTER PART SIGNATURE PAGE TO THE FOURTH
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
DATED AS OF DECEMBER 4, 1998
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders' Agreement on the date first above written.
iVILLAGE, INC.
By: /s/ Steve Elkes
-------------------------------------
Name: Steve Elkes
Title: Vice President
FOUNDERS:
/s/ Candice Carpenter
-----------------------------------------
Candice Carpenter
/s/ Nancy Evans
-----------------------------------------
Nancy Evans
/s/ Robert Levitan
-----------------------------------------
Robert Levitan
VOTING TRUSTEE:
/s/ Candice Carpenter
-----------------------------------------
Candice Carpenter, as VotingTrustee
INVESTOR:
/s/ Admirals, L.P.
-----------------------------------------
Admirals, L.P.
/s/ America Online, Inc.
-----------------------------------------
America Online, Inc.
/s/ Applewood Associates
-----------------------------------------
Applewood Associates
/s/ William James Bell 1993 Trust
-----------------------------------------
William James Bell 1993 Trust
/s/ Laurence Berk
-----------------------------------------
Laurence Berk
/s/ Boston Millenia Associates I Partnership
-----------------------------------------
Boston Millenia Associates I Partnership
/s/ Boston Millenia Partner Limited Partnership
-----------------------------------------
Boston Millenia Partner Limited
Partnership
/s/ CIBC Wood Gundy Ventures, Inc.
-----------------------------------------
CIBC Wood Gundy Ventures, Inc.
/s/ Convergence Entrepreneurs Fund I
-----------------------------------------
Convergence Entrepreneurs Fund I
/s/ Convergence Ventures I, L.P.
-----------------------------------------
Convergence Ventures I, L.P.
/s/ Cox Interactive Media, Inc.
-----------------------------------------
Cox Interactive Media, Inc.
/s/ Gannett International Communications, Inc.
-----------------------------------------
Gannett International Communications,
Inc.
/s/ Leavitt Family Trust
-----------------------------------------
Leavitt Family Trust
/s/ Ralph Mack
-----------------------------------------
Ralph Mack
/s/ Moore Global Investments, Ltd.
-----------------------------------------
Moore Global Investments, Ltd.
/s/ Fred Nazem
-----------------------------------------
Fred Nazem
/s/ Nexus Capital Partners I, L.P.
-----------------------------------------
Nexus Capital Partners I, L.P.
/s/ NIG - Village Ltd.
-----------------------------------------
NIG - Village Ltd.
/s/ Martin H. Levenglick
-----------------------------------------
O'Sullivan Graev & Karabell. L.L.P.
("OGK") Profit Sharing Plan F/B/O
Martin H. Levenglick
/s/ Stephen M. Parish
-----------------------------------------
Stephen M. Parish
/s/ Remington Investment Strategies, L.P.
-----------------------------------------
Remington Investment Strategies, L.P.
/s/ Rho Management Trust I
-----------------------------------------
Rho Management Trust I
/s/ Merrill Roth
-----------------------------------------
Merrill Roth
/s/ Seligman Communications and Information Fund
-----------------------------------------
Seligman Communications and Information
Fund
/s/ Sonem Partners
-----------------------------------------
Sonem Partners
/s/ Fred Tanzer
-----------------------------------------
Fred Tanzer
/s/ TCI Ventures Group, LLC
-----------------------------------------
TCI Ventures Group, LLC
/s/ TCVII Strategic Partners, L.P.
-----------------------------------------
TCVII Strategic Partners, L.P.
/s/ TCVII, (Q), L.P.
-----------------------------------------
TCVII, (Q), L.P.
/s/ TCVII, V.O.F.
-----------------------------------------
TCVII, V.O.F.
/s/ Technology Crossover Ventures II, C.V.
-----------------------------------------
Technology Crossover Ventures II, C.V.
/s/ Technology Crossover Ventures II, L.P.
-----------------------------------------
Technology Crossover Ventures II, L.P.
/s/ Tenet Healthcare Corporation
-----------------------------------------
Tenet Healthcare Corporation
/s/ Transatlantic Venture Partners C.V.
-----------------------------------------
Transatlantic Venture Partners C.V.
/s/ Tribune Company
-----------------------------------------
Tribune Company
/s/ Norman Tulchin
-----------------------------------------
Norman Tulchin
/s/ Vantage Point Venture Partners 1996, LP
-----------------------------------------
Vantage Point Venture Partners 1996, LP
/s/ Vantage Point Communications Partners, LP
-----------------------------------------
Vantage Point Communications Partners, LP
/s/ Van Wagoner Capital Management
-----------------------------------------
Van Wagoner Capital Management
<PAGE>
================================================================================
FOURTH AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
DATED AS OF DECEMBER 4, 1998
AMONG
iVILLAGE INC.
AND
EACH OF THE
SIGNATORIES HERETO
================================================================================
<PAGE>
FOURTH AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT dated
as of December 4, 1998, among
iVILLAGE INC., a Delaware
corporation (the "Company"), each
of the signatories hereto
identified as an Investor on the
signature page of such signatory
(the "Investors") and each of the
parties identified on Annex A
hereto (the "Founders").
The Investors and the Founders currently own, or are acquiring
on the date hereof, (i) securities of the Company that are directly or
indirectly convertible into or exercisable for shares of Common Stock, $.0005
par value (the "Common Stock"), or (ii) Common Stock of the Company. The parties
deem it to be in their best interests to amend and restate the Third Amended and
Restated Registration Rights Agreement dated as of February 24, 1998 (the "Old
Registration Rights Agreement"), among the Company, the Investors and Founders
identified therein and to set forth herein their rights and obligations in
connection with public offerings and sales of shares of Common Stock.
Accordingly, the parties agree as follows:
SECTION 1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "AOL Warrants" shall mean stock subscription warrants
dated September 19, 1995 and May 6, 1996 issued by the Company to America
Online, Inc. ("AOL") to purchase shares of Series B Preferred Stock of the
Company.
(b) "Bear Stearns Warrants" shall mean stock subscription
warrants dated May __, 1997 issued by the Company to Bear Stearns & Co. Inc.
("Bear Stearns") to purchase shares of Common Stock.
(c) "Commission" means the Securities and Exchange Commission
or any other Federal agency at the time administering the Securities Act.
(d) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect from time to time.
(e) "IPO" means an underwritten public offering of Common
Stock of the Company registered pursuant to the Securities Act.
(f) "1997 Warrants" means the stock subscription warrants
dated February 27, 1997, issued by the Company to AOL, Tribune Company
("Tribune"), Kleiner Perkins Caufield & Byers VII and KPCB Information Sciences
Zaibatsu Fund II and the stock
<PAGE>
subscription warrants dated April 30, 1997, issued by the Company to AOL and
Tribune to purchase shares of Series C Preferred Stock of Company.
(g) "Other Shares" means at any time those shares of Common
Stock which do not constitute Primary Shares or Registrable Shares.
