<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 19, 1999
REGISTRATION NO. 333-72799
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THESTREET.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7374 06-15150824
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
</TABLE>
------------------------
TWO RECTOR STREET
NEW YORK, NEW YORK 10006
(212) 271-4004
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
KEVIN W. ENGLISH
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
THESTREET.COM, INC.
TWO RECTOR STREET
NEW YORK, NEW YORK 10006
(212) 271-4004
(800) 562-9571
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies To:
<TABLE>
<S> <C>
DAVID J. GOLDSCHMIDT, ESQ. ALEXANDER D. LYNCH, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP ALAN P. BLAUSTEIN, ESQ.
919 THIRD AVENUE BROBECK, PHLEGER & HARRISON LLP
NEW YORK, NEW YORK 10022 1633 BROADWAY, 47TH FLOOR
(212) 735-3000 NEW YORK, NEW YORK 10019
(212) 581-1600
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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
under the Securities Act, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Stock, par value $.01 per share (including the associated
Rights to purchase Series A Junior Participating Stock)(2)........ $82,225,000 $22,859(3)
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933.
(2) The Rights to purchase shares of our Series A Junior Participating Preferred
Stock initially are attached to and trade with the shares of our common
stock being registered hereby. Value attributed to such Rights, if any, is
reflected in the market price of our common stock.
(3) $20,850 of the registration fees has previously been paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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 to offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion. Dated April 19, 1999
5,500,000 Shares
[LOGO]
Common Stock
----------------------
This is an initial public offering of shares of common stock of
TheStreet.com, Inc. All of the 5,500,000 shares of common stock are being sold
by the TheStreet.com, Inc.
Prior to this offering, there has been no public market for the common
stock. It is currently estimated that the initial public offering price per
share will be between $11 and $13. The common stock has been approved for
quotation on the Nasdaq National Market under the symbol "TSCM".
See "Risk Factors" beginning on page 6 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 discounts.................................................. $ $
Proceeds, before expenses, to TheStreet.com............................. $ $
</TABLE>
The underwriters may, under certain circumstances, purchase up to an
additional 741,667 shares from TheStreet.com and up to an additional 83,333
shares from Kevin English, TheStreet.com's Chairman of the Board, Chief
Executive Officer and President, at the initial public offering price less the
underwriting discount. TheStreet.com will not receive any of the proceeds from
the sale of the shares being sold by Mr. English.
----------------------
The underwriters expect to deliver the shares against payment in New York,
New York on , 1999.
Goldman, Sachs & Co.
Hambrecht & Quist
Thomas Weisel Partners LLC
----------------------
Prospectus dated , 1999.
<PAGE>
OUTSIDE PORTION OF GATEFOLD
Title text reading "TheStreet.com" (centered at top of page)
I. Six photos of the company's editors and reporters at work (diagonal
across page from top left to bottom right)
II. Text:
TheStreet.com is a leading web-based provider of original, timely,
comprehensive and trustworthy financial news, commentary and information aimed
at helping readers make informed investment decisions (bottom left of page)
III. Screenprint--Full-length screenprint of front page of TheStreet.com web
site (right side of page)
GATEFOLD
Title text reading "TheStreet.com" (top left-hand corner of gatefold)
I. Screenprint--Snapshot of TheStreet.com web site stock quote function in
the "Tools of the Trade" section (bottom right hand corner of screenprint
overlayed by II below) (upper left-hand corner of gatefold)
II. Photograph of Brenda Buttner with the following text (upper left-hand
corner of gatefold):
<Brenda Buttner>
Contributing Editor
III. Screenprint--Snapshot of TheStreet.com web site "Herb on the Street"
column by Herb Greenberg (bottom left-hand corner of screenprint overlayed by IV
below) (bottom left-hand corner of gatefold)
IV. Photograph of Herb Greenberg with the following text (bottom left-hand
corner of gatefold):
<Herb Greenberg>
Senior Columnist
V. Screenprint--Snapshot of TheStreet.com web site "Tech Stocks" section
(overlayed by VI below) (upper center of gatefold)
VI. Screenprint--Snapshot of TheStreet.com web site "Basics" section (center
of gatefold)
VII. Photograph of the newsroom of TheStreet.com overlayed in the center by
TheStreet.com logo (bottom center of gatefold)
VIII. Photograph of James J. Cramer with the following text (top right-hand
corner of gatefold):
<James J. Cramer>
Contributing Editor and Co-Founder
IX. Screenprint--Snapshot of TheStreet.com web site "WRONG! Rear Echelon
Revelations" column by James J. Cramer (overlayed by VIII above) (top right-hand
corner of gatefold)
X. Photograph of Dave Kansas with the following text (bottom right-hand
corner of gatefold):
<Dave Kansas>
Editor-in-Chief
XI. Text (vertical column along far right of the gatefold):
TheStreet.com combines the most important qualities of traditional print
journalism--accuracy, intelligence, fairness and wit--with the web's advantages
as a financial news medium--timeliness, interactivity and global distribution.
Our journalists produce quality news coverage and in-depth analysis in a
real-time, interactive medium ideally suited to the needs of today's investors.
Our editorial staff consists of more than 50 professional reporters and
editors who, together with two dozen outside contributors throughout the world,
produce approximately 40 original news, analysis and commentary pieces each
business day.
Our financially oriented readers constitute an upscale demographic that is
desirable to financial services and luxury goods advertisers.
2
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information about our company and the common stock being sold in this offering
and our financial statements and the notes to those statements included
elsewhere in this prospectus.
THESTREET.COM
TheStreet.com is a leading web-based provider of original, timely,
comprehensive and trustworthy financial news, commentary and information aimed
at helping readers make informed investment decisions. TheStreet.com combines
the most important qualities of traditional print journalism--accuracy,
intelligence, fairness and wit--with the web's advantages as a financial news
medium--timeliness, interactivity and global distribution. With a staff of more
than 50 professional reporters and editors, together with two dozen outside
contributors, we update our site with approximately 40 original stories
throughout each business day and with many additional features on weekends.
Trained at the nation's leading financial news organizations, our journalists
produce quality news coverage and in-depth analysis in a real-time, interactive
medium ideally suited to the needs of today's investors. We have developed a
community of loyal readers who turn to TheStreet.com for their financial and
investing news and information needs. During 1998, our subscriber base grew more
than 380% to approximately 32,000 at the end of the year; as of March 31, 1999,
we had over 51,000 subscribers. We derive our revenues primarily from sales of
subscriptions to our web site and from sales of advertising targeted to our
desirable reader demographic.
In recent years, individuals have been taking greater control of their
investments. The web has facilitated this behavioral shift by providing
investors with easy access to information that was once generally available only
to investment professionals. According to International Data Corporation, an
independent market research firm, the number of online brokerage accounts in the
United States is expected to grow from 3.5 million at the end of 1997 to
24 million at the end of 2002, with online brokers expected to manage over
$1.5 trillion in assets by the end of 2002. Increasingly, this growing group of
self-directed investors is seeking timely, comprehensive and trustworthy
financial news and information that can help them make informed investing
decisions.
At TheStreet.com, we aim to meet the increasing demands of today's
investors by providing a broad range of original financial news and in-depth
anaylsis through a real-time, interactive medium. Our objective is to establish
TheStreet.com as the leading and most comprehensive financial news and
information destination for investors. We aim to further develop a community of
loyal readers in order to build our subscription base and attract advertisers.
Our strategy includes the following key elements:
o expand our web site as a comprehensive financial news and information
destination;
o leverage our content to maximize revenue across a diverse customer base;
o capitalize on reader demographics desirable to advertisers;
o leverage strategic partnerships; and
o build brand awareness of TheStreet.com and our writers.
In February 1999, The New York Times Company made an investment for a
minority equity stake in TheStreet.com. Recently, we entered into memoranda of
understanding with The New York Times Electronic Media Company under which we
have agreed to the following proposals:
o Promotion of our web site by The New York Times to registered users of
its web site;
o Indexing of our headlines on the Business section of The New York Times web
site and indexing of headlines from the Business section of The New York Times
web site on our web site;
o Licensing our investment tools to The New York Times; and
o Creating a jointly owned newsroom to provide continuous coverage of business
news.
In April 1999, we entered into a memorandum of understanding with News
America Incorporated under which:
o News America will purchase $7.5 million of the common stock to be sold in this
offering at a price per share equal to the initial public offering price;
3
<PAGE>
o We will enter into an advertising agreement with News America under which we
will agree to advertise on the media properties of News America and its
affiliates, including Fox Entertainment Group, Inc.; and
o We will enter into a cablecast agreement with Fox News Network L.L.C. under
which TheStreet.com and Fox News Network will co-produce a television show
featuring TheStreet.com's brand name, editorial staff and outside contributors
to be cablecast on Fox News Channel.
Our principal executive offices are located at Two Rector Street, 14th
Floor, New York, New York 10006. Our telephone number at that location is (800)
562-9571. Our web site is www.thestreet.com. The information contained on our
web site is not incorporated by reference into this prospectus.
Unless otherwise indicated, all information in this prospectus
(i) reflects the conversion of all outstanding shares of our convertible
preferred stock and accumulated dividends as of March 31, 1999, into an
aggregate of 4,406,129 shares of common stock upon the completion of this
offering, assuming that the initial public offering price is $12.00 per share;
and (ii) assumes no underwriters' exercise of the over-allotment option. See
"Description of Capital Stock" and "Underwriting".
THE OFFERING
The following information assumes that the underwriters do not exercise the
option granted by us to purchase additional shares in this offering. The
following information excludes shares of common stock issuable upon exercise of
options, which vest over certain periods of time, outstanding as of the date of
this prospectus. See "Underwriting".
<TABLE>
<S> <C>
Common stock offered by TheStreet.com............................. 5,500,000 shares
Common stock to be outstanding after the offering................. 25,075,037 shares(1)
Nasdaq National Market symbol..................................... "TSCM"
Use of proceeds................................................... To provide working capital to develop new
products and expand internationally, to fund
general corporate purposes and to create a
public market for our common stock.
</TABLE>
- ------------------
(1) Based on the number of shares actually outstanding as of March 31, 1999,
including 4,406,129 shares issuable upon the conversion of all our
outstanding convertible preferred stock and accumulated dividends and
excludes (i) shares subject to outstanding options or reserved for issuance
under our amended and restated 1998 stock incentive plan and (ii) the
exercise of the over-allotment option.
4
<PAGE>
SUMMARY FINANCIAL DATA
The following table summarizes our statement of operations. The share
information gives effect to the conversion of our business from a limited
liability company into a C corporation at the beginning of each period
indicated. See our financial statements and the notes to those statements
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
JUNE 18, 1996
(INCEPTION)
THROUGH YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1998
--------------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................................................... $ -- $ 589 $ 4,623
Gross profit (loss)............................................ (298) (558) 668
Loss from operations........................................... (1,712) (5,359) (16,131)
Net loss....................................................... $(1,733) $ (5,764) $(16,358)
------- -------- --------
------- -------- --------
Pro forma basic and diluted net loss per share................... $ (0.28) $ (0.95) $ (1.65)
------- -------- --------
------- -------- --------
Pro forma weighted average basic and diluted
shares outstanding (1)......................................... 6,086 6,086 9,923
------- -------- --------
------- -------- --------
</TABLE>
- ------------------
(1) The pro forma weighted average shares outstanding give effect to the
conversion of all of our outstanding convertible preferred stock and
accumulated dividends as of December 31, 1998, into an aggregate of
3,998,505 shares of common stock as of December 31, 1998.
The following table is a summary of our balance sheet as of December 31,
1998, (i) on an actual basis and (ii) on an as adjusted basis to reflect the
conversion of all outstanding shares of our convertible preferred stock and
accumulated dividends into shares of common stock and to give effect to the sale
of the 5,500,000 shares of common stock offered by this prospectus at an assumed
initial public offering price of $12.00 per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses. See "Use
of Proceeds" and "Capitalization".
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................. $24,612 $83,592
Working capital....................................................................... 22,918 81,898
Total assets.......................................................................... 27,581 86,561
Redeemable convertible preferred stock................................................ 21,107 --
Total stockholders' equity............................................................ 2,417 82,504
</TABLE>
5
<PAGE>
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. The risks described below are all the material risks facing
TheStreet.com. We may also face some non-material risks which we have not
discussed in the following description of our risk factors. If any of the
following risks occur, our business, results of operations or financial
condition could be materially adversely affected.
RISKS RELATED TO OUR BUSINESS
OUR LIMITED OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT
We commenced operations in June 1996 and launched our web site in November
1996. Accordingly, we have only a limited operating history upon which you can
evaluate our business and prospects. An investor in our common stock must
consider the risks, expenses and difficulties frequently encountered by early
stage companies in new and rapidly evolving markets, including web-based
financial news and information companies. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
WE HAVE A HISTORY OF LOSSES AND WE ANTICIPATE LOSSES WILL CONTINUE
As of December 31, 1998, we had an accumulated deficit of $12.5 million
that represented our cumulative loss from May 7, 1998, which was the date we
converted to a C corporation. We have not achieved profitability and expect to
continue to incur net losses in 1999 and subsequent fiscal periods. We expect to
continue to incur significant operating expenses and, as a result, will need to
generate significant revenues to achieve profitability, which may not occur.
Even if we do achieve profitability, we may be unable to sustain or increase
profitability on a quarterly or annual basis in the future. See "Selected
Financial Data" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations".
IF WE ARE UNABLE TO ATTRACT OR RETAIN QUALIFIED EDITORIAL STAFF AND OUTSIDE
CONTRIBUTORS, OUR BUSINESS COULD BE HARMED.
Our future success depends substantially upon the continued efforts of our
editorial staff and outside contributors to produce original, timely,
comprehensive and trustworthy content. Only a few of our writers are bound by
employment agreements. Competition for financial journalists is intense, and we
may not be able to retain existing or attract additional highly qualified
writers in the future. If we lose the services of a significant number of our
editorial staff and outside contributors or are unable to continue to attract
additional writers with appropriate qualifications, our business, results of
operations and financial condition could be materially adversely affected.
In addition, we believe that some of our writers, including Mr. James J.
Cramer and Mr. Herb Greenberg, have a large and loyal following among our
readers. Mr. Cramer has an employment agreement with us that terminates in
February 2003. Mr. Greenberg has an employment agreement with us that terminates
in March 2001. If we lose the services of prominent members of our editorial
staff, including Mr. Greenberg, or popular outside contributors, including
Mr. Cramer, a significant number of our subscribers may not renew their
subscriptions or the number of our readers may decrease. A significant reduction
in the number of our subscribers or readers could materially adversely affect
our business, results of operations and financial condition.
INTENSE COMPETITION COULD REDUCE OUR MARKET SHARE AND HARM OUR FINANCIAL
PERFORMANCE
An increasing number of financial news and information sources compete for
consumers' and advertisers' attention and spending. We expect this competition
to continue to increase. We compete for advertisers, readers, staff and outside
contributors with many types of companies, including:
o online services or web sites focused on business, finance and investing, such
as MarketWatch.com, The Wall Street Journal Interactive Edition and The Motley
Fool;
o publishers and distributors of traditional media, including print, radio and
television,
6
<PAGE>
such as The Wall Street Journal, Fortune, Bloomberg Business Radio and CNBC;
o providers of terminal-based financial news and data, such as Bloomberg
Business News, Reuters News Service, Dow Jones Markets and Bridge News
Service;
o web "portal" companies, such as Yahoo! and America Online; and
o online brokerage firms, many of which provide financial and investment news
and information, such as Charles Schwab and E*TRADE.
Our ability to compete depends on many factors, including the originality,
timeliness, comprehensiveness and trustworthiness of our content and that of our
competitors, the ease of use of services developed either by us or our
competitors and the effectiveness of our sales and marketing efforts.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. This may allow them to devote greater resources than we
can to the development and promotion of their services. These competitors may
also engage in more extensive research and development, undertake more
far-reaching marketing campaigns, adopt more aggressive pricing policies
(including offering their financial news for free) and make more attractive
offers to existing and potential employees, outside contributors, strategic
partners and advertisers. Our competitors may develop content that is equal or
superior to ours or that achieves greater market acceptance than ours. It is
also possible that new competitors may emerge and rapidly acquire significant
market share. We may not be able to compete successfully for advertisers,
readers, staff or outside contributors, which could materially adversely affect
our business, results of operations and financial condition. Increased
competition could result in price reductions, reduced margins or loss of market
share, any of which could materially adversely affect our business, results of
operations and financial condition.
We also compete with other web sites, television, radio and print media for
a share of advertisers' total advertising budgets. If advertisers perceive the
Internet or our web site to be a limited or an ineffective advertising medium,
they may be reluctant to devote a portion of their advertising budget to
Internet advertising or to advertising on our web site. See
"Business--Competition".
A FAILURE TO ESTABLISH AND MAINTAIN STRATEGIC RELATIONSHIPS WITH OTHER WEB SITES
COULD DECREASE OUR SUBSCRIBER AND READER BASE, WHICH MAY HARM OUR BUSINESS
We depend on establishing and maintaining subscription distribution
relationships with online financial services firms and content syndication
relationships with high-traffic web sites for a significant portion of our
subscriber and reader base. There is intense competition for relationships with
these firms and placement on these sites, and we may have to pay significant
fees to establish additional content syndication relationships or maintain
existing relationships in the future. We may be unable to enter into
relationships with these firms or sites on commercially reasonable terms or at
all. Even if we enter into these relationships, they may not attract significant
numbers of readers. Therefore, our site may not receive a significant number of
additional subscribers or readers from such relationships.
Many companies that we may approach for a strategic relationship or who
already have strategic relationships with us also provide financial news and
information from other sources. As a result, these companies may be reluctant to
enter into or maintain strategic relationships with us. Our business, results of
operations and financial condition could be materially adversely affected if we
do not establish additional, and maintain existing, strategic relationships on
commercially reasonable terms or if any of our strategic relationships do not
result in an increase in the number of subscribers or readers of our web site.
OUR MEMORANDA OF UNDERSTANDING MAY NOT MATERIALIZE INTO FINAL AGREEMENTS
Recently, we entered into a memorandum of understanding with each of
DLJdirect, Inc., The New York Times Electronic Media Company and News America
Incorporated. We cannot assure you that we will be able to execute final
agreements contemplated by such
7
<PAGE>
memoranda on terms favorable to us or at all. See "Prospectus
Summary--TheStreet.com", "Business--Subscription Sales" and "Certain
Transactions--The New York Times Investment".
POTENTIAL FLUCTUATIONS IN OUR QUARTERLY FINANCIAL RESULTS MAKE FINANCIAL
FORECASTING DIFFICULT
Our quarterly operating results may fluctuate significantly in the future
as a result of a variety of factors, many of which are outside our control.
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. Similar seasonal or other patterns may develop in our industry.
We believe that quarter-to-quarter comparisons of our operating results may
not be a good indication of our future performance, nor would our operating
results for any particular quarter be indicative of future operating results. In
some future quarters our operating results may be below the expectations of
public market analysts and investors. In such an event, the price of our common
stock may fall. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations".
OUR FUTURE SUCCESS DEPENDS ON MAINTAINING AND INCREASING OUR SUBSCRIBER BASE
Our future success is highly dependent on an increase in the number of
readers who are willing to subscribe to online financial news and information
publications. The number of Internet users willing to pay for online financial
news and information may not continue to increase. If the market for
subscription-based online financial news and information publications develops
more slowly than we expect, our business, results of operations and financial
condition could be materially adversely affected. Further, we presently offer a
portion of our content for free. In the future we intend to increase the free
portion of our content to increase traffic. However, this change may reduce the
number of our new or renewing subscribers, which could have a material adverse
effect on our business, results of operations and financial condition.
Additionally, during the fourth quarter of 1998, we began to participate in a
program where our readers can receive annual subscriptions to our site by
redeeming frequent flyer miles through a third-party service. While we expect
the number of annual subscriptions attributable to this program to increase in
the future, additional readers may not subscribe through this program. Further,
while we do not expect that these subscribers will renew their subscriptions at
a rate consistent with the renewal rate of our general subscriber base, it is
possible that the actual renewal rate of these subscribers may be significantly
lower than our expectations, which could materially adversely affect our
business, results of operations and financial condition.
WE DEPEND ON OUR TOP ADVERTISERS FOR A SIGNIFICANT PORTION OF OUR ADVERTISING
REVENUES, AND THE LOSS OF ONE OR MORE OF OUR TOP ADVERTISERS MAY HARM OUR
BUSINESS
In 1998, our top advertiser accounted for approximately 40%, and our top
five advertisers accounted for approximately 67%, of our total advertising
revenues. Our business, results of operations and financial condition could be
materially adversely affected by the loss of one or more of our top advertisers.
Further, if we do not continue to increase our revenue from financial services
advertisers or attract advertisers from non-financial industries, our business,
results of operations and financial condition could be materially adversely
affected. We believe that we charge advertising rates that are among the highest
of financial web sites. However, there can be no assurance that we will be able
to command premium rates in the future. Further, as we increase the free portion
of our site, which may command lower advertising rates than our premium
sections, current advertisers may seek to switch to these less expensive areas.
As is typical in the advertising industry, our advertising contracts have
cancellation provisions.
FAILURE TO RETAIN AND INTEGRATE OUR ADVERTISING SALES FORCE COULD RESULT IN
LOWER ADVERTISING REVENUES
We depend on our internal advertising sales department to maintain and
increase our advertising sales. As of March 31, 1999, our advertising sales
department consisted of 11
8
<PAGE>
employees. The success of our advertising sales department is subject to a
number of risks, including the competition we face from other companies in
hiring and retaining sales personnel and the length of time it takes new sales
personnel to become productive. Our business, results of operations and
financial condition could be materially adversely affected if we do not maintain
an effective advertising sales department.
WE MAY BE UNABLE TO MANAGE OUR GROWTH, WHICH MAY HARM OUR BUSINESS
We have experienced rapid growth in our operations. Our rapid growth has
placed, and our anticipated future growth will continue to place, a significant
strain on our managerial, operational and financial resources. To manage our
growth, we must continue to implement and improve our managerial controls and
procedures and operational and financial systems. In addition, our future
success will depend on our ability to expand, train and manage our workforce, in
particular our editorial, advertising sales and business development staff. As
of December 31, 1998, we had a total of 100 employees, as compared to 33
employees as of December 31, 1997. We expect that the number of our employees
will continue to increase for the foreseeable future. We will need to integrate
these employees into our workforce successfully. We cannot assure you that we
have made adequate allowances for the costs and risks associated with this
expansion, that our systems, procedures or controls will be adequate to support
our operations, or that our management will be able to successfully offer and
expand our services. If we are unable to manage our growth effectively, our
business, results of operations and financial condition could be materially
adversely affected.
OUR FUTURE SUCCESS DEPENDS ON THE CONTINUED SERVICES AND EFFECTIVE INTEGRATION
OF OUR KEY MANAGEMENT PERSONNEL
Our future success depends upon the continued service of certain key
management personnel. The loss of one or more of our key management personnel
could materially adversely affect our business, results of operations and
financial condition. In addition, we recently hired our new chief financial
officer and a general counsel. These individuals will have to be integrated into
our management team successfully. A few of our employees have entered into
non-competition agreements with us. However, other employees may leave us and
work for our competitors or start their own competing business.
UNEXPECTED INCREASES IN TRAFFIC MAY STRAIN OUR SYSTEMS
In the past, we have experienced significant spikes in traffic on our web
site when there have been important financial news events. In addition, the
number of our readers has continued to increase over time and we are seeking to
increase our reader base further. Accordingly, our web site must accommodate a
high volume of traffic, often at unexpected times. Our web site has in the past,
and may in the future, experience slower response times than usual or other
problems for a variety of reasons. These occurrences could cause our readers to
perceive our web site as not functioning properly and, therefore, cause them to
use other methods to obtain their financial news and information. In such a
case, our business, results of operations and financial condition could be
materially adversely affected.
WE FACE A RISK OF SYSTEM FAILURE THAT MAY RESULT IN REDUCED TRAFFIC, REDUCED
REVENUE AND HARM TO OUR REPUTATION
Our ability to provide timely information and continuous news updates
depends on the efficient and uninterrupted operation of our computer and
communications hardware and software systems. Similarly, our ability to track,
measure and report the delivery of advertisements on our site depends on the
efficient and uninterrupted operation of a third-party system, DART by
DoubleClick. These systems and operations are vulnerable to damage or
interruption from human error, natural disasters, telecommunication failures,
break-ins, sabotage, computer viruses, intentional acts of vandalism and similar
events. Although we do not have a formal disaster recovery plan, we are in the
process of developing one. Any system failure, including network, software or
hardware failure, that causes an interruption in our service or a decrease in
responsiveness of our web site could result in reduced traffic, reduced revenue
and harm to our reputation, brand and our
9
<PAGE>
relations with our advertisers. In February 1999, we entered into a one-year
Internet-hosting agreement with Exodus Communications, Inc. to maintain all of
our production servers at Exodus' New Jersey data center. Our operations depend
on Exodus' ability to protect its and our systems in its data center against
damage from fire, power loss, water damage, telecommunications failure,
vandalism and similar unexpected adverse events. Although Exodus provides
comprehensive facilities management services, including human and technical
monitoring of all production servers 24 hours per day, seven days per week,
Exodus does not guarantee that our Internet access will be uninterrupted,
error-free or secure. Any disruption in the Internet access to our web site
provided by Exodus could materially adversely affect our business, results of
operations and financial condition. Our insurance policies may not adequately
compensate us for any losses that we may incur because of any failures in our
system or interruptions in our delivery of content. Our business, results of
operations and financial condition could be materially adversely affected by any
event, damage or failure that interrupts or delays our operations.
DISRUPTIONS ASSOCIATED WITH MOVING OUR SUBSCRIPTION MANAGEMENT SYSTEM IN-HOUSE
MAY HARM OUR BUSINESS
Presently, our subscription management system is hosted by Starwave
Corporation on its systems located in Seattle, Washington. However, during 1999
we plan to move this function to our own internal systems. It is possible that
because of a variety of logistical and technical reasons we may be unable to
complete this move on time or at all. Further, we may face significant technical
problems in integrating our subscription management system with our internal
systems or maintaining our subscription management system. These problems,
should they occur, could adversely affect our ability to process online
subscriptions or to convert efficiently our free-trial members to paid
subscribers, which could materially adversely affect our business, results of
operations and financial condition.
DIFFICULTIES ASSOCIATED WITH OUR BRAND DEVELOPMENT MAY HARM OUR ABILITY TO
ATTRACT SUBSCRIBERS AND READERS
We believe that maintaining and growing awareness about the TheStreet.com
brand is an important aspect of our efforts to continue to attract subscribers
and readers. The importance of brand recognition will increase in the future
because of the growing number of web sites providing financial news and
information. We cannot assure you that our efforts to build brand awareness will
be successful.
FAILURE TO MAINTAIN OUR REPUTATION FOR TRUSTWORTHINESS MAY REDUCE THE NUMBER
OF OUR READERS, WHICH MAY HARM OUR BUSINESS
It is very important that we maintain our reputation as a trustworthy news
organization. The occurrence of events, including our misreporting a news story
or the non-disclosure of stock ownership by one or more of our writers in breach
of our compliance policy, could harm our reputation for trustworthiness. These
events could result in a significant reduction in the number of our readers,
which could materially adversely affect our business, results of operations and
financial condition.
POTENTIAL LIABILITY FOR INFORMATION DISPLAYED ON OUR WEB SITE MAY REQUIRE US TO
DEFEND AGAINST LEGAL CLAIMS, WHICH MAY CAUSE SIGNIFICANT OPERATIONAL
EXPENDITURES
We may be subject to claims for defamation, libel, copyright or trademark
infringement or based on other theories relating to the information we publish
on our web site. These types of claims have been brought, sometimes
successfully, against online services as well as other print publications in the
past. We could also be subject to claims based upon the content that is
accessible from our web site through links to other web sites. Our insurance may
not adequately protect us against these claims.
YEAR 2000 COMPLICATIONS MAY DISRUPT OUR OPERATIONS AND HARM OUR BUSINESS
Many currently installed computer systems and software products are coded
to accept only two-digit entries to identify a year in the date code field.
Consequently, on January 1, 2000, many of these systems could fail or
malfunction
10
<PAGE>
because they may not be able to distinguish between 20th century dates and 21st
century dates. Accordingly, our customers, potential customers, vendors and
strategic partners may need to upgrade their computer systems and software
products to comply with applicable "Year 2000" requirements.
Because we and our subscribers and readers are dependent, to a very
substantial degree, upon the proper functioning of our and their computer
systems, a failure of our or their computer systems to correctly recognize dates
beyond December 31, 1999, could materially disrupt our operations or the ability
of our subscribers and readers to access our web site, which could materially
adversely affect our business, results of operations and financial condition.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000 Readiness Disclosure".
FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD HARM OUR BRAND-
BUILDING EFFORTS AND ABILITY TO COMPETE EFFECTIVELY
To protect our rights to our intellectual property, we rely on a
combination of trademark and copyright law, trade secret protection,
confidentiality agreements and other contractual arrangements with our
employees, affiliates, clients, strategic partners and others. The protective
steps we have taken may be inadequate to deter misappropriation of our
proprietary information. We may be unable to detect the unauthorized use of, or
take appropriate steps to enforce, our intellectual property rights. We have
registered our trademarks in the United States and we have pending U.S.
applications for other trademarks. Effective trademark, copyright and trade
secret protection may not be available in every country in which we offer or
intend to offer our services. Failure to adequately protect our intellectual
property could harm our brand, devalue our proprietary content and affect our
ability to compete effectively. Further, defending our intellectual property
rights could result in the expenditure of significant financial and managerial
resources, which could materially adversely affect our business, results of
operations and financial condition.
WE MAY HAVE TO DEFEND AGAINST INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WHICH
MAY CAUSE SIGNIFICANT OPERATIONAL EXPENDITURES
Although we believe that our proprietary rights do not infringe on the
intellectual property rights of others, other parties may assert infringement
claims against us or claims that we have violated a patent or infringed a
copyright, trademark or other proprietary right belonging to them. We
incorporate licensed third-party technology in some of our services. In these
license agreements, the licensors have generally agreed to defend, indemnify and
hold us harmless with respect to any claim by a third party that the licensed
software infringes any patent or other proprietary right. We cannot assure you
that these provisions will be adequate to protect us from infringement claims.
Any infringement claims, even if not meritorious, could result in the
expenditure of significant financial and managerial resources on our part, which
could materially adversely affect our business, results of operations and
financial condition. See "Business--Intellectual Property".
DIFFICULTIES IN DEVELOPING NEW AND ENHANCED SERVICES AND FEATURES FOR OUR WEB
SITE COULD HARM OUR BUSINESS
We intend to introduce additional and enhanced services in order to retain
our current readers and attract new readers. If we introduce a service that is
not favorably received, our current readers may choose a competitive service
over ours or fail to renew their subscriptions. We may also experience
difficulties that could delay or prevent us from introducing new services. These
difficulties may include the loss of, or inability to obtain or maintain,
third-party technology license agreements. Furthermore, the new services we may
introduce could contain errors that are discovered after these services are
introduced. In these cases, we may need to significantly modify the design or
implementation of such services on our web site to correct these errors. Our
business, results of operations and financial condition could be materially
adversely affected if we experience difficulties in introducing new services or
if these new services are not accepted by our readers.
11
<PAGE>
RISKS RELATED TO OUR INDUSTRY
OUR ABILITY TO MAINTAIN AND INCREASE OUR READER BASE DEPENDS ON THE CONTINUED
GROWTH IN USE AND EFFICIENT OPERATION OF THE WEB
The web-based information market is new and rapidly evolving. Our business
would be materially adversely affected if web usage does not continue to grow or
grows slowly. Web usage may be inhibited for a number of reasons, such as:
o inadequate network infrastructure;
o security concerns;
o inconsistent quality of service; and
o unavailability of cost-effective, high-speed access to the Internet.
Our readers depend on Internet service providers, online service providers
and other web site operators for access to our web site. Many of these services
have experienced significant service outages in the past and could experience
service outages, delays and other difficulties due to system failures unrelated
to our systems. These occurrences could cause our readers to perceive the web in
general or our web site in particular as an unreliable medium and, therefore,
cause them to use other media to obtain their financial news and information. We
also depend on a number of information providers to deliver information and data
feeds to us on a timely basis. Our web site could experience disruptions or
interruptions in service due to the failure or delay in the transmission or
receipt of this information, which could materially adversely affect our
business, results of operations and financial condition.
A GENERAL DECLINE IN ONLINE ADVERTISING OR OUR INABILITY TO ADAPT TO TRENDS IN
ONLINE ADVERTISING COULD HARM OUR ADVERTISING REVENUES
No standards have been widely accepted to measure the effectiveness of web
advertising. If standards do not develop, existing advertisers may not continue
or increase their levels of web advertising. If standards develop and we are
unable to meet these standards, advertisers may not continue advertising on our
site. Furthermore, advertisers that have traditionally relied upon other
advertising media may be reluctant to advertise on the web. Our business,
results of operations and financial condition could be materially adversely
affected if the market for web advertising declines or develops more slowly than
expected.
Different pricing models are used to sell advertising on the web. It is
difficult to predict which, if any, will emerge as the industry standard. This
uncertainty makes it difficult to project our future advertising rates and
revenues. We cannot assure you that we will be successful under alternative
pricing models that may emerge. Moreover, "filter" software programs that limit
or prevent advertising from being delivered to a web user's computer are
available. Widespread adoption of this software could materially adversely
affect the commercial viability of web advertising, which could materially
adversely affect our advertising revenues.