(h) "Preferred Stock" means shares of Series A Preferred
Stock, $.0005 par value, Series B Preferred Stock, $.0005 par value, Series B-1
Preferred Stock, $.0005 par value, Series C Preferred Stock, $.0005 par value,
Series D Preferred Stock, $.0005 par value and Series E Preferred Stock, $.0005
par value of the Company.
(i) "Primary Shares" means at any time the authorized but
unissued shares of Common Stock or shares of Common Stock held by the Company in
its treasury.
(j) "Registrable Bear Stearns Shares" means at any time with
respect to Bear Stearns, the shares of Common Stock issued or issuable upon
exercise of the Bear Stearns Warrants and any shares or other securities
received in respect thereof, which are held by Bear Stearns and which have not
previously been sold to the public pursuant to a registration statement under
the Securities Act or pursuant to Rule 144.
(k) "Registrable Shares" means at any time, with respect to
any Investor, the shares of Common Stock held (or to be held upon conversion of
any Restricted Shares) by such Investor that constitute Restricted Shares.
(l) "Registrable Founder Shares" means at any time, with
respect to any Founder, the shares of Common Stock held by such Founder that
constitute Restricted Founder Shares.
(m) "Registration Date" means the date upon which the
registration statement pursuant to which the Company shall have initially
registered shares of Common Stock under the Securities Act for sale to the
public shall have been declared effective.
(n) "Restricted Founder Shares" means at any time, with
respect to any Founder, the shares of Common Stock held by him or her on the
date hereof, and any shares or other securities received in respect thereof,
which are held by such Founder and which have not previously been sold to the
public pursuant to a registration statement under the Securities Act or pursuant
to Rule 144.
(o) "Restricted Shares" means at any time, with respect to any
Investor, the shares of Preferred Stock and/or Tenet Common Stock held by it on
the date hereof, issuable upon exercise or exchange of the AOL Warrants and the
1997 Warrants or issuable pursuant to the Letter Agreement dated November 11,
1998, between the Company and National Broadcasting Company, Inc. (the "NBC
Letter Agreement"), any shares of Common Stock issued or issuable upon
conversion thereof, and any shares or other securities received in respect
thereof, which are held by such Investor and which have not previously been sold
to the public pursuant to a registration statement under the Securities Act or
pursuant to Rule 144.
2
<PAGE>
(p) "Rule 144" means Rule 144 promulgated under the Securities
Act or any successor rule thereto or any complementary rule thereto.
(q) "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.
(r) "Stockholder" means any Investor or Founder and any person
or entity that acquires Restricted Shares from such Investor or Restricted
Founder Shares from such Founder in accordance with Section 16.
(s) "Tenet Common Stock" means shares of Common Stock sold to
Tenet Healthcare Corporation pursuant to the terms of the Common Stock Purchase
Agreement dated as of February 24, 1998 among the Company and the Investors
identified therein and any Additional Shares (as such term is defined therein)
issued thereunder.
(t) "Transfer" means any disposition of any Restricted Shares
or Restricted Founder Shares or Registrable Bear Stearns Shares or of any
interest therein which constitutes a sale within the meaning of the Securities
Act, other than any disposition pursuant to an effective registration statement
under the Securities Act and complying with all applicable state securities and
"blue sky" laws.
SECTION 2. Required Registration.
If the Company shall be requested by Investors who or which
hold Restricted Shares (based upon Common Stock equivalents) constituting at
least 40% of the then-outstanding Restricted Shares held by all Investors, to
effect the registration under the Securities Act of Registrable Shares in
accordance with this Section (the "Investor Demand"), then the Company shall
promptly give written notice of such proposed registration to all holders of
Restricted Shares and to Bear Stearns and shall offer to include in such
proposed registration any Registrable Shares or Registrable Bear Stearns Shares
requested to be included in such proposed registration by such holders who
respond in writing to the Company's notice within 30 days after delivery of such
notice (which response shall specify the number of Registrable Shares or
Registrable Bear Stearns Shares, as the case may be, proposed to be included in
such registration). If the Company shall at any time following six months after
the consummation of an IPO be requested by the National Broadcasting Company,
Inc. for itself and, to the extent applicable, its affiliates ("NBC") (and not
in conjunction with the other Investors) in writing (which request shall specify
the number of Registrable Shares held by NBC proposed to be included in such
registration), to effect the registration under the Securities Act of
Registrable Shares held by NBC in accordance with this Section (the "NBC
Additional Demand"), then the Company shall include in such proposed
registration any Registrable Shares held by NBC requested to be included in such
proposed registration. The Company shall promptly use its best efforts to effect
such registration under the Securities Act of the Registrable Shares which the
Company has been so requested to register; provided, however, that the Company
shall not be obligated to effect any registration under the Securities Act
except in accordance with the following provisions:
3
<PAGE>
(a) the Company shall not be obligated to file (i) more than
four registration statements initiated pursuant to this Section that constitute
Investor Demands which become effective or which are rescinded by the Investors
without reimbursement referred to in the last paragraph of this Section, (ii)
more than one registration statement initiated pursuant to this Section that
constitutes an NBC Additional Demand which becomes effective or which is
rescinded by NBC without reimbursement referred to in the last paragraph of this
Section, or (iii) any registration statement during any period in which any
other registration statement (other than on Form S-4 or Form S-8 promulgated
under the Securities Act or any successor forms thereto) pursuant to which
Primary Shares are to be or were sold has been filed and not withdrawn or has
been declared effective within the prior 180 days;
(b) the Company shall not be obligated to effect any
registration unless the anticipated aggregate offering proceeds, net of
underwriting discounts and commissions, are expected to exceed $5,000,000;
(c) the Company may delay the filing or effectiveness of any
registration statement for a period not to exceed 120 days after the date of a
request for registration pursuant to this Section 2 if (i) at the time of such
request the Company is engaged, or has fixed plans to engage within 60 days of
the time of such request, in a firm commitment underwritten public offering of
Primary Shares in which the holders of Restricted Shares may include Registrable
Shares pursuant to Section 3 or (ii) the Company shall furnish to the Investors
requesting such registration a certificate signed by the President of the
Company stating that, in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement (provided that the
Company may not utilize the right set forth in this clause (c) more than once in
any 12-month period); and
(d) with respect to any registration pursuant to this Section,
the Company may include in such registration any Primary Shares, Registrable
Bear Stearns Shares or Other Shares; provided, however, that if the managing
underwriter advises the Company that the inclusion of all Registrable Shares,
Registrable Bear Stearns Shares, Primary Shares and Other Shares proposed to be
included in such registration would interfere with the successful marketing
(including pricing) of all such securities, then (A) in the case of any Investor
Demand, the number of Registrable Shares, Registrable Bear Stearns Shares,
Primary Shares and Other Shares proposed to be included in such registration
shall be included in the following order:
(i) first, no less than twenty-five (25%) percent of the
Registrable Shares held by Investors, pro rata based upon
the number of Restricted Shares (based upon Common Stock
equivalents) owned by each Investor at the time of such
registration;
(ii) second, the Registrable Bear Stearns Shares;
(iii) third, the Primary Shares; and
4
<PAGE>
(iv) fourth, the Other Shares;
or (B) in the case of the NBC Additional Demand, the number of Registrable
Shares, Registrable Bear Stearns Shares, Primary Shares and Other Shares
proposed to be included in such registration shall be included in the following
order:
(i) first, the Registrable Shares held by NBC;
(ii) second, any Registrable Shares held by Investors
other than NBC, pro rata based upon the number of
Restricted Shares (based upon Common Stock equivalents)
owned by each Investor at the time of such registration;
and
(iii) third, as determined by the Company in its sole and
absolute discretion.