We compete with other web sites, television, radio and print media for a
share
of advertisers' total advertising budgets. If advertisers perceive the web in
general or our web site in particular to be a limited or an ineffective
advertising medium, they may be reluctant to devote a portion of their
advertising budget to online advertising or to advertising on our web site.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES RELATING TO THE WEB COULD INCREASE
OUR COSTS OF TRANSMITTING DATA AND INCREASE OUR LEGAL AND REGULATORY
EXPENDITURES AND COULD DECREASE OUR READER BASE
Existing domestic and international laws or regulations specifically
regulate communications or commerce on the web. Further, laws and regulations
that address issues such as user privacy, pricing, online content regulation,
taxation and the characteristics and quality of online products and services are
under consideration by federal, state, local and foreign governments and
agencies. Several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and online
services providers in a manner similar to the regulation of long distance
telephone carriers and to impose access fees on such companies. This regulation,
if imposed, could increase the cost of transmitting data over the web. Moreover,
it
12
<PAGE>
may take years to determine the extent to which existing laws relating to issues
such as intellectual property ownership and infringement, libel, obscenity and
personal privacy are applicable to the web. The Federal Trade Commission and
government agencies in certain states have been investigating certain Internet
companies regarding their use of personal information. We could incur additional
expenses if any new regulations regarding the use of personal information are
introduced or if these agencies chose to investigate our privacy practices. Any
new laws or regulations relating to the web, or certain application or
interpretation of existing laws, could decrease the growth in the use of the
web, decrease the demand for our web site or otherwise materially adversely
affect our business.
CONCERNS ABOUT WEB SECURITY COULD REDUCE OUR ADVERTISING REVENUES, DECREASE OUR
READER BASE AND INCREASE OUR WEB SECURITY EXPENDITURES
Concern about the transmission of confidential information over the
Internet has been a significant barrier to electronic commerce and
communications over the web. Any well-publicized compromise of security could
deter more people from using the web or from using it to conduct transactions
that involve the transmission of confidential information, such as signing up
for a paid subscription, executing stock trades or purchasing goods or services.
Because many of our advertisers seek to advertise on our web site to encourage
people to use the web to purchase goods or services, our business, results of
operations and financial condition could be materially adversely affected if
Internet users significantly reduce their use of the web because of security
concerns. We may also incur significant costs to protect ourselves against the
threat of security breaches or to alleviate problems caused by these breaches.
RISKS RELATED TO THIS OFFERING
INVESTORS WILL INCUR IMMEDIATE DILUTION AND MAY EXPERIENCE FURTHER DILUTION
The initial offering price of our common stock will be substantially higher
than the pro forma net tangible book value per share of the outstanding common
stock immediately after the offering. If you purchase common stock in this
offering, you will incur immediate and substantial dilution in the pro forma net
tangible book value per share of the common stock from the price you pay for
common stock. We also have a large number of outstanding stock options to
purchase the common stock with exercise prices significantly below the estimated
initial public offering price of the common stock. To the extent these options
are exercised, there will be further dilution. See "Dilution".
SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY AFFECT OUR
STOCK PRICE
After this offering there will be outstanding 25,075,037 shares of our
common stock. There will be 25,816,704 shares outstanding if the underwriters'
over-allotment option is exercised in full. Of these shares, the shares sold in
this offering will be freely tradeable except for any shares purchased by our
"affiliates" as defined in Rule 144 under the Securities Act. The remaining
shares will be "restricted securities," subject to the volume limitations and
other conditions of Rule 144 under the Securities Act.
Our directors, executive officers, and substantially all of our current
stockholders and optionholders have agreed, subject to certain limited
exceptions, for a period of 180 days after the date of this prospectus, that
they will not, without the prior written consent of Goldman, Sachs & Co.,
directly or indirectly, offer to sell, sell or otherwise dispose of any shares
of common stock. After the first anniversary of this offering, some holders of
common stock will have the right to request the registration of their shares
under the Securities Act. Upon the effectiveness of the registration statement,
all shares covered by the registration statement will be freely transferable. In
addition, following the completion of this offering, we also intend to file a
registration statement on Form S-8 under the Securities Act covering 4,400,000
shares of common stock reserved for issuance under the amended and restated 1998
stock incentive plan. This registration statement will automatically become
effective upon filing. As of March 31, 1999, options to purchase 2,632,321
shares of common stock were issued and outstanding, of which 142,667 shares have
vested. These vested shares include 83,333 shares that may be sold by Mr.
Kevin English in thise offering if the underwriters exercise their
overallotment option. Subject to the exercise of the issued and outstanding
options, shares registered under the
13
<PAGE>
registration statement on Form S-8 will be available for sale in the open market
immediately after the 180-day lock-up agreements expire. See "Underwriting",
"Description of Capital Stock--Registration Rights" and "Shares Eligible for
Future Sale".
We cannot predict if future sales of our common stock, or the availability
of our common stock for sale, will materially adversely affect the market price
for our common stock or our ability to raise capital by offering equity
securities. See "Shares Eligible for Future Sale" and "Underwriting".
CONTROL BY PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS COULD ADVERSELY AFFECT
OUR STOCKHOLDERS
Upon completion of this offering, our officers, directors and
greater-than-five-percent stockholders (and their affiliates) will, in the
aggregate, beneficially own approximately 62.7% (61.0% if the underwriters'
over-allotment option is exercised in full) of the outstanding common stock. As
a result, these persons, acting together, will have the ability to control
substantially all matters submitted to our stockholders for approval (including
the election and removal of directors and any merger, consolidation or sale of
all or substantially all of our assets) and to control our management and
affairs. Accordingly, this concentration of ownership may have the effect of
delaying, deferring or preventing a change in control of us, impeding a merger,
consolidation, takeover or other business combination involving us or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us, which in turn could materially adversely
affect the market price of the common stock. See "Management" and "Principal
Stockholders".
POSSIBLE VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT OUR STOCKHOLDERS
We cannot predict the extent to which investor interest in us will lead to
the development of a trading market or how liquid that market might become. The
initial public offering price for the shares of our common stock 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. The stock market has experienced significant price and volume
fluctuations and the market prices of securities 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. 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 that company. The institution of similar litigation against
us could result in substantial costs and a diversion of our management's
attention and resources, which could materially adversely affect our business,
results of operations and financial condition.
OUR MANAGEMENT HAS BROAD DISCRETION AS TO USE OF PROCEEDS FROM THIS OFFERING,
WHICH WE MAY NOT USE EFFECTIVELY
Our management will have broad discretion in how we use the net proceeds of
this offering. Investors will be relying on the judgment of our management
regarding the application of the proceeds of this offering. See "Use of
Proceeds".
ANTI-TAKEOVER PROVISIONS COULD PREVENT OR DELAY A CHANGE OF CONTROL
Provisions of our amended and restated certificate of incorporation and
amended and restated bylaws and Delaware law could make it more difficult for a
third party to acquire us, even if doing so would be beneficial to our
stockholders. See "Description of Capital Stock".
WE DO NOT INTEND TO PAY DIVIDENDS
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future. See
"Dividend Policy".
14
<PAGE>
FORWARD LOOKING STATEMENTS; MARKET DATA
This prospectus contains certain "forward-looking statements" based on our
current expectations, assumptions, estimates and projections about TheStreet.com
and our industry. These forward-looking statements involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in such forward-looking statements as a result of factors more fully described
in this section and elsewhere in this prospectus. We undertake no obligation to
update publicly any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future.
This prospectus contains market data related to TheStreet.com and the
Internet. This data has been included in the studies published by the Internet
market research firms of International Data Corporation and Forrester Research,
Inc. This market data includes projections that are based on a number of
assumptions. These assumptions include that:
o no catastrophic failure of the Internet will occur;
o the number of people online and the total number of hours spent online will
increase significantly over the next five years;
o the value of online advertising dollars spent per online user hour will
increase; and
o Internet security and privacy concerns will be adequately addressed.
If any one or more of these assumptions turns out to be incorrect, actual
results may differ materially from the projections based on these assumptions.
15
<PAGE>
USE OF PROCEEDS
We estimate that the net proceeds to us from the sale of the 5,500,000
shares of common stock offered by this prospectus will be approximately
$58,980,000 ($67,257,000 if the underwriters' over-allotment option is exercised
in full), at an assumed initial public offering price of $12.00 per share and,
after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us. As of the date of this prospectus, we have not
made any specific expenditure plans with respect to the proceeds of this
offering. Therefore, we cannot specify with certainty the particular uses for
the net proceeds to be received upon completion of the offering. Accordingly,
our management will have broad discretion in the application of the net
proceeds.
The principal purposes of this offering are to provide working capital to
develop new products and expand internationally, to fund general corporate
purposes, to create a public market for our common stock and to facilitate our
future access to the public capital markets. In addition, we may use a portion
of the net proceeds to acquire or invest in complementary businesses,
technologies, services or products. However, we currently have no commitments or
agreements with respect to any such transactions.
Pending such uses, the net proceeds will be invested in short-term
investment-grade instruments, certificates or deposit or direct or guaranteed
obligations of the U.S. government.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock and
do not anticipate paying any cash dividends on our common stock for the
foreseeable future.
CORPORATE INFORMATION
We were formed in Delaware on June 18, 1996 as TheStreet.com, L.L.C. and we
converted into TheStreet.com, Inc., a Delaware corporation, on May 7, 1998.
References in this prospectus to "TheStreet.com", "we", "us" and "our" refer to
TheStreet.com, Inc. and our predecessor, TheStreet.com, L.L.C.
WRONG! is a registered trademark of TheStreet.com. TSC, TheStreet.com,
TheStreet, the TSC logo and TheStreet.com logo are our trademarks. Each
trademark, trade name or service mark of any other company appearing in this
prospectus belongs to its holder.
16
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of TheStreet.com as of
December 31, 1998:
(i) on an actual basis;
(ii) on a pro forma basis to reflect the conversion of all outstanding shares of
our convertible preferred stock and accumulated dividends into shares of common
stock; and
(iii) on a pro forma as adjusted basis to give effect to the sale of the
5,500,000 shares of common stock offered by this prospectus, after deducting
the underwriting discount and commissions and estimated offering expenses that
we will pay assuming an initial public offering price of $12.00 per share.
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and the notes to those statements included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------
PRO
PRO FORMA AS
ACTUAL FORMA ADJUSTED
------- ------- --------
(IN THOUSANDS, EXCEPT SHARE
DATA)
<S> <C> <C> <C>
Long-term debt................................................................ $ -- $ -- $ --
------- ------- --------
Redeemable Convertible Series B 9 1/2% Cumulative Preferred Stock, $0.01 par
value, 345,366 shares issued and outstanding, actual; none pro forma and
pro forma as adjusted.................................................... 21,107 -- --
------- ------- --------
Stockholders' equity:
Common Stock, $0.01 par value, 100,000,000 shares authorized; 13,763,838
shares issued and outstanding, actual; 17,762,343 pro forma and 23,262,343
pro forma as adjusted(1).................................................... 138 178 233
Convertible Preferred Stock -
Series A 9 1/2% Cumulative Preferred Stock, $0.01 par value, 118,441 shares
issued and outstanding, actual; none pro forma and pro forma as
adjusted................................................................. 1 -- --
Series C Preferred Stock, $0.01 par value, 1,500 shares issued and
outstanding, actual; none pro forma and pro forma as adjusted............ -- -- --
Additional paid-in capital.................................................... 16,349 37,417 96,342
Deferred compensation......................................................... (1,578) (1,578) (1,578)
Accumulated deficit........................................................... (12,493) (12,493) (12,493)
------- ------- --------
Total stockholders' equity.................................................... 2,417 23,524 82,504
------- ------- --------
Total capitalization........................................................ $23,524 $23,524 $ 82,504
------- ------- --------
------- ------- --------
</TABLE>
- ------------------
(1) Excludes (i) 1,497,286 shares of common stock issuable upon the exercise of
options then outstanding under our amended and restated 1998 stock incentive
plan of which 50,167 are vested as of December 31, 1998, and (ii) an
aggregate of 1,029,986 additional shares reserved for issuance as of
December 31, 1998. In March 1999, we increased the number of shares reserved
for issuance under our amended and restated 1998 stock incentive plan from
2,527,272 to 4,400,000. See "Management--1998 Stock Incentive Plan".
17
<PAGE>
DILUTION
The pro forma net tangible book value of TheStreet.com as of December 31,
1998 was approximately $23,524,000, or $1.32 per share of common stock. Pro
forma net tangible book value per share represents the amount of total tangible
assets less total liabilities, divided by the pro forma shares of common stock
outstanding as of December 31, 1998 after giving effect to the conversion of all
outstanding shares of our convertible preferred stock and accumulated dividends.
After giving effect to the issuance and sale of the 5,500,000 shares of common
stock offered in this offering, after deducting underwriting discount and
commissions and estimated offering expenses that we will pay assuming an initial
public offering price of $12.00 per share, the pro forma net tangible book value
of TheStreet.com as of December 31, 1998 would have been $82,504,000 million, or
$3.54 per share. This represents an immediate increase in pro forma net tangible
book value of $2.22 per share to existing stockholders and an immediate dilution
of $3.54 per share to new investors. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Initial public offering price per share............................................................. $12.00
Pro forma net tangible book value per share at December 31, 1998........................ $1.32
Increase in pro forma net tangible book value per share attributable to new investors... 2.22
Pro forma net tangible book value per share after offering.......................................... 3.54
------
Dilution per share to new investors................................................................. $ 8.46
------
------
</TABLE>
The following table summarizes, on a pro forma basis, as of December 31,
1998, the differences between the number of shares of common stock purchased
from TheStreet.com, the aggregate cash consideration paid and the average price
per share paid by existing stockholders and new investors purchasing shares of
common stock in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders...................... 17,762,343 76.36% $ 47,249,000 41.72% $ 2.66
New investors.............................. 5,500,000 23.64 66,000,000 58.28 12.00
---------- ------- ------------ -------
Total............................... 23,262,343 100.00% $113,249,000 100.00%
---------- ------- ------------ -------
---------- ------- ------------ -------
</TABLE>
The foregoing discussion and table assumes no exercise of any stock options
outstanding at December 31, 1998. As of December 31, 1998, there were
1,497,286
options outstanding to purchase common stock. To the extent that any of these
options are exercised, there will be further dilution to the new investors.
18
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data is qualified by reference to, and
should be read in conjunction with, our financial statements and the notes to
those statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" appearing elsewhere in this prospectus. The
selected statement of operations data presented below for the period from
June 18, 1996 (inception) through December 31, 1996 and the years ended
December 31, 1997 and 1998, and the balance sheet data as of December 31, 1997
and 1998 are derived from our financial statements that have been audited by
Arthur Andersen LLP, independent public accountants, and are included elsewhere
in the prospectus. The balance sheet data as of December 31, 1996 has been
derived from our audited financial statements not included in this prospectus.
<TABLE>
<CAPTION>
JUNE 18, 1996
(INCEPTION)
THROUGH YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- ----------------- -----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues:
Advertising.......................................... $ -- $ 118 $ 2,544
Subscription......................................... -- 321 1,686
Other................................................ -- 150 393
--------- ------- ---------
Total net revenues................................ -- 589 4,623
Cost of revenues....................................... 298 1,147 3,955
--------- ------- ---------
Gross profit...................................... (298) (558) 668
Operating expenses:
Product development.................................. 469 402 2,346
Sales and marketing.................................. 397 2,189 9,205
General and administrative........................... 548 2,210 5,158
Noncash compensation expense......................... -- -- 90
--------- ------- ---------
Total operating expenses.......................... 1,414 4,801 16,799
--------- ------- ---------
Loss from operations.............................. (1,712) (5,359) (16,131)
Interest expense, net.................................. 21 405 227
--------- ------- ---------
Loss before provision for income taxes............ (1,733) (5,764) (16,358)
Provision for income taxes(1).......................... -- -- --
--------- ------- ---------
Net loss.......................................... $ (1,733) $(5,764) $ (16,358)
--------- ------- ---------
--------- ------- ---------
Pro forma basic and diluted net loss per share......... $ (0.28) $ (0.95) $ (1.65)
--------- ------- ---------
--------- ------- ---------
Pro forma weighted average basic and diluted shares
outstanding(2)....................................... 6,086 6,086 9,923
--------- ------- ---------
--------- ------- ---------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....................................................... $ 18 $ 157 $24,612
Working capital (deficit)....................................................... (253) (1,343) 22,918
Total assets.................................................................... 305 911 27,581
Long-term debt, less current maturities......................................... 1,357 6,335 --
Redeemable convertible preferred stock.......................................... -- -- 21,107
Total stockholders' equity (deficit)............................................ (1,433) (7,157) 2,417
</TABLE>
- ------------------
(1) Prior to May 7, 1998, we were a limited liability company and as a result
were treated as a partnership for both Federal and state income tax
purposes. Upon conversion to a C corporation, we applied the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). Had SFAS 109 been applied for all periods from
inception, the deferred tax asset generated, primarily from net operating
loss carryforwards, would have been offset by a full valuation allowance.
(2) The pro forma weighted average shares outstanding give effect to the
conversion of all of our outstanding convertible preferred stock and
accumulated dividends as of December 31, 1998, into an aggregate of
3,998,505 shares of common stock upon the completion of this offering.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and the notes to those statements which appear elsewhere in this
prospectus. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this prospectus, particularly in "Risk
Factors".
OVERVIEW
TheStreet.com is a leading web-based provider of original, timely,
comprehensive and trustworthy financial news, commentary and information aimed
at helping readers make informed investment decisions. TheStreet.com combines
the most important qualities of traditional print journalism--accuracy,
intelligence, fairness, and wit--with the web's advantages as a financial news
medium--timeliness, interactivity and global distribution. With a staff of more
than 50 professional reporters and editors, together with two dozen outside
contributors, we update our site with approximately 40 original stories
throughout each business day and with many additional features on weekends.
During 1998, our subscriber base grew more than 380% to approximately 32,000 at
the end of the year; as of March 31, 1999, we had over 51,000 subscribers.
We were originally organized in June 1996 as a limited liability company
funded by our co-founders, Mr. James J. Cramer and Dr. Martin Peretz. During
1996, we hired our first reporters and began publishing in November of that
year. In August 1997, we launched our high-capacity web site hosted by Starwave
Corporation. Our coverage of the stock market during its turmoil in October 1997
increased our traffic significantly. In October 1998, we hired Mr. Kevin English
as our chief executive officer and president.
We derive our revenues from retail and professional subscriptions,
advertising and other sources, including content syndication fees. We offer both
monthly and annual subscriptions at current regular prices of $9.95 and $99.95,
respectively. From time to time, we offer seasonal and special discounts and
promotions. Substantially all our retail subscribers pay by credit card. Monthly
subscriptions are automatically renewed and annual subscribers are notified by
email three to four weeks prior to the expiration date of their subscriptions.
Unless these annual subscribers elect to cancel, they too are renewed
automatically, although they have the option to cancel during the 30 days
following their renewal date. During the last six months, approximately 85% of
our annual subscribers whose subscriptions came up for renewal, and 97% of our
monthly subscribers, renewed their subscriptions. We also enter into
subscription distribution agreements with third parties, such as E*TRADE, that
purchase subscriptions to our service for certain of their members or
subscribers. We recognize the revenue for customers ratably over the period of
the subscription. We treat the payment for the unused portion of the
subscription as deferred revenue. See "Business--Subscription Sales".
Our subscriber base continued to grow through 1998, from a base of
approximately 6,700 at the end of December 1997 to approximately 32,000 at the
end of December 1998 and to over 51,000 as of March 31, 1999. In 1998, we
established a Professional Markets group to make enterprise-wide sales to
financial services companies. Approximately 2,400 of our subscribers at the end
of 1998 were the result of corporate sales to financial services firms. During
the fourth quarter of 1998, we initiated a marketing program where individuals
can receive annual subscriptions to TheStreet.com by redeeming frequent flyer
miles. We do not receive any revenues from these subscribers for their initial
annual subscriptions. Rather, we pay a third-party service a nominal amount per
subscriber to participate in this program. As a result of this program, we
received 5,500 new annual subscriptions during the fourth quarter of 1998.
During 1999, we expect to continue using a variety of marketing programs,
including non-
21
<PAGE>
revenue generating program like this one, to help build our subscriber base.
Subscription revenues represent customer subscriptions that provide full
access to our financial news, commentary and information. Subscriptions are
generally charged to customers' credit cards or are charged directly to
companies that subscribe. These subscriptions are generally billed in advance on
a monthly, quarterly or annual basis. Deferred revenue relates to subscription
fees for which amounts have been collected but for which revenue has not been
recognized.
Advertising revenue, derived from the sale of sponsorships and of banner
and email advertisements, is recognized ratably over the period advertising is
displayed, provided that no significant company obligations remain and
collection of the resulting receivable is probable.
We established a Professional Markets group in 1998 to sell our service to
institutions on an enterprise-wide basis. During 1998 and 1999, this
Professional Markets group entered into agreements with 16 financial
institutions, including PaineWebber, BT Alex. Brown, Fidelity and Deutsche Bank,
to provide each of them with our content delivered according to their
transmission needs. The agreements entered into by our Professional Markets
group are typically one year in duration. We recognize revenues derived from
these agreements ratably over the term of the agreement.
Our cost of revenues is made up of editorial staff costs, outside
contributor fees and content licensing fees. Since these are expected to
increase more slowly than our revenues, we believe that our gross margins will
increase as our revenues increase.
Our product development expenses are also largely fixed, though there are
some variable costs related to increasing the capacity of our web site. The
largest element of our sales and marketing expenses represents marketing costs
for new subscriber acquisition, which are closely tied to our subscription
growth.
We have only a limited operating history upon which you can evaluate our
business and prospects. We have not achieved profitability, and expect to
continue to incur net losses in 1999 and subsequent fiscal periods. We expect to
continue to incur significant operating expenses and, as a result, will need to
generate significant revenues to achieve profitability, which may not occur.
Even if we do achieve profitability, we may be unable to sustain or increase
profitability on a quarterly or annual basis in the future. We believe that
quarter-to-quarter comparisons of our operating results may not be a good
indication of our future performance, nor would our operating results for any
particular quarter be indicative of future operating results.
RESULTS OF OPERATIONS
NET REVENUES
SUBSCRIPTION REVENUES. Net subscription revenues are derived from annual
and monthly subscriptions. We calculate net subscription revenues by deducting
from gross revenues cancellation chargebacks and any refunds. During 1998, these
chargebacks and refunds accounted for approximately 2% of total subscription
revenues. During 1997, net subscription revenues were $321,000. Substantially
all of these revenues related to monthly subscriptions. Net subscription
revenues increased to $1,686,000 in 1998 because of the growth in our subscriber
base. In 1998, approximately 46% of our net subscription revenue was derived
from annual subscriptions.
ADVERTISING REVENUES. Advertising revenues are derived from sponsorship
arrangements and from the delivery of banner and email advertisements. During
1997, our advertising revenues were $118,000, all of which were derived from the
delivery of banner advertisements as a result of monthly advertising agreements.
Advertising revenues increased from $118,000 in 1997 to $2,544,000 in 1998
because we began to sell sponsorships and increased our sales of banner and
email advertisements. During 1998, 65% of our advertising revenues were derived
from sponsorship contracts.
OTHER REVENUES. Other revenues consist primarily of content syndication
fees. In 1997, our other revenues consisted entirely of revenues derived from a
syndication and hosting partnership with ABCNEWS.com and
22
<PAGE>
Starwave (an affiliate of ABCNEWS.com). As part of this arrangement, we agreed
to syndicate a portion of our news content to ABCNEWS.com in return for
technology and hosting services from Starwave. During 1998, $300,000 of our
other revenues were derived from this agreement. We expect that the revenues and
associated product development expenses incurred in connection with this
arrangement will cease once our internal subscription management system becomes
operational. See "Business--Infrastructure, Operations and Technology".
COST OF REVENUES
Cost of revenues includes compensation and benefits for editorial staff,
fees paid to outside contributors and content licensing fees payable to content
providers. Cost of revenues increased from $298,000 in 1996 to $1,147,000 in
1997 and to $3,955,000 in 1998, primarily as a result of the growth of our
editorial staff from 10 at the end of 1996 to 21 at the end of 1997 and to 53 at
the end of 1998. Our cost of revenues is expected to increase on an absolute
dollar basis in 1999 because of the expansion of our editorial staff, increased
fees paid to outside contributors and increased licensing fees, but it is
expected to decrease as a percentage of revenues.
PRODUCT DEVELOPMENT EXPENSES
Product development expenses include compensation and benefits for software
developers, expenses for contract programmers and developers, and communications
lines, computer equipment and other technology costs. Product development
expenses decreased from $469,000 in 1996, to $402,000 in 1997 and then increased
to $2,346,000 in 1998 primarily as a result of the development of our original
site in 1996 and the construction of our new site during 1998. We increased our
technology headcount from one person at the end of 1996 to three at the end of
1997 to 13 at the end of 1998. All product development costs are expensed as
incurred. We intend to increase our product development expenditures in 1999 to
introduce our own subscription management system and to further enhance the
programming on the web site. These expenses may fluctuate as a percentage of
revenue over time depending on the projects undertaken.
SALES AND MARKETING EXPENSES
Sales and marketing expenses consist primarily of advertising and promotion
on television, online and in print; advertising commissions; promotional
materials; and compensation, benefits and sales commissions to our direct sales
force. Sales and marketing expenses increased from $397,000 in 1996 to
$2,189,000 in 1997 and to $9,205,000 in 1998 primarily due to the commencement
of marketing initiatives in 1997 and to a significant advertising campaign in
the first half of 1998. In 1999, we anticipate hiring additional sales and
marketing staff and incurring additional costs related to advertising and
promotion on television, online and in print. As a result, our sales and
marketing expenses are expected to increase on an absolute dollar basis in 1999,
but they are expected to decrease as a percentage of revenues.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist primarily of compensation and
benefits for general management, finance and administrative personnel, occupancy
costs, professional fees, depreciation and other office expenses. General and
administrative expenses increased from $548,000 in 1996 to $2,210,000 in 1997
and to $5,158,000 in 1998 primarily as a result of increased finance and
administration costs to support the growth of our business and higher rent
payments to accommodate the increase in staff. The finance and administration
costs increased from $170,000 in 1996 to $807,000 in 1997 and to $2,834,000 in
in 1998. The rent costs increased from $35,000 in 1996 to $157,000 in 1997 and
to $442,000 in 1998. We anticipate hiring additional personnel and incurring
additional costs related to our being a public company, including introducing
investor relations programs, increasing professional service fees and increasing
directors and officers liability insurance premiums. Accordingly, our general
and administrative expenses are expected to increase on an absolute dollar basis
in 1999 but are expected to decrease as a percentage of revenues.
23
<PAGE>
NONCASH COMPENSATION EXPENSE
During 1998 and the first quarter of 1999, we granted options to purchase
shares of common stock at exercise prices that were less than the fair market
value of the underlying shares of common stock. This will result in noncash
compensation expense over the period that these specific options vest. We
estimate this expense will be approximately $2.9 million for the year ended
December 31, 1999. During 1998, we recorded $90,000 noncash compensation expense
related to these options. The remaining noncash compensation expense beyond 1999
is currently estimated to be $7.9 million.
INTEREST EXPENSE, NET
Interest expense consists primarily of interest on loans to TheStreet.com,
L.L.C. from its members and another lender that were converted into equity in
May 1998. Interest income consists primarily of interest income from excess cash
balances invested in short-term investment-grade instruments, certificates of
deposit or direct or guaranteed obligations of the U.S. government. In 1996, net
interest expense was $21,000. It increased to $405,000 in 1997 because of the
growth in the members' loan balances. In 1998, the interest on these loans was
$383,000 from the beginning of the year to May 1998, when the loans and
remaining accrued interest were converted into equity of TheStreet.com, Inc. An
additional $5,000 of interest expense was recorded in 1998 for a bank loan.
There was no interest income in 1996 or 1997. In 1998, interest income was
$161,000.
INCOME TAXES
No benefit for Federal and state income taxes is reported in the financial
statements, as we had elected to be taxed as a partnership prior to May 7, 1998,
at which time we converted to a C corporation. Therefore, for the periods
presented through May 7, 1998, the Federal and state tax effects of the tax
losses were recorded by the members of the TheStreet.com, L.L.C. in their
respective income tax returns. Subsequent to our conversion to a C corporation,
we have accounted for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Had we
applied the provisions of SFAS 109 for the period from inception, the deferred
tax asset generated, primarily from net operating loss carryforwards, would have
been offset by a full valuation allowance.
24
<PAGE>
QUARTERLY RESULTS OF OPERATIONS
The following table sets forth, for the periods presented, certain data
from our statements of operations. The statement of operations data has been
derived from our financial statements, which, in our management's opinion, have
been prepared on substantially the same basis as the audited financial
statements and include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the financial information for
the periods presented. This information should be read in conjunction with the
audited financial statements and notes to those statements included elsewhere in
this prospectus. The operating results in any quarter are not necessarily
indicative of the results that may be expected for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------
MARCH 31, 1998 JUNE 30, 1998 SEPTEMBER 30, 1998 DECEMBER 31, 1998
-------------- ------------- ------------------ -----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net revenues:
Advertising........................ $ 574 $ 586 $ 575 $ 809
Subscription....................... 259 448 438 541
Other.............................. 85 82 105 121
-------- ------- -------- -------
Total net revenues................. 918 1,116 1,118 1,471
Cost of revenues..................... 646 844 1,077 1,388
-------- ------- -------- -------
Gross profit....................... 272 272 41 83
-------- ------- -------- -------
Operating expenses:
Product development................ 137 205 444 1,560
Sales and marketing................ 2,570 3,849 1,535 1,251
General and administrative......... 779 1,009 1,313 2,057
Noncash compensation expense....... -- 14 26 50
-------- ------- -------- -------
Total operating expenses........... 3,486 5,077 3,318 4,918
-------- ------- -------- -------
Loss from operations................. (3,214) (4,805) (3,277) (4,835)
Interest income (expense), net....... (257) (77) 76 31
-------- ------- -------- -------
Net loss............................. ($ 3,471) ($4,882) ($ 3,201) ($4,804)
-------- ------- -------- -------
-------- ------- -------- -------
</TABLE>
Product development expenses increased significantly in the fourth quarter
as a result of the consulting, hardware and software costs associated with
building our new hosting and content management systems and our new web site.
Sales and marketing expenses were greater in the first two quarters of 1998
compared to the last two quarters primarily as a result of an aggressive
television advertising campaign. Subsequent to this campaign, quarterly
advertising costs declined as a percentage of quarterly revenues. General and
administrative expenses increased in the fourth quarter primarily as a result of
the growth in general management, professional services and infrastructure
costs.
LIQUIDITY AND CAPITAL RESOURCES
From inception on June 18, 1996 through April 1998, we funded our
operations primarily from investments and loans from Mr. Cramer and Dr. Peretz
and a loan from a third party. The loans and accrued interest were converted
into equity as part of the May 1998 private placement and, since then, we have
funded our operations primarily from the sale of equity securities and from cash
received from the sale of subscriptions and advertising. In May 1998, we raised
approximately $10 million in a private placement. In December 1998, we raised
approximately $25 million in a second private placement. As of December 31,
1998, we had working capital of $22.9 million available to us. See "Certain
Transactions--1998 Private Placements".
Cash used in operating activities was $15.8 million in 1998 compared to
$4.4 million in 1997 and $1.4 million for the period from June 18, 1996
(inception) to December 31, 1996. Significant uses of cash in operations that
led to the net operating loss in 1998 include costs associated with our
marketing initiatives, technology development and
25
<PAGE>
increased staffing in our editorial and business operations.
Cash provided by financing activities was $40.6 million in 1998 compared to
$5.0 million in 1997 and $1.6 million for the period from June 18, 1996
(inception) through December 31, 1996. In 1996 and 1997, the amounts represented
loans and investments from the founders. In 1998, they consisted primarily of
net proceeds from the private placement of equity securities in May and December
1998.
In September 1998, we entered into a sale and leaseback transaction with
Leasing Technologies International Inc. for substantially all of our fixed
assets, including fixtures and fittings, telephone equipment and office
equipment. Since that date, we have financed substantially all of our fixed
asset purchases through an operating lease. Capital expenditures were $334,000
in 1998, $490,000 in 1997 and $173,000 for the period from June 18, 1996
(inception) through December 31, 1996. We did not have any commitments for
capital expenditures at December 31, 1998. As of December 31, 1998, we had
commitments under non-cancellable operating leases of $2.3 million for 1999.
We also have a revolving working capital line of credit of $2.0 million
from Imperial Bank, secured against certain accounts receivable held by us, that
carries interest at the bank's prime lending rate. As of December 31, 1998,
approximately $3,000 was outstanding under this line of credit.
We believe that the net proceeds from this offering, together with our
current cash, will be sufficient to meet our anticipated cash needs for working
capital and capital expenditures for at least the next 12 months following the
offering. Thereafter, if cash generated from operations is insufficient to
satisfy our liquidity requirements, we may need to raise additional funds
through public or private financings, strategic relationships or other
arrangements. There can be no assurance that such additional funding, if needed,
will be available on terms attractive to us, or at all. Strategic relationships,
if necessary to raise additional funds, may require us to provide rights to
certain of our content. The failure to raise capital when needed could
materially adversely affect our business, results of operations and financial
condition. If additional funds are raised through the issuance of equity
securities, the percentage ownership of our then-current stockholders would be
reduced. Furthermore, such equity securities might have rights, preferences or
privileges senior to those of the common stock.