A requested registration under this Section may be rescinded
by written notice to the Company by the Investors initiating such request (in
the case of an Investor Demand) or by NBC (in the case of an NBC Additional
Demand); provided, however, that such rescinded registration shall not count as
a registration statement initiated pursuant to this Section for purposes of
paragraph (a) above if the Investors initiating such request (in the case of an
Investor Demand) or NBC (in the case of the NBC Additional Demand) shall have
reimbursed the Company for all out-of-pocket expenses incurred by the Company in
connection with such rescinded registration. The Company shall select any firm
of underwriters in connection with a registration under this Section 2, which
firm of underwriters shall be reasonably acceptable to the Investors (in the
case of an Investor Demand) or NBC (in the case of an NBC Additional Demand)
including Restricted Shares in a registration under this Section; provided,
however, that at such time as General Electric Pension Trust shall include
Restricted Shares in a registration under this Section, General Electric Pension
Trust shall have the right to approve or disapprove the use of a firm of
underwriters in which it has a 5% or more direct or indirect interest.
SECTION 3. Piggyback Registration.
(a) If the Company at any time proposes for any reason to
register Primary Shares, Registrable Shares (other than pursuant to Section 2
hereof) or Other Shares under the Securities Act (other than on Form S-4 or Form
S-8 promulgated under the Securities Act or any successor forms thereto or other
than in connection with an exchange offer or offering solely to, the Company's
stockholders), it shall promptly give written notice to each Stockholder and to
Bear Stearns of its intention so to register the Primary Shares, Registrable
Shares or Other Shares and, upon the written request, given within 30 days after
delivery of any such notice by the Company, of any Stockholder and/or of Bear
Stearns to include in such registration Registrable Shares, Registrable Founder
Shares or Registrable Bear Stearns Shares, as the case may be (which request
shall specify the number of Registrable Shares, Registrable Founder Shares or
Registrable Bear Stearns Shares, as the case may be, proposed to be included in
such registration), the Company shall use its best efforts to cause all such
Registrable Shares, Registrable Founder Shares, or Registrable Bear Stearns
Shares as the case may be, to be included in such registration on the same terms
and conditions as the securities otherwise being
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sold in such registration; provided, however, that if the managing underwriter
advises the Company that the inclusion of all Registrable Shares, Registrable
Founder Shares, Registrable Bear Stearns Shares and/or Other Shares proposed to
be included in such registration would interfere with the successful marketing
(including pricing) of the Primary Shares proposed to be registered by the
Company, then the number of Primary Shares, Registrable Shares, Registrable
Founder Shares, Registrable Bear Stearns Shares and Other Shares, proposed to be
included in such registration shall be included in the following order:
(i) first, the Primary Shares;
(ii) second, the Registrable Shares held by Investors and
the Registrable Bear Stearns Shares, pro rata based upon
the number of Restricted Shares (based upon Common Stock
equivalents) owned by each Investor and the number of
Registrable Bear Stearns Shares then held by or issuable
to Bear Stearns at the time of such registration;
(iii) third, Registrable Founder Shares pro rata based
upon the number of shares of Common Stock then owned by
each Founder at the time of such registration; and
(iv) the Other Shares (other than Registrable Founder
Shares).
(b) Each Stockholder who has requested that Registrable Shares
or Registrable Founder Shares, as the case may be, and Bear Stearns if it has
requested that Registrable Bear Stearns Shares, be included in a registration
pursuant to Section 3(a) hereof, shall be bound by the Company's choice of
managing underwriter stated in the Company's notice; provided, however, at such
time as General Electric Pension Trust shall include Restricted Shares in a
registration under this Section, General Electric Pension Trust shall have the
right to approve or disapprove the use of a firm of underwriters in which it has
a 5% or more direct or indirect interest, and to execute an underwriting
agreement with such underwriter that is (i) reasonably satisfactory to such
Stockholder and (ii) in customary form.
SECTION 4. Registrations on Form S-3.
Anything contained in Section 2 to the contrary
notwithstanding, at such time as the Company shall have qualified for the use of
Form S-3 promulgated under the Securities Act or any successor form thereto, the
Investors shall have the right to request in writing an unlimited number of
registrations on Form S-3 or such successor form of Registrable Shares, which
request or requests shall (i) specify the number of Registrable Shares intended
to be sold or disposed of, (ii) state the intended method of disposition of such
Registrable Shares, and (iii) relate to Registrable Shares having an anticipated
aggregate offering price of at least $500,000; provided, however, the Investors
may only make one such request in any 6-month period. A requested registration
on Form S-3 or any such successor form in compliance with this Section shall not
count as a registration statement demanded pursuant to Section 2, but shall
otherwise be treated as a registration initiated pursuant to and shall, except
as otherwise expressly provided in this Section, be subject to Section 2.
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SECTION 5. Holdback Agreement.
(a) In connection with the initial public offering of shares
of Common Stock of the Company registered pursuant to the Securities Act, if the
managing underwriter for such registration shall so request, the Stockholders
and Bear Stearns shall not (and will not permit any other person, to the extent
allowable by law, who or which holds of record any of the Stockholders' or Bear
Stearns' Restricted Shares, Founder Restricted Shares or Registrable Bear
Stearns Shares, to), with respect to the Restricted Shares, Founder Restricted
Shares or Registrable Bear Stearns Shares so held, directly or indirectly, sell,
offer to sell, contract to sell, grant any option or warrant for the sale or
purchase of, or otherwise dispose of, any of such shares (other than those
included in such registration), or any security convertible or exchangeable into
or exercisable therefor, whether now owned or hereafter acquired, owned by the
Stockholders or Bear Stearns or with respect to which the Stockholders or Bear
Stearns have the power of disposition or beneficial ownership (as used in this
Section 5, collectively, the "Subject Shares") for a period of 180 days after
the effective date of the registration statement pursuant to which such public
offering shall be made. Notwithstanding anything to the contrary contained
elsewhere herein, the transfer restrictions contained in this Section 5 shall
not apply to shares of Common Stock purchased by the Stockholders in the initial
public offering or in market transactions after the initial public offering. Any
subsequent resale of such shares of Common Stock so acquired shall not
constitute a breach of this Section 5.
(b) The foregoing restriction is expressly agreed by the
parties hereto to preclude the Stockholders and Bear Stearns from engaging in
any hedging or other transaction which is designed to or reasonably expected to
lead to or result in a sale or disposition of the Subject Shares even if such
Subject Shares would be disposed of by someone other than the Stockholders and
Bear Stearns. Such prohibited hedging or other transactions would include,
without limitation, any short sale or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect to any of
the Subject Shares or with respect to any security that includes, relates to, or
derives any significant part of its value from the Subject Shares.