YEAR 2000 READINESS DISCLOSURE
OUR STATE OF READINESS
We have defined Year 2000 compliance as follows:
Information technology ("IT") time and date data processes, including, but
not limited to, calculating, comparing and sequencing data from, into and
between the 20th and 21st centuries contained in our products and services,
and our non-IT systems, will function accurately, continuously and without
degradation in performance and without requiring intervention or
modification in any manner that will or could materially adversely affect
the performance of such products or the delivery of such services as
applicable at any time hereafter.
We have substantially completed the process of determining the Year 2000
readiness of our IT systems, which include the hardware and software necessary
to provide and deliver our service, and of our non-IT systems, except for our
telephone systems which we expect to replace before the end of this year.
TheStreet.com's assessment plan consists of the following steps:
(i) evaluating our date dependent code, software and hardware and
evaluating external dependencies;
(ii) quality assurance testing of our internally-developed proprietary
software and systems;
(iii) obtaining assurances or warranties from third-party vendors and
licensors of material hardware, software and services that are related to
the delivery of our services; and
26
<PAGE>
(iv) evaluating the need for, and preparing and implementing if
required, a contingency plan.
To date, our assessment has determined that our material internally
developed software and systems are Year 2000 compliant and our material
hardware, software and service vendors have informed us that the products we are
using to support our services are Year 2000 compliant. Our hosting service,
Exodus Communications, has represented to us that its systems are Year 2000
compliant. All material commercial software on which we depend is either Year
2000 compliant or will be upgraded to be compliant in the normal course of
business through upgrades or installation of software patches. Substantially all
hardware used in our network operations and office operations has been certified
as Year 2000 compliant by our vendors. We expect to be moving from our present
facilities in 1999, and, therefore, we have not asked for assurances from our
current landlord on the Year 2000 compliance of our existing facilities.
THE COSTS TO ADDRESS YEAR 2000 ISSUES
We have incurred $17,000 in costs in connection with our Year 2000
compliance efforts since inception through December 31, 1998. We expect to incur
approximately $25,000 in additional costs to make our systems Year 2000
compliant by mid-1999, which will be expensed as incurred.
We are not currently aware of any material operational issues or costs
associated with preparing our systems for the Year 2000. Nonetheless, we may
experience material unexpected costs caused by undetected errors or defects in
the technology used in our systems or because of the failure of a material
vendor to be Year 2000 compliant.
RISKS ASSOCIATED WITH YEAR 2000 ISSUES
Notwithstanding our Year 2000 compliance efforts, the failure of a material
system or vendor, or the Internet generally, to be Year 2000 compliant could
harm the operation of our systems or prevent or delay the delivery of our
services being offered through us, or have other unforeseen, material adverse
consequences to us.
We are also subject to external Year 2000-related failures or disruptions
that might generally affect industry and commerce, such as utility or
transportation company Year 2000 compliance failures and related service
interruptions. All of these factors could materially adversely affect our
business, results of operations and financial condition.
CONTINGENCY PLANS
We have not yet developed a contingency plan to address situations that may
result if we are unable to achieve Year 2000 compliance. The cost of developing
and implementing such a plan, if necessary, could be material.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosure about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 establishes new
standards for the way companies report information about operating segments in
annual financial statements. The disclosures prescribed by SFAS 131 are
effective for the year ending December 31, 1998. We do not believe we operate in
more than one segment.
27
<PAGE>
BUSINESS
OVERVIEW
TheStreet.com is a leading web-based provider of original, timely,
comprehensive and trustworthy financial news, commentary and information aimed
at helping readers make informed investment decisions. TheStreet.com combines
the most important qualities of traditional print journalism--accuracy,
intelligence, fairness and wit--with the web's advantages as a financial news
medium--timeliness, interactivity and global distribution. With a staff of more
than 50 professional reporters and editors, together with two dozen outside
contributors, we update our site with approximately 40 original stories
throughout each business day and with many additional features on weekends.
Trained at the nation's leading financial news organizations, our journalists
produce quality news coverage and in-depth analysis in a real-time, interactive
medium ideally suited to the needs of today's investors. We have developed a
community of loyal readers who turn to TheStreet.com for their financial and
investing news and information needs. During 1998, our subscriber base grew more
than 380% to approximately 32,000 at the end of the year; as of March 31, 1999,
we had over 51,000 subscribers.
We derive our revenues primarily from the sale of subscriptions to our web
site and from advertising sales. To build brand awareness, increase traffic and
create a ready source of potential subscribers, we aggressively promote our site
and provide a portion of our content for free. We seek to maximize our revenue
per reader--both paying subscribers and free users--by selling advertisements on
all areas of our site. Our financially oriented readers comprise an upscale
demographic that is desirable to advertisers, enabling us to charge advertising
rates that we believe to be among the highest of financial web sites. We believe
we are well positioned for significant growth in both subscription and
advertising sales as the market for online financial news and information
continues to expand.
INDUSTRY BACKGROUND
The web has rapidly established itself as an effective means for investors
to manage their portfolios, research investments and trade securities. At the
same time, individuals have been taking greater control of their investments by
directly researching information on investments, tracking their portfolios,
purchasing no-load mutual funds and playing a more proactive role in their
relationships with financial advisors. The web has facilitated these behavioral
shifts by providing investors with easy access to information that was once
generally available only to investment professionals, such as timely market
news, intra-day and historical quotes, charts, SEC filings and analysts'
earnings estimates. According to International Data Corporation, the number of
online brokerage accounts in the United States is expected to grow from
3.5 million at the end of 1997 to 24 million at the end of 2002, with online
brokers expected to manage over $1.5 trillion in assets by the end of 2002.
Similarly, investors in Europe are beginning to play a more proactive role in
managing their finances, according to a November 1998 Forrester Research report.
Increasingly, this growing group of self-directed investors is seeking
timely, comprehensive and trustworthy financial news and information that can
help them make informed investing decisions. Many existing financial news
sources, however, fail to meet this need. Traditional print publications,
constrained by publication cycles of days or even months, are limited in their
ability to keep pace with financial markets. Television provides a measure of
timeliness but generally lacks depth of analysis. In addition, viewers are
subject to television's predetermined schedules. On the web, some news and
information sources offer little disclosure about their background and any
conflicts of interest, potentially rendering their information untrustworthy.
Some online news outlets do little more than republish stories that have already
appeared in their affiliated print publications and many simply aggregate
stories from disparate news and press release wires without supplying the
original insight, analysis
28
<PAGE>
and point of view that comes from independent reporting. Other financial sites
offer stock quotes, charts and other investment tools, but provide limited
financial news.
The democratization of Wall Street represents a significant opportunity for
a financial news, commentary and information web site that combines the depth of
coverage of traditional media with the immediacy and interactivity of the web.
We believe that as the audience for investment news grows both in the United
States and abroad, we are poised to become the leading source worldwide for
original, timely, comprehensive and trustworthy financial news, commentary and
information.
THESTREET.COM SOLUTION
At TheStreet.com, we aim to meet the increasing demands of today's
investors. Our large and experienced news organization provides a broad range of
original financial news and in-depth analysis to our readers through a
real-time, interactive medium. We complement this news and analysis with
compelling commentary by well-known writers, including James J. Cramer, Herb
Greenberg, Brenda Buttner and Jim Seymour. We believe this combination of
coverage and commentary, together with our community features and investment
tools, provides a solution for the shortcomings of existing financial news
sources by combining the best attributes of each:
o ORIGINAL. Our stories are written by our staffers, for our web site. They are
not merely aggregated from other online sources, nor are they originally
prepared for another medium and simply re-purposed for the web.
o TIMELY. Our focused reporters continuously track and investigate the latest
financial news. We update our web site dozens of times throughout the business
day to keep our readers abreast of developing news stories.
o COMPREHENSIVE. We seek to achieve both depth and breadth of coverage. We aim
to provide in-depth analysis that is more valuable to investors than a
broadcast sound bite or a wire-service dispatch. We offer a broad range of
content, community features and investment tools to meet the needs of a
variety of individuals, from active investors to buy-and-hold stock purchasers
to first-time Roth IRA contributors.
o TRUSTWORTHY. We aim to uphold the highest ethical and journalistic standards,
striving to ensure that our stories are accurate, reliable and fair, and that
staff members and outside contributors adhere to our rigorous disclosure and
conflict-of-interest policy.
We believe our approach is effective. During 1998, our subscriber base grew
more than 380% to approximately 32,000 at the end of the year; as of March 31,
1999, we had over 51,000 subscribers.
STRATEGY
Our objective is to establish TheStreet.com as the leading and most
comprehensive financial news and information destination for investors. We aim
to further develop a loyal community of readers in order to build our
subscription base and attract advertisers. Our strategy includes the following
key elements:
EXPAND OUR WEB SITE AS A COMPREHENSIVE FINANCIAL NEWS AND INFORMATION
DESTINATION
We are building upon our comprehensive offerings so that readers can
satisfy all of their financial and investing news and information needs without
leaving our web site. For example, we are expanding our coverage of
international markets, adding new community features such as message boards and
enhancing the sophistication of our investment tools with offerings like
real-time stock quotes. Through continued additions like these, we aim to give
investors an informative, robust and entertaining user experience.
LEVERAGE OUR CONTENT TO MAXIMIZE REVENUE ACROSS A DIVERSE CUSTOMER BASE
To leverage our content across and derive greater revenues from a wider
audience, we offer various levels of access to our content at different price
points. We currently offer free content as well as paid premium content and in
the future plan to add more customized offerings for both retail and
professional investors. Free content builds our brand, increases traffic,
broadens our base of prospective subscribers and expands opportunities for
advertising revenues. Our
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premium content offering includes a wide variety of breaking news, analysis,
commentary and investment tools.
We are developing specialized, higher-priced products for both retail
investors and financial professionals. To satisfy retail investors' demand for
the customized delivery of content, we plan to add additional services such as
increased personalization. We further believe that financial professionals
represent a significant market opportunity for subscriptions and advertising
revenue. We have built a sales group to target that audience through
enterprise-wide sales and plan to develop specialized content for professionals.
We believe these additions to our product line will allow us to maximize both
our reach and our revenue per user.
CAPITALIZE ON READER DEMOGRAPHICS DESIRABLE TO ADVERTISERS
Our desirable reader demographic has enabled us to build a growing
advertising business. To reach this attractive audience, our advertisers pay
rates that we believe are among the highest of financial web sites. Our
advertising revenues grew from approximately $118,000 in 1997 to approximately
$2.5 million in 1998. By March 31, 1999 we had signed contracts for
approximately $3.8 million in advertising revenues for the year, $1.3 million
more than the total advertising revenues we generated in all of 1998. We expect
that as we increase our traffic and expand our offering of news and commentary,
community features and investment tools, we will continue to create significant
opportunities both for increased financial services-related advertising as well
as technology and luxury-goods advertising.
LEVERAGE STRATEGIC PARTNERSHIPS
We continue to build our subscriber base and brand awareness through both
subscription distribution and content syndication relationships. Under
subscription distribution relationships with online brokerages and other firms,
we expect to sign up thousands of subscribers without incurring typical consumer
marketing costs. For example, under our recent subscription distribution
agreement with E*TRADE, the online broker purchases discounted subscriptions in
bulk to distribute as a premium service to certain of its customers.
By syndicating our content to other leading sites, we expose our brand name
and quality writing to millions of potential subscribers and drive additional
traffic to our site. Under content syndication agreements with Yahoo!, America
Online, Charles Schwab and other leading companies, we provide selected stories
each day, at times on a delayed basis, for co-branded publication with a link to
our site. Our content syndication agreements capitalize on the cost efficiencies
of online delivery by creating additional value from stories already produced
for our own site.
BUILD BRAND AWARENESS OF THESTREET.COM AND OUR WRITERS
We believe that increased brand awareness helps us attract additional
traffic, subscribers, strategic partners, advertisers and talented employees. We
engage in a comprehensive marketing and media-relations campaign to raise
visibility and cultivate our brand identity. We advertise on television, print
and online media and conduct innovative marketing campaigns. We also build the
visibility of our individual writers. Our writers and their work have been
featured or mentioned in publications such as The Wall Street Journal, The New
York Times and Fortune. Contributor James Cramer and senior columnist Herb
Greenberg appear regularly on CNBC, and Mr. Greenberg appears twice daily on
KRON television, the San Francisco television affiliate of NBC.
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OUR EDITORIAL STAFF AND OUTSIDE CONTRIBUTORS
We believe that our original, timely, comprehensive and trustworthy content
is a competitive advantage. Our editorial staff consists of more than 50
professional reporters and editors who, together with two dozen outside
contributors throughout the world, produce approximately 40 original news,
analysis and commentary pieces each business day that are aimed at helping
readers make informed investment decisions. We also publish additional features
and news updates on weekends. Our editorial staff and outside contributors have
broken numerous important stories, many of which have been cited by other
publications such as The Wall Street Journal and The New York Times.
Recently, we were named as a finalist for the General Excellence in New
Media category of the 1999 National Magazine Awards. The purpose of this
category is "to honor an interactive publication that most effectively serves
its intended audience and reflects an outstanding level of interactivity,
journalistic integrity and service." Also, we were a 1999 winner of the
Excellence in Financial Journalism Award sponsored by the New York State Society
of Certified Public Accountants for our 1998 story package "Looking Out for the
Shareholder".
Before joining TheStreet.com, many members of our editorial staff worked at
other leading news organizations, including The Wall Street Journal, The New
York Times, CNBC, Dow Jones News Service, SmartMoney, Bloomberg, Reuters and USA
Today. Among our site's notable writers:
JAMES J. CRAMER. Mr. Cramer, a money manager, is an outside
contributor to TheStreet.com and writes multiple columns each business day.
Mr. Cramer also is a founder and director of TheStreet.com. In addition,
Mr. Cramer writes for Time magazine and appears regularly on CNBC.
HERB GREENBERG. Mr. Greenberg, formerly of the San Francisco
Chronicle, is a staffer and daily commentator. Mr. Greenberg also appears
regularly on CNBC and writes a regular column for Fortune magazine. In
addition, he provides business coverage twice each morning for KRON
television, the San Francisco television affiliate of NBC.
BRENDA BUTTNER. Ms. Buttner, a former anchor of CNBC's The Money Club
and winner of the network's first Cable Ace Award, is a regular outside
contributor. Ms. Buttner profiles America's top mutual fund managers and
comments on the mutual fund industry.
DAVE KANSAS. Mr. Kansas, our editor-in-chief, writes a column about
market trends. Mr. Kansas worked at The Wall Street Journal for five years,
most recently as a financial markets reporter. He has provided commentary
for several television networks, including ABC, CBS, NBC, CNBC and CNN. His
writing has appeared in The New Republic, Red Herring, Upside, The Industry
Standard, Slate and the New York Observer.
ALEX BERENSON. Mr. Berenson, a senior staff writer, covers media and
entertainment companies. Mr. Berenson was recently featured in a "Heroes"
column in Brill's Content, a media magazine, for his coverage of Tel-Save
Holdings (now Tel-Save.com). TheStreet.com was also named a finalist for
the 1998 Investigative Reporters and Editors Awards for Mr. Berenson's
coverage of Tel-Save.com.
JIM SEYMOUR. Mr. Seymour, a longtime commentator for PC Magazine and
the founding editor-in-chief of PC/Computing magazine, writes about
America's leading technology stocks as an outside contributor.
GARY B. SMITH. Mr. Smith, an individual investor who manages his own
money using technical analysis, is an outside contributor who writes four
times each week about technical analysis and at-home trading.
To ensure impartiality and prevent any conflict-of-interest or appearance
of conflict, our editorial staff and outside contributors are required to abide
by our strict compliance policy. According to this policy, our editorial
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staffers are not permitted to individually own individual stocks (though they
may, and most will, own equity in TheStreet.com). In addition, James Cramer, a
money manager and outside contributor to, large stockholder of and director of
TheStreet.com, has no control over the editorial content of TheStreet.com and,
like our other contributors, is required to disclose his current positions in
any of the stocks he writes about. Mr. Cramer's employment agreement prohibits
him from discussing individual stocks with editorial staffers and limits his
contact with the editorial staff to the editor-in-chief or his designee. See
"Certain Transactions--Cramer Employment Agreements".
THESTREET.COM WEB SITE
We produce original coverage of Wall Street, money management and financial
planning. Topics include the U.S. stock, bond and global financial markets,
technology and other individual stocks, mutual funds, options, hedge funds,
analysts, IPOs, online brokers, 401(k)s and taxes.