(c) Notwithstanding the foregoing, the provisions of this
Section 5 shall not prohibit the Stockholders and Bear Stearns from transferring
the Subject Shares (i) as a bona fide gift or gifts, provided that the donee or
donees thereof agree to be bound by the restrictions set forth herein, (ii) to
any trust for the direct or indirect benefit of any Stockholder or Bear Stearns
or the immediate family of such Stockholder or (iii) any affiliate of any
Stockholder, provided that the trustee of the trust or any such affiliate
transferee agrees to be bound by the restrictions set forth herein, and provided
further (x) that any such transfer shall not involve a disposition for value and
(y) in the case of an affiliate, such affiliate continues during such restricted
period to be an affiliate, or (iv) with the prior written consent of the
managing underwriter of such public offering on behalf of the underwriters for
such public offering. For purposes of this Section 5, "immediate family" shall
mean any relationship by blood, marriage or adoption, not more remote than first
cousin.
(d) The Stockholders and Bear Stearns also agree and consent
to the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of the Subject Shares except in compliance with
the foregoing restrictions.
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(e) The foregoing restrictions in this Section 5 shall be
binding on the Stockholders and Bear Stearns only if, and to the extent, the
executive officers of the Company owning Common Stock shall be bound by such
restrictions.
SECTION 6. Preparation and Filing.
If and whenever the Company is under an obligation pursuant to
the provisions of this Agreement to use its best efforts to effect the
registration of any Registrable Shares, Registrable Founder Shares or
Registrable Bear Stearns Shares, the Company shall, as expeditiously as
practicable:
(a) use its best efforts to cause a registration statement
that registers such Registrable Shares, Registrable Founder Shares or
Registrable Bear Stearns Shares (as the case may be) to become and remain
effective for a period of 180 days or until all of such Registrable Shares,
Registrable Founder Shares and/or Registrable Bear Stearns Shares (as the case
may be) have been disposed of (if earlier);
(b) furnish, at least five business days before filing a
registration statement that registers such Registrable Shares, Registrable
Founder Shares and/or Registrable Bear Stearns Shares (as the case may be), a
prospectus relating thereto or any amendments or supplements relating to such a
registration statement or prospectus, to one counsel selected by the holders of
a majority of such Registrable Shares (the "Selling Stockholders' Counsel") or,
with respect to the NBC Additional Demand, one counsel selected by NBC (the "NBC
Counsel"), copies of all such documents proposed to be filed (it being
understood that such five-business-day period need not apply to successive
drafts of the same document proposed to be filed so long as such successive
drafts are supplied to such counsel in advance of the proposed filing by a
period of time that is customary and reasonable under the circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
at least a period of 180 days or until all of such Registrable Shares,
Registrable Founder Shares and/or Registrable Bear Stearns Shares (as the case
may be) have been disposed of (if earlier) and to comply with the provisions of
the Securities Act with respect to the sale or other disposition of such
Registrable Shares, Registrable Founder Shares and/or Registrable Bear Stearns
Shares (as the case may be);
(d) notify in writing the Selling Stockholders' Counsel or NBC
Counsel (as the case may be) promptly (i) of the receipt by the Company of any
notification with respect to any comments by the Commission with respect to such
registration statement or prospectus or any amendment or supplement thereto or
any request by the Commission for the amending or supplementing thereof or for
additional information with respect thereto, (ii) of the receipt by the Company
of any notification with respect to the issuance by the Commission of any stop
order suspending the effectiveness of such registration statement or prospectus
or any amendment or supplement thereto or the initiation or threatening of any
proceeding for that purpose and (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification of such
Registrable Shares, Registrable Founder Shares and/or Registrable
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Bear Stearns Shares (as the case may be) for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purposes;
(e) use its best efforts to register or qualify such
Registrable Shares, Registrable Founder Shares and/or Registrable Bear Stearns
Shares (as the case may be) under such other securities or blue sky laws of such
jurisdictions as any seller of Registrable Shares, Registrable Founder Shares
and/or Registrable Bear Stearns Shares (as the case may be) reasonably requests
and do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller of Registrable Shares, Registrable Founder
Shares and/or Registrable Bear Stearns Shares (as the case may be) to consummate
the disposition in such jurisdictions of the Registrable Shares, Registrable
Founder Shares and/or Registrable Bear Stearns Shares (as the case may be) owned
by such seller; provided, however, that the Company will not be required to
qualify generally to do business, subject itself to general taxation or consent
to general service of process in any jurisdiction where it would not otherwise
be required so to do but for this paragraph (e);
(f) furnish to each seller of such Registrable Shares,
Registrable Founder Shares and/or Registrable Bear Stearns Shares (as the case
may be) such number of copies of a summary prospectus or other prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such seller of Registrable Shares,
Registrable Founder Shares and/or Registrable Bear Stearns Shares (as the case
may be) may reasonably request in order to facilitate the public sale or other
disposition of such Registrable Shares and/or Registrable Founder Shares (as the
case may be);
(g) use its best efforts to cause such Registrable Shares,
Registrable Founder Shares and/or Registrable Bear Stearns Shares (as the case
may be) to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Company to enable the seller or sellers thereof to consummate the disposition of
such Registrable Shares, Registrable Founder Shares and/or Registrable Bear
Stearns Shares (as the case may be);
(h) notify on a timely basis each seller of such Registrable
Shares, Registrable Founder Shares and/or Registrable Bear Stearns Shares (as
the case may be) at any time when a prospectus relating to such Registrable
Shares, Registrable Founder Shares and/or Registrable Bear Stearns Shares (as
the case may be) is required to be delivered under the Securities Act within the
appropriate period mentioned in paragraph (a) of this Section, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing and, at the request of such seller, prepare and furnish to such seller
a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the offerees
of such shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
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(i) make available for inspection by any seller of such
Registrable Shares, Registrable Founder Shares and/or Registrable Bear Stearns
Shares (as the case may be), any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter (collectively, the
"Inspectors"), all pertinent financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information (together with the Records, the "Information") reasonably
requested by any such Inspector in connection with such registration statement.
Any of the Information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, shall
not be disclosed by the Inspectors unless (i) the disclosure of such Information
is necessary to avoid or correct a misstatement or omission in the registration
statement, (ii) the release of such Information is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction or (iii) such
Information has been made generally available to the public. The seller of
Registrable Shares, Registrable Founder Shares and/or Registrable Bear Stearns
Shares (as the case may be) agrees that it will, upon learning that disclosure
of such Information is sought in a court of competent jurisdiction, give notice
to the Company and allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of the Information deemed confidential;
(j) use its best efforts to obtain from its independent
certified public accountants "comfort" letters in customary form and at
customary times and covering matters of the type customarily covered by comfort
letters;
(k) use its best efforts to obtain from its counsel an opinion
or opinions in customary form;
(l) provide a transfer agent and registrar (which may be the
same entity and which may be the Company) for such Registrable Shares,
Registrable Founder Shares and/or Registrable Bear Stearns Shares (as the case
may be);
(m) issue to any underwriter to which any seller of
Registrable Shares, Founder Shares and/or Registrable Bear Stearns Shares (as
the case may be) may sell shares in such offering certificates evidencing such
Registrable Shares, Registrable Founder Shares and/or Registrable Bear Stearns
Shares (as the case may be);
(n) list such Registrable Shares, Registrable Founder Shares
and/or Registrable Bear Stearns Shares (as the case may be) on any national
securities exchange on which any shares of the Common Stock are listed or, if
the Common Stock is not listed on a national securities exchange, use its best
efforts to qualify such Registrable Shares, Registrable Founder Shares and/or
Registrable Bear Stearns Shares (as the case may be) for inclusion on the
automated quotation system of the National Association of Securities Dealers,
Inc. (the "NASD") or such national securities exchange as the holders of a
majority of such Registrable Shares, Registrable Founder Shares and/or
Registrable Bear Stearns Shares (as the case may be) shall request;
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(o) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make available to its
securityholders, as soon as reasonably practicable, earnings statements (which
need not be audited) covering a period of 12 months beginning within three
months after the effective date of the registration statement, which earnings
statements shall satisfy the provisions of Section 11(a) of the Securities Act;
and
(p) use its best efforts to take all other steps necessary to
effect the registration of such Registrable Shares, Registrable Founder Shares
and/or Registrable Bear Stearns Shares (as the case may be) contemplated hereby.
SECTION 7. Expenses.
All expenses incurred by the Company in complying with Section
6, including, without limitation, all registration and filing fees (including
all expenses incident to filing with the NASD), fees and expenses of complying
with securities and blue sky laws, printing expenses, and fees and expenses of
the Company's counsel and accountants, and the fees and expenses of the Selling
Stockholders' Counsel or NBC Counsel (as the case may be) shall be paid by the
Company; provided, however, that all underwriting discounts and selling
commissions applicable to the Registrable Shares, Registrable Founder Shares
and/or Registrable Bear Stearns Shares (as the case may be), and all fees and
expenses of any special or interim audit for any registration initiated by
Stockholders or Bear Stearns pursuant to Section 2 that is not otherwise
required under the Securities Act in connection with such registration, shall be
borne by the seller or sellers thereof, in proportion to the number of
Registrable Shares, Registrable Founder Shares and/or Registrable Bear Stearns
Shares (as the case may be) sold by such seller or sellers.
SECTION 8. Indemnification.
In connection with any registration of any Registrable Shares,
Registrable Founder Shares and/or Registrable Bear Stearns Shares (as the case
may be) under the Securities Act pursuant to this Agreement, the Company shall
indemnify and hold harmless the seller of such Registrable Shares, Registrable
Founder Shares and/or Registrable Bear Stearns Shares (as the case may be), its
partners, members in the case of a limited liability company, beneficiaries in
the case of a trust, officers and directors, each underwriter, broker or any
other person acting on behalf of such seller and each other person, if any, who
controls any of the foregoing persons within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or several, (or
actions in respect thereof) to which any of the foregoing persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the registration statement under which such Registrable Shares,
Registrable Founder Shares and/or Registrable Bear Stearns Shares (as the case
may be) were registered under the Securities Act, any preliminary prospectus or
final prospectus contained therein or otherwise filed with the Commission, any
amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Shares, Registrable Founder Shares and/or
Registrable Bear Stearns Shares (as the case may be), or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or, with
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respect to any prospectus, necessary to make the statements therein in light of
the circumstances under which they were made not misleading, or any violation by
the Company of the Securities Act or state securities or blue sky laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration or qualification under such state
securities or blue sky laws; and shall reimburse such seller, such officer or
director, such underwriter, such broker or such other person acting on behalf of
such seller and each such controlling person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, preliminary prospectus, final prospectus,
amendment, supplement or document incident to registration or qualification of
any Registrable Shares, Registrable Founder Shares and/or Registrable Bear
Stearns Shares (as the case may be) in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller or underwriter that states that it is specifically for use in the
preparation thereof.
In connection with any registration of Registrable Shares,
Registrable Founder Shares and/or Registrable Bear Stearns Shares (as the case
may be) under the Securities Act pursuant to this Agreement, each seller of
Registrable Shares, Registrable Founder Shares and/or Registrable Bear Stearns
Shares (as the case may be) shall indemnify and hold harmless (in the same
manner and to the same extent as set forth in the preceding paragraph of this
Section) the Company, each director of the Company, each officer of the Company
who shall sign such registration statement, each underwriter, broker or other
person acting on behalf of such seller, each person who controls any of the
foregoing persons within the meaning of the Securities Act and each other seller
of Registrable Shares, Registrable Founder Shares and/or Registrable Bear
Stearns Shares (as the case may be) under such registration statement with
respect to any statement or omission from such registration statement, any
preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, Registrable
Founder Shares and/or Registrable Bear Stearns Shares (as the case may be), if
such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company or such underwriter through an
instrument duly executed by such seller or underwriter that states that it is
specifically for use in connection with the preparation of such registration
statement, preliminary prospectus, final prospectus, amendment, supplement or
document; provided, however, that the obligation to indemnify will be several,
not joint and several, among such sellers of Registrable Shares, Registrable
Founder Shares or Registrable Bear Stearns Shares (as the case may be), and the
maximum amount of liability in respect of such indemnification shall be in
proportion to and limited to, in the case of each seller of Registrable Shares,
Registrable Founder Shares or Registrable Bear Stearns Shares (as the case may
be), an amount equal to the net proceeds actually received by such seller from
the sale of Registrable Shares, Registrable Founder Shares or Registrable Bear
Stearns Shares (as the case may be) effected pursuant to such registration.
The indemnification required by this Section 8 will be made by
periodic payments during the course of the investigation or defense, as and when
bills are received or expenses
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incurred, subject to prompt refund in the event any such payments are determined
not to have been due and owing hereunder.
Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in the preceding
paragraphs of this Section, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof; provided, however, that if any indemnified party shall have reasonably
concluded that there may be one or more legal or equitable defenses available to
such indemnified party which are additional to or conflict with those available
to the indemnifying party, or that such claim or litigation involves or could
have an effect upon matters beyond the scope of the indemnity agreement provided
in this Section, the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party and such indemnifying
party shall reimburse such indemnified party and any person controlling such
indemnified party for that portion of the fees and expenses of any counsel
retained by the indemnified party which is reasonably related to the matters
covered by the indemnity agreement provided in this Section.
The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling person of such
indemnified party and will survive the transfer of securities.