Our content currently falls into two categories: free and premium. The free
areas of our site, currently accessible without registration or a subscription,
include our regularly updated Markets coverage, most of our educational Basics
section and many of our investment tools. Our premium content is available to
those who have purchased a monthly, annual or multi-year subscription or who are
currently registered for our 30-day free trial. It currently includes
approximately 20 stock, technology, mutual fund, personal finance and
international news stories and commentaries each business day; some investment
tools; and all free areas of the site. Our premium content subscribers and
free-trial members also receive market and news summaries via email twice daily.
The following is a detailed description of the various sections on
TheStreet.com web site.
MARKETS
The Markets section is a free area that features approximately 20 stories
throughout each business day, from about 8 a.m. until 8 p.m. Eastern time. These
stories aim to keep readers abreast of:
o the latest movements of the major indices;
o the most active stocks;
o news from foreign markets;
o the direction of the bond market;
o earnings news;
o merger and acquisitions news; and
o other major market events.
Easy-to-read tables within the stories give readers a summary of index
performance and earnings news, including corporate earnings surprises.
COMMENTARY
The most popular area on the site, our Commentary section is a premium area
that includes columns from staffers and a network of outside contributors who
write about topics such as money management, technical analysis, currency
issues, industry analysis, macroeconomics, fundamental analysis, financial
planning and mutual funds.
TECH STOCKS
The Tech Stocks section is a premium area that covers technology stocks.
Our tech reporters, many of whom are located in our West Coast bureau in San
Francisco, cover areas such as hardware, software, networking, semiconductors,
the Internet and the Year 2000 problem. We also publish a separate technology
stock update several times daily detailing the major news in the sector.
STOCK NEWS
The Stock News section is a premium area that includes coverage of
companies outside of the technology sector, such as retail, media/entertainment,
biotechnology, energy, brokerages/Wall Street and online brokers. It also
includes our daily coverage of the options market.
FUNDS/TAXES
To assist our many readers who leave part or all of their stock selection
to professional money managers, we have a premium area covering daily mutual
fund news. Each day we answer an individual reader's fund question, with the
Friday question dedicated to bonds.
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Our tax and 401(k) coverage is also located here.
INTERNATIONAL
Recognizing that knowledge of international markets is vital to
understanding the U.S. markets, we have a dedicated International section, which
is a premium area. We have hired staffers in New York, San Francisco, London and
Frankfurt and several contributors to provide coverage of foreign markets and
some individual stocks. We expect to expand our international coverage in 1999
with the deployment of staffers in key financial markets in Europe and Asia.
BASICS
This mostly free section caters to readers who are gaining familiarity with
the markets and investing. It features basic guides on stocks, bonds, mutual
funds, options, taxes and financial planning.
COMMUNITY FEATURES
We offer several interactive features that help create a community
atmosphere among our readers. We believe that developing a sense of community
among our readers increases our brand awareness, increases the frequency and
duration of reader visits and fosters loyalty to our site and our writers.
Current community features include:
o email between our readers and our staff;
o polls that invite readers to vote on issues related to the latest financial
and investing news; and
o regular chats featuring our top-name contributors and expert staffers hosted
on Yahoo!, America Online, and other services.
In addition, we plan to introduce message boards and streaming audio
programs.
INVESTMENT TOOLS
Committed to providing our readers with the most robust interactive
experience that an online financial publication can offer, we feature a variety
of interactive investment tools that enable users to conduct their own financial
research. Among the investment tools we offer are:
o detailed stock quotes;
o intraday and historical stock charts;
o mutual fund quotes and scoreboards;
o summary company data;
o SEC filings; and
o a portfolio tracker.
We are currently working to enhance the investment tools offerings on our
site, both in terms of volume and quality, to strengthen our position as a
comprehensive financial news and information destination. Planned investment
tools include real-time stock quotes and news wire feeds.
SUBSCRIPTION SALES
As of March 31, 1999, we had over 51,000 subscribers. Readers can
choose either an annual subscription regularly priced at $99.95 or a monthly
subscription regularly priced at $9.95. From time to time, we offer seasonal and
special discounts and promotions. The number of our subscribers has risen each
month since August 1997, when we began tracking that data. During the last six
months, approximately 85% of our annual subscribers whose subscriptions came up
for renewal, and 97% of our monthly subscribers, renewed their subscriptions.
We actively market our subscriptions by offering a 30-day free trial to our
readers. Once these readers have signed up for the free trial, we seek to
convert them to paid subscribers by allowing them access to all areas of our
site. We also send them a series of targeted emails that highlight the benefits
of membership. We continue to contact by email those readers whose free trials
have expired without conversion.
We plan to launch an in-house subscription management system in 1999. We
expect that this system will enhance our ability to convert free-trial members
to paid subscribers through the use of customized emails and automated pop-up
reminder messages. See "Risk Factors--Disruptions Associated with Moving Our
Subscription Management System In-house May Harm Our Business".
As part of our efforts to increase our subscriber base, we have entered
into subscription distribution agreements with online financial services firms.
For example, under our
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agreement with E*TRADE, which has a term through January 12, 2000, E*TRADE
purchases bulk subscriptions at a discounted rate that it offers to certain new
E*TRADE brokerage customers and to its existing Power E*TRADE customers (active
customers).
In addition, in March 1999, we entered into a memorandum of understanding
with DLJdirect, Inc., under which DLJdirect would purchase bulk subscriptions at
a discounted rate that it would offer to its large account holders as well as to
those persons who open an account with DLJdirect as a result of a promotion
involving TheStreet.com. DLJdirect would also purchase bulk subscriptions at a
discounted rate for all of its in-house professionals.
We have also increased the number of our subscribers through the efforts of
our Professional Markets group, which has entered into agreements with 16
financial institutions to provide content to their financial professionals. See
"--Professional Markets".
ADVERTISING SALES
We currently derive, and expect to continue to derive, a substantial
portion of our revenues from advertising sales. We have established a desirable
reader demographic that has enabled us to build a growing advertising business
and charge rates that are, to our knowledge, among the highest of financial web
sites. We have been able to attract an increasing number of advertisers, both
within and beyond the financial services industry.
Our advertising revenues grew from approximately $118,000 in 1997 to
approximately $2.5 million in 1998. In 1998, advertising revenues represented
approximately 55% of our total revenue. We believe that our advertising revenues
will continue to grow in 1999. By March 31, 1999, we had signed contracts for
approximately $3.8 million in advertising revenues for 1999--$1.3 million more
than the total advertising revenues we generated in all of 1998. In addition,
our top three advertisers in terms of committed revenue in January 1999 also
advertised with us in 1998. One advertiser increased its advertising commitment
in 1999 from $250,000 to $1 million, and another increased its advertising
commitment from $20,000 to $750,000. See "Risk Factors--We Depend on Our Top
Advertisers for a Significant Portion of Our Advertising Revenues, and the Loss
of One or More of Our Top Advertisers May Harm Our Business".
DEMOGRAPHICS
Our audience presents a desirable reader demographic for advertisers in the
financial services, technology and luxury goods industries. According to @plan,
a third-party neutral marketing research firm, the percentage of our readers who
have portfolios over $250,000 is higher than at any other site surveyed in
@plan's Spring 1999 study. Also, according to the same study, we have the
highest percentage of readers who own securities. In addition, compared to the
average Internet user surveyed by @plan, our readers are seven times more likely
to trade stocks online. The survey research portion of the @plan system is
conducted by The Gallup Organization.
In March 1999, our web site attracted approximately 970,000 unique visitors
who generated nearly 14 million page views, as compared with approximately
280,000 unique visitors who generated over 7 million page views in December
1998. Our unique visitor information was based on data provided to us by
DoubleClick Inc., a company that measures our users in connection with
delivering advertisements on our web site.
A unique visitor is a person who visits TheStreet.com site from a
particular personal computer. A person who makes multiple visits from the same
computer in a given time period is only counted once. A page view means one
person's download of one page of our web site.
OTHER FACTORS ATTRACTIVE TO ADVERTISERS
In addition to our desirable reader demographics, advertisers seek a
presence on TheStreet.com for a number of other reasons, including:
o LONG DURATION AND HIGH FREQUENCY OF VISITS. In the first quarter of 1999 our
subscribers and free-trial members spent an average of 23 minutes per visit on
our site. We believe this duration compares favorably to the time spent by
readers on other financial sites. However, this time period may decrease as
our base of free-trial members expands. Further, according to a study
conducted in October 1998 by NFO Interactive for TheStreet.com, approximately
77% of our subscribers visit our site at least once every day.
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o PAID SUBSCRIBERS. Our subscribers have already demonstrated a willingness to
pay for products and services online by virtue of their having subscribed to
TheStreet.com. This trait is highly attractive to advertisers seeking to
encourage online sales of their products and services.
o OUR MARKETING EFFORTS. Advertisers like the fact that we conduct an extensive
marketing and media relations campaign to increase the visibility of our site.
o OUR EDITORIAL CONTENT. Many advertisers like to associate their products and
services with our original, timely and trustworthy editorial content.
OUR ADVERTISING SALES DEPARTMENT
We have maintained an internal, direct advertising sales department since
1997. As of March 31, 1999, our advertising sales department consisted of 11
employees. By using a direct sales force rather than outsourcing advertising
sales, we control our advertising relationships and are better able to serve our
clients.
ADVERTISING OPPORTUNITIES AT THESTREET.COM
We offer a variety of advertising options that may be purchased
individually or in packages, such as "run-of-site" banner advertisements that
run throughout our web site, for which our current rate card CPM (cost per
thousand impressions) ranges from $51 to $57; premium positioning advertising
featuring targeted advertisements for which our current rate card CPM ranges
from $60 to $68; sponsorships, which run in a fixed area of our web site for a
set duration; and advertising on our twice-daily email bulletins delivered to
our subscribers and free-trial readers, for which our current rate card CPM
ranges from $30 to $52.
OUR ADVERTISERS
In 1998, 61 advertisers advertised on our web site. In 1998, our top
advertiser accounted for approximately 40%, and our top five advertisers
accounted for approximately 67%, of our advertising revenues. Historically,
advertisers on TheStreet.com have mainly come from the financial services
industry. However, in 1998 we added well-known non-financial brands, including
Volvo, Mercedes, and Stolichnaya Vodka to our roster of advertisers. In
addition, in 1999 we have added several new advertisers, including Chase
Manhattan Bank, Multex.com, and Compaq.
The following is a list of our top ten brokerage and non-brokerage
advertisers in 1998:
<TABLE>
<S> <C>
TOP 10 BROKERAGE ADVERTISERS
American Express Financial Direct Fidelity
Ameritrade On-Site Trading
Datek Polar Trading
DLJdirect Quick & Reilly
Dreyfus Web Street Securities
TOP 10 NON-BROKERAGE ADVERTISERS
American Stock Exchange Kinsella Communications
Chicago Board of Options Exchange Mercedes
horsesmouth SAP America
INVESTools Stockgenie
Janus Volvo
</TABLE>
In addition, we believe that investor relations professionals increasingly
are recognizing that both the sophisticated individual investor and the
professional investor are turning to the web for timely information. As a
leading online financial news and information site, we believe we will benefit
from this trend. Some companies that have run investor relations advertising on
our site include ITT Industries, SAP America and Intimate Brands.
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MARKETING
We pursue a variety of marketing initiatives designed to build brand
awareness, increase traffic to our site and accelerate subscription growth.
These initiatives include advertising in every major category of media,
establishing strategic distribution relationships with leading companies,
maintaining a well-trained team of in-house customer service representatives,
developing brand extensions and engaging in an ongoing media-relations campaign.
ADVERTISING CAMPAIGN
Advertisements for TheStreet.com appear in a variety of online and offline
media, including:
o cable television networks, including CNBC;
o local and network radio, including Westwood One, WFAN and WNEW;
o newspapers, including The Wall Street Journal and The New York Times;
o print magazines, including Fortune and SmartMoney;
o outdoor locations, including phone kiosks, moving and stationary billboards
and train platforms;
o in-flight advertising, including flights on United Airlines, Northwest
Airlines and US Airways; and
o online sites, including SmartMoney.com and Bloomberg.com.
CONTENT SYNDICATION
We have established content syndication agreements with leading companies
to increase recognition of our brand and attract new readers to TheStreet.com
site. Key partners with whom we have content syndication and promotion
agreements include:
o YAHOO! Under our agreement with Yahoo!, which has a term through
December 31, 1999, we syndicate approximately five stories daily, some
delayed, for co-branded publication on Yahoo! Finance. Each of our stories
published on Yahoo! Finance contains direct links to our site and sign-up
page. In addition, we host approximately four online chats on Yahoo! Chat each
month, featuring our writers or special guests. In 1998, such special guests
included John Bogle, senior chairman of the Vanguard Group; Maria Bartiromo,
anchor for CNBC; and Christos Cotsakos, chairman and CEO of E*TRADE Group.
These chats have helped us raise the profile of our staff and expose our brand
to millions of Yahoo! users.
In February 1999, we signed an agreement with Yahoo! that provides for our
stories to be "indexed" on Yahoo! Finance. Under this agreement, every request
by a user of Yahoo! Finance for a stock or mutual fund quote pulls up a list
of stories from TheStreet.com about that stock or fund. These headlines link
directly to our site so that readers can click straight through to
TheStreet.com. If the story is in our free area, the readers click straight
into the story. If it's a premium story, and if the reader is not a free-trial
member or subscriber of TheStreet.com, the reader is offered the opportunity
to register for a free trial.
o AMERICA ONLINE. Under our agreement with America Online, which has a term
through July 23, 1999, we have a dedicated TheStreet.com area on AOL's
Personal Finance channel, where we post stories each day. The area features
prominent links to our web site. As part of the agreement, AOL users receive a
20% discount when they purchase a new subscription to TheStreet.com. The
agreement also provides for regular live TheStreet.com chat events on AOL,
typically two each month. We are in the process of renegotiating this
agreement with America Online. However, we cannot assure you that we will be
able to renegotiate this agreement on terms that are favorable to us or at
all.
o INTUIT. Under our agreement with Intuit, which has a term through March 20,
2000, Intuit includes certain of our stories in a package of financial news
and information that it provides to certain sites such as Quicken.com,
AOL.com, Excite and Webcrawler. Such stories include our logo and a prominent
link to a free-trial sign-up page.
o ABCNEWS.COM. Our agreement with ABCNEWS.com, which has a term through May 1,
1999, provides for the co-branded publication of five of our stories each day
on the ABCNEWS.com site. Our logo and links to our site appear prominently on
the Business section of the ABCNEWS.com page.
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o 3COM. Under our agreement with 3Com, which terminates one year from the
commercial release of the forthcoming Palm VII hand-held organizer, users of
the organizer will be able to access branded financial markets stories by
TheStreet.com via a remote wireless connection to the Internet.
o UNITED FEATURE SYNDICATE. Our agreement with United Feature Syndicate, which
has a term through February 14, 2000, provides for the syndication of articles
from our site to numerous print newspapers. The newspaper articles are
credited to TheStreet.com, extending the brand to readers of newspapers around
the country.
We distribute content to many other leading web sites, including those of
DLJdirect, Charles Schwab and the Chicago Board Options Exchange.
THESTREET.COM INTERNET SECTOR AND E-COMMERCE INDICES
In conjunction with the Philadelphia Stock Exchange and the Susquehanna
Investment Group, we created TheStreet.com Internet Sector, an index of 20
Internet stocks. Options based on the index began trading in December 1998.
Since its launch, TheStreet.com Internet Sector has been mentioned or featured
on prominent news outlets including The New York Times, The Wall Street Journal,
the Los Angeles Times and CNBC. Additionally, in conjunction with the American
Stock Exchange and Susquehanna Investment Group, in February 1999 we created
TheStreet.com E-Commerce Index, an index of 15 electronic commerce stocks.
MEDIA RELATIONS
TheStreet.com engages in an ongoing media-relations campaign. In 1998,
TheStreet.com, our writers and our stories were mentioned or featured in more
than 400 reports by more than 40 news outlets, including The Wall Street
Journal, The New York Times, USA Today, The Financial Times, ABC News, CNN and
Newsweek. Two of our daily commentators, James Cramer and Herb Greenberg, make
regularly scheduled television appearances, and our West Coast bureau chief,
Cory Johnson, appears daily on a radio program that we sponsor. These
appearances help increase our brand awareness and build our reputation and that
of our writers.
UPCOMING TELEVISION SHOW
In April 1999, we entered into a memorandum of understanding with News
America Incorporated to co-produce a television show with the Fox News Network.
The show will feature TheStreet.com brand name, editorial staff and outside
contributors and will be cablecast on Fox News Channel. We believe that the
cablecasting of this television show will significantly boost our brand
awareness as well as further raise the profile of our writers.
CUSTOMER SERVICE
Customer service is a critical element of our marketing strategy. Because
TheStreet.com is published online, we can interact with our readers much more
easily than traditional print publications or broadcast media companies. In
November 1998, for example, we had approximately 15,000 reader contacts, from a
base of about 50,000 individuals, including subscribers and readers in their
30-day free trial. As of March 31, 1999, our customer service department had 21
personnel.