If the indemnification provided for in this Section is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim, damage or
liability as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the sellers of Registrable Shares, Registrable Founder Shares
and Registrable Bear Stearns Shares agree that it would not be just and
equitable if contributions pursuant to this paragraph were determined by pro
rata allocation or by any other method of allocation which did not take into
account the equitable considerations referred to herein. The amount paid or
payable to an indemnified party as a result of the losses, claims, damages,
liabilities or expenses referred to above shall be deemed to include, subject to
the limitation set forth in the fourth paragraph of
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this Section 8, any legal or other expenses reasonably incurred in connection
with investigating or defending the same. Notwithstanding the foregoing, in no
event shall the amount contributed by a seller of Registrable Shares,
Registrable Founder Shares or Registrable Bear Stearns Shares exceed the
aggregate net offering proceeds received by such seller from the sale of such
seller's Registrable Shares, Registrable Founder Shares or Registrable Bear
Stearns Shares (as the case may be).
SECTION 9. Underwriting Agreement.
Notwithstanding the provisions of Sections 5, 6, 7 and 8, to
the extent that the Company and the Stockholders selling Registrable Shares,
Registrable Founder Shares or Registrable Bear Stearns Shares (as the case may
be) in a proposed registration shall enter into an underwriting or similar
agreement, which agreement contains provisions covering one or more issues
addressed in such Sections, the provisions contained in such Sections addressing
such issue or issues shall be superseded with respect to such registration by
such other agreement.
SECTION 10. Information by Holder.
Each Stockholder or Bear Stearns (as the case may be) selling
Registrable Shares, Registrable Founder Shares Registrable or Bear Stearns
Shares (as the case may be) in a proposed registration shall furnish to the
Company such written information regarding such holder and the distribution
proposed by such Stockholder or Bear Stearns (as the case may be) as the Company
may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Agreement.
SECTION 11. Exchange Act Compliance.
From and after the Registration Date or such earlier date as a
registration statement filed by the Company pursuant to the Exchange Act
relating to any class of the Company's securities shall have become effective,
the Company shall comply with all of the reporting requirements of the Exchange
Act and with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Common Stock. The Company shall cooperate with each Stockholder or Bear
Stearns (as the case may be) in supplying such information as may be necessary
for such Stockholder or Bear Stearns (as the case may be) to complete and file
any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.
SECTION 12. No Conflict of Rights.
The Company represents and warrants to the Stockholders that
the registration rights granted to the Stockholders and Bear Stearns hereby do
not conflict with any other registration rights granted by the Company. The
Company shall not, after the date hereof, grant any registration rights which
conflict with or impair the registration rights granted hereby.
SECTION 13. Restriction on Transfer.
(a) The Restricted Shares, the Restricted Founder Shares and
Registrable Bear Stearns Shares shall not be transferable except upon the
conditions specified in
14
<PAGE>
this Section, which conditions are intended to insure compliance with the
provisions of the Securities Act.
(b) Each certificate representing Restricted Shares,
Restricted Founder Shares or Registrable Bear Stearns Shares (as the case may
be) shall (unless otherwise permitted by the provisions of paragraph (c) and (d)
below) be stamped or otherwise imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT. ADDITIONALLY, THE TRANSFER
OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN
SECTION 13 OF THE FOURTH AMENDED AND RESTATED REGISTRATION
RIGHTS AGREEMENT DATED AS OF ___________, 1998, AMONG i
VILLAGE INC., AND THE OTHER PARTIES THERETO, AND NO TRANSFER
OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED. UPON THE FULFILLMENT OF
CERTAIN OF SUCH CONDITIONS, i VILLAGE INC., HAS AGREED TO
DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING
THIS LEGEND, FOR THE SECURITIES REPRESENTED HEREBY REGISTERED
IN THE NAME OF SUCH HOLDER. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF i VILLAGE INC."
(c) The holder of any Restricted Shares, Restricted Founder
Shares or Registrable Bear Stearns Shares by acceptance thereof agrees, prior to
any Transfer of any Restricted Shares or Restricted Founder Shares (as the case
may be), to give written notice to the Company of such holder's intention to
effect such Transfer and to comply in all other respects with the provisions of
this Section. Each such notice shall describe the manner and circumstances of
the proposed Transfer. Upon request by the Company, the holder delivering such
notice shall deliver a written opinion, addressed to the Company, of counsel for
the holder of Restricted Shares, Restricted Founder Shares or Registrable Bear
Stearns Shares (as the case may be), stating that in the opinion of such counsel
(which opinion and counsel shall be reasonably satisfactory to the Company) such
proposed Transfer does not involve a transaction requiring registration or
qualification of such Restricted Shares, Restricted Founder Shares or
Registrable Bear Stearns Shares (as the case may be) under the Securities Act or
the securities or "blue sky" laws of any state of the United States provided,
however, that no such opinion of counsel shall be necessary for a Transfer by an
Investor which is a partnership to a partner of such Investor, or a retired
partner of such holder who retires after the date hereof, or the estate of
15
<PAGE>
any such partner or retired partner, or in the case of Rho Management Trust I,
to the beneficial owners of such trust, if in each case the transferee agrees in
writing to be subject to the terms of this Section 13 to the same extent as if
such transferee were originally a signatory to this Agreement. Such holder of
Restricted Shares, Restricted Founder Shares or Registrable Bear Stearns Shares
(as the case may be) shall be entitled to Transfer such Restricted Shares,
Restricted Founder Shares or Registrable Bear Stearns Shares (as the case may
be) in accordance with the terms of the notice delivered to the Company, if the
Company does not reasonably object to such Transfer and request such opinion
within three business days after delivery of such notice, or, if it requests
such opinion, does not reasonably object to such Transfer within five days after
delivery of such opinion. Each certificate or other instrument evidencing the
securities issued upon the Transfer of any Restricted Shares, Restricted Founder
Shares or Registrable Bear Stearns Shares (as the case may be) (and each
certificate or other instrument evidencing any untransferred balance of such
Registered Shares, Restricted Founder Shares or Registrable Bear Stearns Shares)
shall bear the legend set forth in paragraph (b) above unless (i) in such
opinion of counsel registration of any future Transfer is not required by the
applicable provisions of the Securities Act or (ii) the Company shall have
waived the requirement of such legends.
(d) Notwithstanding the foregoing provisions of this Section,
the restrictions imposed by this Section upon the transferability of any
Restricted Shares, Founder Shares or Registrable Bear Stearns Shares shall cease
and terminate when (i) any such Restricted Shares, Restricted Founder Shares or
Registrable Bear Stearns Shares (as the case may be) (as the case may be) are
sold or otherwise disposed of (A) pursuant to an effective registration
statement under the Securities Act or (B) in a transaction contemplated by
paragraph (c) above which does not require that the Restricted Shares,
Restricted Founder Shares or Registrable Bear Stearns Shares (as the case may
be) so transferred bear the legend set forth in paragraph (b) hereof, or (ii)
the holder of such Restricted Shares, Restricted Founder Shares or Registrable
Bear Stearns Shares has met the requirements for Transfer of such Restricted
Shares, Restricted Founder Shares or Registrable Bear Stearns Shares (as the
case may be) under Rule 144(k) under the Securities Act. Whenever the
restrictions imposed by this Section shall terminate, the holder of any
Restricted Shares, Restricted Founder Shares or Registrable Bear Stearns Shares
(as the case may be) as to which such restrictions have terminated shall be
entitled to receive from the Company, without expense, a new certificate not
bearing the restrictive legend set forth in paragraph (b) above and not
containing any other reference to the restrictions imposed by this Section.
SECTION 14. Termination.
This Agreement shall terminate and be of no further force or
effect when there shall not be any Restricted Shares, Restricted Founder Shares
or Registrable Bear Stearns Shares, provided that in no event shall this
Agreement terminate with respect to NBC prior to the issuance and delivery of
all shares of Preferred Stock and/or Common Stock pursuant to the NBC Letter
Agreement unless the NBC Letter Agreement terminates prior thereto and no shares
of Preferred Stock and/or Common Stock have been issued to NBC (in which case
this Agreement shall terminate as to NBC), provided further that the rights of
the Stockholders and Bear Stearns and obligations of the Corporation under
Sections 2, 3 and 4 hereof shall earlier terminate and be of no further force or
effect at such earlier time as to any Stockholder or Bear Stearns as the
provisions of Rule 144(k) are applicable to the Restricted Shares, Restricted
16
<PAGE>
Founder Shares or Registrable Bear Stearns Shares (as the case may be) then held
by such Stockholder (or, with respect to NBC, to the Restricted Shares issuable
to NBC pursuant to the NBC Letter Agreement.)
SECTION 15. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the
Company, the Stockholders and Bear Stearns and, subject to Section 16, their
respective successors, permitted assigns, heirs and legal representatives (as
the case may be).
SECTION 16. Assignment.
This Agreement and the rights and obligations of the parties
hereunder shall be assignable by the parties hereto and their respective
successors and assigns, except that (i) Intel Corporation and/or NBC may assign
its rights and obligations hereunder only in connection with a sale or transfer
of Restricted Shares at any time, and (ii) any other Stockholder may assign its
rights and obligations hereunder only in connection with a sale or transfer of
Restricted Shares or Restricted Founder Shares, as the case may be, (a) if such
Stockholder is a partnership, to any partner thereof (in the case of a pro rata
distribution by a Stockholder that is a partnership to its partners), (b) if
such Stockholder is a corporation, to any majority-owned subsidiary of such
Stockholder (provided that such rights may be exercised by such subsidiary only
for so long as such subsidiary continues to be majority-owned by such
Stockholder), (c) if such Stockholder is a natural person, to the spouse or
descendants of such person or any trust for the benefit of any thereof, (d)
otherwise to any other person or entity to whom at least 250,000 Restricted
Shares or Restricted Founder Shares (in each case as constituted on the date
hereof) (or lesser number of such shares if representing all of the shares then
held by such Stockholder), have been sold or otherwise transferred in accordance
with the terms of the Fourth Amended and Restated Stockholders' Agreement dated
as of the date hereof, among the Company and the other parties thereto or (e)
(x) in the case of Rho Management Trust I, to the beneficial owners of such
trust, (y) in the case of Cox Interactive Media, Inc., to any entity the
majority voting power of which is, directly or indirectly, controlled by Cox
Enterprises, Inc. and (z) in the case of Tenet Healthcare Corporation, to an
entity over which Tenet Healthcare Corporation has Control (as hereinafter
defined), provided, however, that the Company is given written notice at the
time of such assignment stating the name and address of the assignee and
identifying the securities with respect to which the rights and benefits
hereunder are being assigned and such assignee expressly agrees in writing with
the Company and the other Stockholders to be bound by and to comply with all
applicable provisions of this Agreement, whereupon such person or entity shall
have the benefits of, and shall be subject to the restrictions contained in,
this Agreement with respect to such securities. Any assignment pursuant to this
Section 16 shall not relieve, release or otherwise discharge the Stockholder
effecting such assignment from its obligations under this Agreement. This
Agreement shall bind and inure to the benefit of the Company, each Stockholder,
and its or his respective successors, permitted assigns, heirs and legal
representatives. For purposes of this Section 16, "Control" or "Controlled"
shall mean the possession, direct or indirect, of the power to direct or cause
the direction of the management or policies of an entity, whether through the
ownership of voting securities, by contract or otherwise.
17
<PAGE>
SECTION 17. Entire Agreement.
This Agreement contains the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior arrangements
or understandings with respect hereto, including, without limitation, the Old
Registration Rights Agreement, which is hereby terminated in its entirety and of
no further force or effect.
SECTION 18. Notices.
All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument and shall be deemed to have been duly given when delivered in
person, by telecopy, by nationally-recognized overnight courier, or by first
class registered or certified mail, postage prepaid, addressed to such party at
the address set forth below or such other address as may hereafter be designated
in writing by the addressee to the addressor:
(i) if to the Company, to:
iVillage, Inc.
170 Fifth Avenue
3rd Floor
New York, New York 10010
Fax: (212) 604-9133
Telephone: (212) 604-0963
Attention: Candice Carpenter;
with a copy to:
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, New York 10103
Fax: (212) 506-5151
Telephone: (212) 506-5325
Attention: Martin H. Levenglick, Esq.;
(ii) if to an Investor to the address specified
on such Investor's signature page hereto;
(iii) if to the Founders, to the respective addresses set
forth on Annex A hereto.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next business day and (c) in the case of mailing, on
the third business day following such mailing if sent by certified mail, return
receipt requested.
18
<PAGE>
SECTION 19. Modifications; Amendments; Waivers.
The terms and provisions of this Agreement may not be modified
or amended, except pursuant to a writing signed by the Company and the Investors
holding at least sixty (60%) percent of the Restricted Shares (based upon Common
Stock equivalents) held by all Investors; provided, however, that any amendment
or modification that would adversely affect the rights of the Founders hereunder
shall require the written approval of Founders holding at least 66-2/3% of the
outstanding Restricted Founder Shares (as the case may be); provided,
however, that any amendment or modification that would adversely affect the NBC
Additional Demand right (including NBC's right to select and be reimbursed for
expenses incurred by the NBC Counsel in connection with the NBC Additional
Demand); provided further, however, that no modification or amendment shall
discriminate against any Stockholder or Bear Stearns without the consent of such
Stockholder or Bear Stearns.
SECTION 20. Counterparts.
This Agreement may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement.
SECTION 21. Headings.
The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
SECTION 22. Severability.
It is the desire and intent of the parties that the provisions
of this Agreement be enforced to the fullest extent permissible under the law
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any provision of this Agreement would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 23. Governing Law.
This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any law or rule that would cause the laws of any jurisdiction other
than the State of New York to be applied.
SECTION 24. Limitation on liability to General Electric Pension Trust.
Any monetary obligation of the Trustees of General Electric
Pension Trust shall be enforceable solely against the assets of such Pension
Trust and not against any Trustee individually, General Electric Pension Trust
(other than as necessary to enforce such rights against such assets) or GE
Investment Management Incorporated.
19
<PAGE>
COUNTERPART SIGNATURE PAGE TO THE FOURTH
AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT DATED AS OF DECEMBER 4, 1998
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
i VILLAGE INC.