PROFESSIONAL MARKETS
TheStreet.com appeals to a broad range of financial professionals,
including analysts, money managers and financial advisors. Our October 1998
subscriber study conducted by NFO Interactive showed that approximately 25% of
our subscribers were financial professionals. In 1998 and 1999, our Professional
Markets group entered into agreements with 16 financial institutions, including
PaineWebber, BT Alex. Brown, Fidelity and Deutsche Bank, to provide them with
our content delivered according to their transmission needs. Through such
arrangements, we currently reach approximately 5,800 financial professionals.
In addition, we are devoting significant resources to our Professional
Markets group, as we believe that subscription sales to this market will be
significant and that financial professionals will provide a desirable reader
demographic to advertisers.
We plan to develop new products that will be customized to better satisfy
the exacting needs of financial professionals. We expect these products will
feature information, news, commentary, data and investment tools of particular
relevance to financial professionals.
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COMPETITION
An increasing number of financial news and information sources compete for
consumers' and advertisers' attention and spending. We expect this competition
to continue to increase. We compete for advertisers, readers, staff and outside
contributors with many types of companies, including:
o online services or web sites focused on business, finance and investing, such
as MarketWatch.com, The Wall Street Journal Interactive Edition and The Motley
Fool;
o publishers and distributors of traditional media, including print, radio and
television, such as The Wall Street Journal, Fortune, Bloomberg Business Radio
and CNBC;
o providers of terminal-based financial news and data, such as Bloomberg
Business News, Reuters News Service, Dow Jones Markets and Bridge News
Service;
o web "portal" companies, such as Yahoo! and America Online; and
o online brokerage firms, many of which provide financial and investment news
and information, such as Charles Schwab and E*TRADE.
Our ability to compete depends on many factors, including the originality,
timeliness, comprehensiveness and trustworthiness of our content and that of
competitors, the ease of use of services developed either by us or our
competitors and the effectiveness of our sales and marketing efforts.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. This may allow them to devote greater resources than we
can to the development and promotion of their services. These competitors may
also engage in more extensive research and development, undertake more
far-reaching marketing campaigns, adopt more aggressive pricing policies
(including offering their financial news for free) and make more attractive
offers to existing and potential employees, outside contributors, strategic
partners and advertisers. Our competitors may develop content that is equal or
superior to ours or that achieves greater market acceptance than ours. It is
also possible that new competitors may emerge and rapidly acquire significant
market share. We may not be able to compete successfully for readers, staff and
outside contibutors which could have a material adverse effect on our business,
results of operations and financial condition. Increased competition could
result in price reductions, reduced margins or loss of market share, any of
which could materially adversely affect our business, results of operations and
financial condition.
We also compete with other web sites, television, radio and print media for
a share of advertisers' total advertising budgets. If advertisers perceive the
Internet or our web site to be a limited or an ineffective advertising medium,
they may be reluctant to devote a portion of their advertising budget to
Internet advertising or to advertising on our web site.
INFRASTRUCTURE, OPERATIONS & TECHNOLOGY
TheStreet.com's technological infrastructure is built and maintained for
reliability, security and flexibility. This infrastructure is hosted primarily
at Exodus Communications' facility in Jersey City, New Jersey, which is equipped
with an uninterruptible power supply.
We have made, and expect to continue to make, technological improvements
that we expect will reduce costs and increase our advertising sales and
subscription base. Our content-management system allows our stories to be
prepared for publication in a number of output formats. This feature enables us
to distribute our stories to multiple destinations economically. Our
subscription management system is currently based on the Starwave Corporation's
commerce system-based application. We are currently developing a new
subscription management system that is scheduled to launch in 1999. We expect
that this new system will be based on technology provided by Art Technology
Group and Clear Commerce and will be hosted at Exodus Communications' facility.
We expect that this system will allow us to communicate automatically with
readers during their free-trial period and to make a wide variety of customized
subscription offers available to potential subscribers. We are also constructing
our systems to capture information on reader
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<PAGE>
behavior that will be stored in a data warehouse. We expect that this will allow
us to segment our reader population, enabling us to personalize our services for
the individual reader and allowing our advertisers to target better their
intended audience. Our operations are dependent on our ability and that of
Exodus to protect our systems against damage from fire, earthquakes, power loss,
telecommunications failure, break-ins, computer viruses, hacker attacks and
other events beyond our control. See "Risk Factors--Disruptions Associated with
Moving Our Subscription Management System In-house May Harm Our Business" and
"Risk Factors--We Face a Risk of System Failure that May Result in Reduced
Traffic, Reduced Revenue and Harm to Our Reputation".
INTELLECTUAL PROPERTY
To protect our rights to intellectual property, we rely on a combination of
trademark, copyright law, trade secret protection, confidentiality agreements
and other contractual arrangements with our employees, affiliates, clients,
strategic partners and others. The protective steps we have taken may be
inadequate to deter misappropriation of our proprietary information. We may be
unable to detect the unauthorized use of, or take appropriate steps to enforce,
our intellectual property rights. We have registered certain of our trademarks
in the United States and we have pending U.S. applications for other trademarks.
Effective trademark, copyright and trade secret protection may not be available
in every country in which we offer or intend to offer our services. Failure to
adequately protect our intellectual property could harm our brand, devalue our
proprietary content and affect our ability to compete effectively. Further,
defending our intellectual property rights could result in the expenditure of
significant financial and managerial resources, which could materially adversely
affect our business, results of operations and financial condition. Although we
believe that our proprietary rights do not infringe on the intellectual property
rights of others, other parties may assert infringement claims against us or
claims that we have violated a patent or infringed a copyright, trademark or
other proprietary right belonging to them. These claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources on our part, which could materially adversely affect our
business, results of operations and financial condition. We incorporate certain
licensed third-party technology in some of our services. In these license
agreements, the licensors have generally agreed to defend, indemnify and hold us
harmless with respect to any claim by a third party that the licensed software
infringes any patent or other proprietary right. We cannot assure you that these
provisions will be adequate to protect us from infringement claims. Any
infringement claims, even if not meritorious, could result in the expenditure of
significant financial and managerial resources on our part, which could
materially adversely affect our business, results of operations and financial
condition. See "Risk Factors--Failure to Protect Our Intellectual Property
Rights Could Harm Our Brand-Building Efforts and Ability to Compete
Effectively".
EMPLOYEES
As of March 31, 1999, we had 138 full-time employees, of which 56 worked in
editorial, nine in marketing and media relations, 11 in advertising, five in
professional markets, 20 in technology, five in art, 21 in customer service and
11 in finance/administration. We have never had a work stoppage and no personnel
are represented under collective bargaining agreements. We consider our
relations with our employees to be good.
FACILITIES
Our principal administrative, sales, marketing, technology and editorial
facilities are located in approximately 22,500 square feet of office space in
New York, New York. We are seeking larger facilities, into which we expect to
move in the second half of 1999. Our West Coast bureau is located in
approximately 3,200 square feet of office space in San Francisco, California.
Our communications and network infrastructure is hosted at Exodus Communications
in Jersey City, New Jersey, except for our commerce database, which is currently
hosted by the Starwave Corporation in Seattle, Washington.
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<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information regarding the executive
officers, directors and key employees of TheStreet.com:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Executive Officers and Directors
Kevin W. English..................................... 46 Chairman of the Board of Directors, Chief Executive
Officer and President (Class III)
Dave Kansas.......................................... 32 Editor-in-Chief and Director (Class II)
Paul Kothari......................................... 45 Vice President and Chief Financial Officer
Michael S. Zuckert................................... 40 Vice President and General Counsel
Jerry Colonna(1)..................................... 35 Director (Class II)
James J. Cramer...................................... 44 Director (Class I)
Edward F. Glassmeyer(1)(2)........................... 57 Director (Class II)
Martin Peretz........................................ 59 Director (Class I)
Fred Wilson(2)....................................... 37 Director (Class III)
Michael Golden....................................... 49 Director (Class I)
Key Employees
Brendan Amyot........................................ 34 Vice President and General Manager--Consumer Markets
Simon Clark.......................................... 33 Vice President and General Manager--International
Markets
Dawn M. Kikel........................................ 33 Vice President--Advertising Sales
Dan Woods............................................ 38 Vice President and Chief Technology Officer
</TABLE>
- ------------------
(1) Member of the compensation committee
(2) Member of the audit committee
KEVIN W. ENGLISH has served as chief executive officer and president of
TheStreet.com since October 1998. He was appointed chairman of the board in
December 1998. Before joining TheStreet.com, he served as the vice president and
general manager of the Nexis Enterprise Group, a division of Lexis-Nexis, from
February 1998 to October 1998. From September 1997 to February 1998,
Mr. English served on a special assignment, reporting to the chairman of Reed
Elsevier, the parent company of Lexis-Nexis. Mr. English served as vice
president of sales and marketing of Lexis-Nexis from May 1995 to September 1997
and as a senior director from 1994 to May 1995.
DAVE KANSAS has served as editor-in-chief of TheStreet.com since April 1997
and has served as a director of TheStreet.com since May 1998. He served as its
executive editor from September 1996 to April 1997. From October 1992 to
September 1996, Mr. Kansas held a variety of positions at The Wall Street
Journal, most recently as a financial markets reporter.
PAUL KOTHARI has served as vice president and chief financial officer of
TheStreet.com since February 1999. From February 1998 to February 1999,
Mr. Kothari was the chief financial officer at International Telecommunication
Data Systems, Inc., a wireless billing and customer care service company. From
August 1993 to January 1998, Mr. Kothari was the vice president of finance at
Bellcore, a telecommunications company.
MICHAEL S. ZUCKERT has served as vice president and general counsel of
TheStreet.com since February 1999. From 1987 to January 1999, Mr. Zuckert held a
variety of positions within the legal department of Morgan Stanley Dean Witter &
Co., most recently as a principal.
JERRY COLONNA has served as a director of TheStreet.com since May 1998. In
1996,
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Mr. Colonna co-founded Flatiron Partners, an Internet-focused, early-stage
venture capital firm, and has served as a managing partner since its inception.
In February 1995, Mr. Colonna joined CMG@Ventures, an Internet-focused venture
capital firm, as a founding partner. Prior to joining CMG@Ventures, Mr. Colonna
worked for nearly 10 years at CMP Publications, a technology publishing firm.
Mr. Colonna also serves as a director of GeoCities, Inc.
JAMES J. CRAMER is a co-founder and outside contributor of TheStreet.com.
Mr. Cramer has served as a director of TheStreet.com since May 1998, and served
as co-chairman from June 1996 to December 1998. Mr. Cramer founded and has
served as a president and director of Cramer, Berkowitz & Co., a hedge fund,
since its inception in 1987.
EDWARD F. GLASSMEYER has served as a director of TheStreet.com since
December 1998. Mr. Glassmeyer co-founded Oak Investment Partners, a venture
capital firm with $1.6 billion of committed capital, in November 1978.
Mr. Glassmeyer serves as a director of Mobius Management Systems, Inc., a
software infrastructure provider for Internet-based bill presentment and payment
and is a director of several privately held Oak portfolio companies in the
information technology sector.
MARTIN PERETZ is a co-founder of TheStreet.com. Dr. Peretz has served as a
director of TheStreet.com since May 1998. He served as co-chairman of
TheStreet.com from June 1996 to December 1998. Since 1974, Dr. Peretz has served
as the editor-in-chief and chairman of The New Republic. He has been a member of
the faculty of Harvard University since 1966. Dr. Peretz also serves as a
director of 11 mutual funds managed by the Dreyfus-Mellon Bank Group, of
LeukoSite, a publicly traded biotechnology company, and of The Electronic
Newstand, Inc., a web site specializing in the sale of magazine subscriptions.
FRED WILSON has served as a director of TheStreet.com since May 1998. In
1996, Mr. Wilson co-founded Flatiron Partners, an Internet-focused, early-stage
venture capital firm, and has served as a managing partner since its inception.
Prior to Flatiron Partners, Mr. Wilson worked at Euclid Partners, an early stage
venture capital firm, for 10 years where he served as general partner from 1991
to 1996.
MICHAEL GOLDEN has served as a director of TheStreet.com. since March 1999.
Mr. Golden has worked for The New York Times Company since 1984. Since October
1997, he has served as its vice chairman and senior vice president. From January
1996 to October 1997, he was the New York Times' vice president for operations
development. From October 1994 to January 1996, Mr. Golden was the executive
vice president and publisher of Tennis Magazine, a New York Times publication.
From September 1991 to October 1994, he was the executive vice president and
general manager of the New York Times' women's publishing division.
BRENDAN AMYOT has served as vice president and general manager--consumer
markets of TheStreet.com since January 1999. Mr. Amyot served in several
positions at TheStreet.com from August 1996 to January 1999. From January 1995
to August 1996, Mr. Amyot was the associate consumer marketing director at
Entertainment Weekly. From March 1993 to December 1994, Mr. Amyot was the
circulation director at Vibe.
SIMON CLARK has served as vice president and general manager--international
markets since February 1999. From December 1997 to February 1999, he served as
chief financial officer and vice president of operations of TheStreet.com, and
from June 1997 to November 1997 he served as director of finance. From January
1992 to June 1997, Mr. Clark held several positions at Reuters, most recently as
the director of corporate web sites.
DAWN M. KIKEL has served as vice president--advertising sales of
TheStreet.com since October 1997. From June 1996 to September 1997, Ms. Kikel
worked for Institutional Investor Inc. as publisher of Infrastructure Finance, a
global magazine focusing on project and public finance in the infrastructure
market, and as industry director--money management for Institutional Investor
Magazine from January 1993 to May 1996.
DAN WOODS has served as vice president and chief technology officer of
TheStreet.com since May 1998. From June 1995 to April 1998,
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<PAGE>
Mr. Woods served as director of editorial technology for Time New Media's
Pathfinder web site. From 1992 to May 1995, he worked as a database editor at
the News & Observer, a newspaper in Raleigh, North Carolina.
CLASSIFIED BOARD OF DIRECTORS
Our board of directors is divided into three classes of directors serving
staggered three-year terms. As a result, approximately one-third of the board of
directors will be elected each year. These provisions, together with the
provision of our amended and restated certificate of incorporation, allow the
board of directors to fill vacancies of or increase the size of the board of
directors, and may deter a stockholder from removing incumbent directors and
filling such vacancies with its own nominees in order to gain control of the
board.
Our board has resolved that Mr. Golden, Mr. Cramer and Dr. Peretz will
serve as Class I Directors whose terms expire at the 2000 annual meeting of
stockholders. Mr. Colonna, Mr. Glassmeyer and Mr. Kansas will serve as Class II
directors whose terms expire at the 2001 annual meeting of stockholders.
Mr. English and Mr. Wilson will serve as Class III directors whose terms expire
at the 2002 annual meeting of stockholders.
BOARD COMMITTEES
We have established an audit committee and a compensation committee. The
audit committee reviews our internal accounting procedures and considers and
reports to the board of directors with respect to other auditing and accounting
matters, including the selection of our independent auditors, the scope of
annual audits, fees to be paid to our independent auditors and the performance
of our independent auditors. The audit committee currently consists of
Mr. Glassmeyer and Mr. Wilson. The compensation committee reviews and recommends
to the board of directors the salaries, benefits and stock option grants of all
employees, consultants, directors and other individuals compensated by us. The
compensation committee also administers our stock option and other employee
benefits plans. The compensation committee currently consists of Mr. Glassmeyer
and Mr. Colonna.
DIRECTOR COMPENSATION
Directors do not currently receive any compensation for serving on the
board of directors, although they are reimbursed for reasonable travel expenses
incurred in connection with attending board of directors and committee meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee makes all compensation decisions. Prior to the
formation of the compensation committee in June 1998, our board of directors
made decisions relating to compensation of our executive officers. None of our
executive officers serves as a member of the board of directors or compensation
committee of any entity that has one or more of its executive officers serving
as a member of our board of directors or compensation committee. Our
compensation committee currently consists of Mr. Colonna and Mr. Glassmeyer,
neither of whom has ever been an officer or employee of TheStreet.com.
Mr. Cramer served as a member of the compensation committee from June 1998 to
February 1999, when Mr. Glassmeyer was appointed to the compensation committee.
During his tenure on the compensation committee, Mr. Cramer, an outside
contributor to TheStreet.com, participated in all decisions relating to
compensation of our executive officers, but was excluded from discussions by the
board of directors regarding his own compensation. See "Certain Transactions".
EMPLOYMENT AGREEMENTS
In October 1998, we entered into an employment agreement with Mr. Kevin
English, our chairman of the board, chief executive officer and president. This
agreement provides for an annual base salary of $350,000. Mr. English is also
eligible to receive a bonus of up to $100,000 for each fiscal year during which
he is employed upon the achievement of quarterly and annual objectives, plus any
additional bonus compensation awarded in the sole discretion of the compensation
committee. As part of this agreement, we granted Mr. English, a stock option to
purchase 400,000 shares of common stock at an exercise price of $0.15 per share.