By: /s/ Steve Elkes
-------------------------------
Name: Steve Elkes
Title: Vice President
<PAGE>
COUNTERPART SIGNATURE PAGE TO THE FOURTH
AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT DATED AS OF December 4, 1998
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
FOUNDERS:
/s/ Candice Carpenter
-----------------------------------
Candice Carpenter
/s/ Nancy Evans
-----------------------------------
Nancy Evans
/s/ Robert Levitan
-----------------------------------
Robert Levitan
INVESTOR:
/s/ Admirals, L.P.
-----------------------------------------
Admirals, L.P.
/s/ America Online, Inc.
-----------------------------------------
America Online, Inc.
/s/ Applewood Associates
-----------------------------------------
Applewood Associates
/s/ William James Bell 1993 Trust
-----------------------------------------
William James Bell 1993 Trust
/s/ Laurence Berk
-----------------------------------------
Laurence Berk
/s/ Boston Millenia Associates I
Partnership
-----------------------------------------
Boston Millenia Associates I Partnership
/s/ Boston Millenia Partner Limited
Partnership
-----------------------------------------
Boston Millenia Partner Limited
Partnership
/s/ CIBC Wood Gundy Ventures, Inc.
-----------------------------------------
CIBC Wood Gundy Ventures, Inc.
/s/ Convergence Entrepreneurs Fund I
-----------------------------------------
Convergence Entrepreneurs Fund I
/s/ Convergence Ventures I, L.P.
-----------------------------------------
Convergence Ventures I, L.P.
/s/ Cox Interactive Media, Inc.
-----------------------------------------
Cox Interactive Media, Inc.
/s/ Gannet International Communications
Inc.
-----------------------------------------
Gannett International Communications,
Inc.
/s/ Leavitt Family Trust
-----------------------------------------
Leavitt Family Trust
/s/ Ralph Mack
-----------------------------------------
Ralph Mack
/s/ Moore Global Investments, Ltd.
-----------------------------------------
Moore Global Investments, Ltd.
/s/ Fred Nazem
-----------------------------------------
Fred Nazem
/s/ Nexus Capital Partners I, L.P.
-----------------------------------------
Nexus Capital Partners I, L.P.
/s/ NIG - Village Ltd.
-----------------------------------------
NIG - Village Ltd.
/s/ O'Sullivan Graev & Karabell. L.L.P.
("OGK") Profit Sharing Plan F/B/O
Martin H. Levenglick
-----------------------------------------
O'Sullivan Graev & Karabell. L.L.P.
("OGK") Profit Sharing Plan F/B/O
Martin H. Levenglick
/s/ Stephen M. Parish
-----------------------------------------
Stephen M. Parish
/s/ Remington Investment Strategies, L.P.
-----------------------------------------
Remington Investment Strategies, L.P.
/s/ Rho Management Trust I
-----------------------------------------
Rho Management Trust I
/s/ Merrill Roth
-----------------------------------------
Merrill Roth
/s/ Seligman Communications and
Information Fund
-----------------------------------------
Seligman Communications and Information
Fund
/s/ Sonem Partners
-----------------------------------------
Sonem Partners
/s/ Fred Tanzer
-----------------------------------------
Fred Tanzer
/s/ TCI Ventures Group, LLC
-----------------------------------------
TCI Ventures Group, LLC
/s/ TCVII Strategic Partners, L.P.
-----------------------------------------
TCVII Strategic Partners, L.P.
/s/ TCVII, (Q), L.P.
-----------------------------------------
TCVII, (Q), L.P.
/s/ TCVII, V.O.F.
-----------------------------------------
TCVII, V.O.F.
/s/ Technology Crossover Ventures II,
C.V.
-----------------------------------------
Technology Crossover Ventures II, C.V.
/s/ Technology Crossover Ventures II,
L.P.
-----------------------------------------
Technology Crossover Ventures II, L.P.
/s/ Tenet Healthcare Corporation
-----------------------------------------
Tenet Healthcare Corporation
/s/ Transatlantic Venture Partners C.V.
-----------------------------------------
Transatlantic Venture Partners C.V.
/s/ Tribune Company
-----------------------------------------
Tribune Company
/s/ Norman Tulchin
-----------------------------------------
Norman Tulchin
/s/ Vantage Point Venture Partners 1996,
LP
-----------------------------------------
Vantage Point Venture Partners 1996, LP
/s/ Vantage Point Communications
Partners, LP
-----------------------------------------
Vantage Point Communications Partners, LP
/s/ Van Wagoner Capital Management
-----------------------------------------
Van Wagoner Capital Management
<PAGE>
COUNTERPART SIGNATURE PAGE TO THE FOURTH
AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT DATED AS OF DECEMBER 4, 1998
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
BEAR, STEARNS & CO. INC.
By: /s/ Bear, Stearns & Co. Inc.
-------------------------------
Name: Richard C. Metrick
Title: Senior Managing Director
<PAGE>
ANNEX A
- -------------------------------------------------------------------------------
Founder
- -------------------------------------------------------------------------------
Candice Carpenter
c/o iVillage Inc.
170 Fifth Avenue
New York, New York 10010
- -------------------------------------------------------------------------------
Nancy Evans
c/o iVillage Inc.
170 Fifth Avenue
New York, New York 10010
- -------------------------------------------------------------------------------
Robert Levitan
c/o iVillage Inc.
170 Fifth Avenue
New York, New York 10010
- -------------------------------------------------------------------------------
<PAGE>
Health ResponseAbility Systems, Inc.
ParentsPlace.com, Inc.
iBaby, Inc.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of our
report dated July 17, 1998, on our audits of the consolidated financial
statements of iVillage Inc. and Subsidiaries as of December 31, 1997 and 1996
and for the two years in the period ended December 31, 1997 and the period from
July 1, 1995 (inception) to December 31, 1995. We also consent to the reference
to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
New York, New York
December 9, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> SEP-30-1998 DEC-31-1997
<CASH> 8,768 4,335
<SECURITIES> 0 0
<RECEIVABLES> 3,577 2,479
<ALLOWANCES> (723) (280)
<INVENTORY> 0 0
<CURRENT-ASSETS> 12,260 6,835
<PP&E> 9,373 5,260
<DEPRECIATION> (3,697) (1,817)
<TOTAL-ASSETS> 23,302 16,236
<CURRENT-LIABILITIES> 11,975 5,575
<BONDS> 0 0
0 0
16 9
<COMMON> 3 3
<OTHER-SE> 11,070 10,510
<TOTAL-LIABILITY-AND-EQUITY> 23,302 16,236
<SALES> 0 0
<TOTAL-REVENUES> 9,126 6,819
<CGS> 0 0
<TOTAL-COSTS> 42,195 27,104
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 219
<INCOME-PRETAX> (32,449) (21,301)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (32,449) (21,301)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (32,449) (21,301)
<EPS-PRIMARY> (5.21) (4.55)
<EPS-DILUTED> (5.21) (4.55)
</TABLE>