The stock
42
<PAGE>
option becomes exercisable at a rate of 25% annually, commencing in October
1999. In December 1998, we completed an equity financing and Mr. English
received a stock option to purchase 121,316 shares of common stock at an
exercise price of $0.15 per share. The option becomes exercisable 25% annually
commencing in October 1999. In March 1999, in accordance with his October stock
option agreement, we granted Mr. English a stock option to purchase an
additional 345,351 shares of common stock at an exercise price of $3.00 per
share, of which the option to purchase 83,333 shares vested as of March 31,
1999. The option to purchase the remaining 262,018 shares becomes exercisable
25% annually commencing in October 1999.
As of January 1999, Mr. English also receives the use of a one-bedroom
corporate apartment, a monthly parking spot, term life insurance in the amount
of $500,000 and disability insurance paying not less than $180,000 per year. If
Mr. English's employment agreement is terminated for reasons other than a
disability, for cause or due to a liquidation, dissolution or shutdown of our
business, or if Mr. English should resign for good reason, he will be entitled
to receive his remaining earned but unpaid salary, any bonus earned through the
most recently ended fiscal quarter and an amount equal to his then current
annual base salary. We maintain a key person life insurance policy for Mr.
English. Mr. English's employment agreement terminates in December 2003.
In September 1996, we entered into an employment agreement with Dave
Kansas, our editor-in-chief and a director. Mr. Kansas' employment agreement
provides for an annual base salary of $130,000, subject to annual review by the
compensation committee. Under the agreement, Mr. Kansas is eligible to receive
an annual bonus of up to 30% of his annual base salary. However, the
compensation committee has discretion to grant Mr. Kansas a bonus in excess of
such amount and, in 1998, Mr. Kansas received $78,769 as a bonus. The employment
agreement terminates on August 30, 1999.
In May 1998, we entered into an employment agreement with Simon Clark, our
vice president and general manager--international markets. Mr. Clark's
employment agreement provides for an annual base salary of $150,000. The
compensation committee will review Mr. Clark's salary annually. The employment
agreement terminates on August 30, 1999.
In May 1998, we entered into an employment agreement with Brendan Amyot,
our vice president and general manager--consumer markets. Mr. Amyot's employment
agreement provides for an annual base salary of $130,000. The compensation
committee will review Mr. Amyot's salary annually. The employment agreement
terminates on August 30, 1999.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned for all services
rendered to us in all capacities during 1998 by our chief executive officer and
our four most highly compensated executive officers, other than our chief
executive officer, who earned more than $100,000 in 1998 and who were serving as
executive officers at the end of 1998. As of January 1999, Mr. Clark and
Mr. Amyot ceased to be executive officers of TheStreet.com.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION(1) SECURITIES
FISCAL --------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
- ------------------------------------------------------------- ------ ------- ------- ------------
<S> <C> <C> <C> <C>
Kevin W. English, Chairman of the Board,
Chief Executive Officer and President(2)................... 1998 $71,791 $25,000 521,316
Dave Kansas, Editor-in-Chief and Director.................... 1998 130,000 78,769 105,758
Simon Clark, Chief Financial Officer and Vice
President--Operations(3)................................... 1998 150,000 25,944 30,303
Brendan Amyot, Vice President--Business Development and
Marketing.................................................. 1998 130,000 26,064 30,303
</TABLE>
- ------------------------
(1) The column for "Other Annual Compensation" has been omitted because there is
no compensation required to be reported in that column. The aggregate amount
of perquisites and other personal benefits provided to each officer listed
above is less than 10% of the total annual salary and bonus of that officer.
(2) Mr. English joined TheStreet.com in October 1998. See "--Employment
Agreements".
(3) Mr. Clark served as our chief financial officer and vice
president--operations until February 1999 when he became vice president and
general manager--international markets of TheStreet.com.
44
<PAGE>
OPTION GRANTS IN FISCAL YEAR
The following table sets forth information regarding stock options granted
to our officers listed on the Summary Compensation Table for 1998. We have never
granted any stock appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
PERCENT OF STOCK
NUMBER OF TOTAL OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(3)
OPTIONS IN FISCAL PRICE PER EXPIRATION --------------------
NAME GRANTED(#) YEAR(%)(2) SHARE DATE 5% 10%
- --------------------------------- ---------- ------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Kevin W. English(4).............. 400,000(5) 24.0% $0.15 10/18/08 $461,246 $769,998
121,316(5) 7.3 0.15 12/20/08 574,636 925,790
Dave Kansas(6)................... 75,758(7) 4.6 0.03 5/06/03 75,080 95,334
30,000(7) 1.8 0.03 6/30/03 29,731 37,752
Simon Clark(8)................... 30,303(7) 1.8 0.03 5/06/03 30,031 38,134
Brendan Amyot(9)................. 30,303(7) 1.8 0.03 5/06/03 30,031 38,134
</TABLE>
- ------------------
(1) All options were granted under the Amended and Restated 1998 Stock Incentive
Plan. The options shown in this table, except as otherwise indicated below,
become exercisable at a rate of 25% annually over four years from the date
of grant. See "--1998 Stock Incentive Plan".
(2) In 1998, we granted options to employees to purchase an aggregate of
1,663,953 shares of common stock.
(3) Potential realizable value is based on the assumption that our common stock
appreciates at the annual rate shown, compounded annually, from the date of
grant until the expiration of the five or ten-year term as applicable. These
numbers are calculated based on Securities and Exchange Commission
requirements and do not reflect our projection or estimate of future stock
price growth. Potential realizable values are computed by multiplying the
number of shares of common stock subject to a given option by the fair
market value on the date of grant, as determined by our Board of Directors,
assuming that the aggregate stock value derived from that calculation
compounds at the annual 5% or 10% rate shown in the table for the entire
five or ten-year term of the option and subtracting from that result the
aggregate option exercise price. Assuming an initial public offering price
of $12.00 per share, the potential realizable value at assumed annual rates
of stock price appreciation will increase. Mr. English's 400,000 options
will have a potential realizable value of $7,758,400 and $12,390,000 at
assumed annual rates of stock price appreciation of 5% and 10%,
respectively. Mr. English's 121,316 options will have a potential realizable
value of $2,353,045 and $3,757,764 at assumed annual appreciation rates of
5% and 10%, respectively. Mr. Kansas' 75,758 options will have a potential
realizable value of $1,157,961 and $1,461,826 at assumed annual appreciation
rates of 5% and 10%, respectively. Mr. Kansas' 30,000 options will have a
potential realizable value of $458,550 and $578,880 at assumed annual
appreciation rates of 5% and 10%, respectively. Mr. Clark's and Mr. Amyot's
30,303 options will have a potential realizable value of $463,181 and
$584,727 at assumed annual appreciation rates of 5% and 10%, respectively.
(4) The option granted to Mr. English vests fully if any of the following
occurs: (i) there is a change of control as defined in his employment
agreement; (ii) we fail to renew Mr. English's employment agreement; or
(iii) Mr. English's employment agreement is terminated for good reason,
which includes a reduction in his responsibilities or compensation,
relocation of Mr. English or a merger or asset sale in which the acquiring
entity does not assume our obligations under Mr. English's employment
agreement. If Mr. English's employment agreement is terminated for good
reason before October 1999, 50% of the shares underlying the option vest
fully. If his employment agreement is terminated for good reason before
October 2000, 75% vest, and if his employment agreement is terminated for
good reason before October 2001, 100% vest. In
(Footnotes continued on next page)
45
<PAGE>
(Footnotes continued from previous page)
addition, Mr. English may exercise this option by cash, or through cashless
exercise subject to the approval of our management and board of directors.
(5) The options to purchase 400,000 and 121,316 shares were granted to
Mr. English at an exercise price of $0.15 per share. The fair market value
on the date of these grants was $0.80 and $3.00 per share, respectively. The
potential realizable value at assumed annual rates of stock price
appreciation has been calculated using the fair market value per share on
the date of grant.
(6) As a result of the limited liability company agreement of TheStreet.com,
L.L.C., Dave Kansas, Simon Clark, Brendan Amyot, and two other employees
were entitled to receive Class C-1 Units in the TheStreet.com, L.L.C. The
limited liability company agreement provided that in the event of the merger
of the TheStreet.com, L.L.C. with and into TheStreet.com, Inc., each
employee's entitlement to the Class C-1 Units would terminate and be
replaced by an option to purchase shares of common stock of TheStreet.com
based upon the conversion ratio set forth in the merger agreement.
TheStreet.com, L.L.C. merged with and into TheStreet.com in May 1998. In
connection with the merger, Mr. Kansas was granted an option to purchase
75,758 shares of common stock in exchange for the 1,250 Class C-1 Units that
he was entitled to receive under the limited liability agreement. The option
fully vested on October 1, 1998, on which date Mr. Kansas exercised the
option. The 75,758 shares of common stock issued to Mr. Kansas upon the
option exercise were contributed to us as a result of a share contribution
agreement, dated May 7, 1998, between us and Peretz Partners, L.L.C. The
terms of the share contribution agreement require Peretz Partners to
contribute to us an aggregate of 196,970 shares of common stock in
connection with options granted to Brendan Amyot, Dave Kansas, Simon Clark
and two other employees. See "Certain Transactions--Share Contribution
Agreement".
(7) The fair market value on the date of grant for these options was $0.80 per
share.
(8) In connection with the merger of the TheStreet.com, L.L.C. into
TheStreet.com, Inc., Mr. Clark was granted an option to purchase 30,303
shares of common stock in exchange for the 500 Class C-1 Units that he was
entitled to receive under the limited liability company agreement. The
option vested fully on June 1, 1998, on which date Mr. Clark exercised the
option. The 30,303 shares of common stock issued to Mr. Clark were
contributed to us as a result of the share contribution agreement.
(9) In connection with the merger of the TheStreet.com, L.L.C. into
TheStreet.com, Inc., Mr. Amyot was granted an option to purchase 30,303
shares of common stock in exchange for the 500 Class C-1 Units that he was
entitled to receive under the limited liability company agreement. This
option vested fully on April 1, 1999, on which date Mr. Amyot exercised the
option. The 30,303 shares of common stock issued to Mr. Amyot were
contributed to us as a result of the share contribution agreement.
46
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning the exercise of stock
options during the fiscal year ended December 31, 1998 by our officers listed on
the Summary Compensation Table and the fiscal year-end value of unexercised
options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1998 DECEMBER 31,1998(1)
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kevin W. English............. -- -- -- 521,316 -- $ 6,177,595
Dave Kansas.................. 75,758 $ 58,334(2) -- 30,000 -- $ 359,100
Simon Clark.................. 30,303 $ 23,333(2) -- -- -- --
Brendan Amyot................ -- -- -- 30,303 -- $ 362,727
</TABLE>
- ------------------
(1) There was no public market for the common stock on December 31, 1998. The
value of unexercised in-the-money options at December 31, 1998 has been
calculated using an assumed initial public offering price of $12.00 per
share.
(2) At the time of exercise, the fair market value was deemed to be $0.80 per
share.
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<PAGE>
1998 STOCK INCENTIVE PLAN
The amended and restated TheStreet.com, Inc. 1998 stock incentive plan,
which became effective on May 6, 1998, provides for the granting of incentive
stock options, non-qualified stock options, restricted stock and tax offset
payments. Our amended and restated 1998 stock incentive plan is administered by
our compensation committee. The total number of shares of our common stock that
may be issued under our amended and restated 1998 stock incentive plan to our
employees, directors and consultants (or of any entity in which we own at least
a 20% beneficial interest) is 4,400,000. The terms and conditions of options and
restricted stock will be set forth by the compensation committee in each
individual award agreement. The compensation committee may designate an award as
a "performance award" by making its grant or vesting subject to the achievement
of performance goals established by the compensation committee. The compensation
committee may also pay an awardee a tax offset payment as compensation for some
or all of the taxes that the awardee owes with respect to an award. In the event
of a change of control, if so determined by the compensation committee at the
time of grant or by amendment (with the holder's consent) of the grant, all
outstanding options will vest and become fully exercisable and the restrictions
applicable to any outstanding restricted stock awards shall lapse and the shares
shall be deemed fully vested. Under our amended and restated 1998 stock
incentive plan, a change of control occurs when there is:
o an acquisition in which a majority of our common stock is acquired by an
entity or person owning less than 5% of our total common stock outstanding
prior to the acquisition;
o an election of members of the board of directors in which a majority of the
board members after the election were not members of the board on the date of
option grant;
o a merger or consolidation with another corporation where our stockholders
immediately prior to the merger or consolidation no longer comprise a majority
of the voting shares of the surviving corporation; or
o a sale of all or substantially all of our assets.
As of March 31, 1999, 2,632,321 options were outstanding, of which 142,667
have vested.
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CERTAIN TRANSACTIONS
LLC FINANCING
From our inception as a limited liability company in June 1996, until May
1998, we were financed through contributions from our founders and through loans
bearing interest at the prime interest rate plus 1%. In return for their
contributions, our founders received Class A, B, C and D membership units of the
limited liability company and a lender received Class E units.
In May 1998, our Board of Directors approved our reorganization from a
limited liability company into a C corporation. As part of this reorganization,
each Class C membership unit was converted into 181.81818 shares of our common
stock. In addition, our Class A and Class B membership units were converted into
shares of our Series A 9 1/2% Cumulative Preferred Stock and Series C Preferred
Stock at a ratio of one preferred share per $100 of both Class A and Class B
membership units. Our Class D and Class E membership units were converted into
shares of our Series A 9 1/2% Cumulative Preferred Stock at a ratio of one
preferred share per $100 of Class D and Class E membership units.
1998 PRIVATE PLACEMENTS
In December 1998, we raised gross proceeds of $25 million by completing a
private placement of 243,891 shares of our Redeemable Convertible Series B
9 1/2% Cumulative Preferred Stock and 4,072,778 shares of our common stock to a
group of investors comprising of our founders, corporate and institutional
investors, venture capital funds and high net worth individuals, including some
of our directors and officers. In connection with this transaction we amended
and restated the registration rights agreement and the stockholders' agreement
in each case to include, among other things, the new purchasers. The amended and
restated stockholders' agreement will terminate upon completion of this
offering.
In May 1998, we raised gross proceeds of approximately $10 million by
completing a private placement of 101,475 shares of our Series B Preferred Stock
and 3,418,333 shares of our common stock to a group of investors comprising of
our founders, corporate and institutional investors, venture capital funds and
high net worth individuals, including some of our directors and officers. In
connection with this transaction, we granted the purchasers of these shares
registration rights. At this time we also entered into a stockholders' agreement
with these stockholders which by its terms will terminate upon the completion of
this offering. See "Description of Capital Stock -- Registration Rights".
Assuming an initial public offering price of $12.00 per share of common
stock, all of the outstanding shares of the convertible preferred stock,
including accumulated dividends as of March 31, 1999, will convert into an
aggregate of 4,406,129 shares of common stock upon the completion of this
offering.
THE NEW YORK TIMES INVESTMENT
In February 1999, we sold 37,728 shares of our Series B Preferred Stock and
1,320,901 shares of our common stock to The New York Times Company for an
aggregate consideration of $15 million in cash and services. In connection
with this sale, we entered into an advertising credit agreement with The New
York Times Company under which The New York Times Company has agreed to provide
us with an advertising credit for our advertising on The New York Times and
other media controlled by it. Additionally, as part of this transaction Mr.
Michael Golden, the vice chairman and senior vice president of The New York
Times Company, became a director of TheStreet.com. Recently, we entered into
memoranda of understanding with The New York Times Electronic Media Company
under which we have agreed to the following proposals:
o Promotion of our web site by The New York Times to registered users of
its web site;
o Indexing of our headlines on the Business section of The New York Times
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web site and indexing of headlines from the Business section of The New York
Times web site on our web site;
o Licensing our investment tools to The New York Times; and
o Creating a jointly owned newsroom to provide continuous coverage of business
news.
See "Risk Factors--Our Memoranda of Understanding May Not Materialize Into
Final Agreements".
CRAMER EMPLOYMENT AGREEMENTS
In May 1998, we entered into a one-year employment agreement with James
Cramer, an outside contributor. Under the terms of the agreement, we granted
Mr. Cramer a stock option to purchase 66,667 shares of common stock at an
exercise price of $0.033 per share. In February 1999, we entered into a new
employment agreement with Mr. Cramer, superseding the earlier agreement.
Mr. Cramer's new employment agreement provides for an annual salary of $250,000,
which increases annually by 10%. Under the new agreement, we granted Mr. Cramer
an option to purchase 333,333 shares of common stock at an exercise price of
$3.00 per share. The option becomes exercisable at a rate of 25% annually
commencing in February 2000. The employment agreement terminates in February
2003. We maintain a "key person" life insurance policy for Mr. Cramer.
REGISTRATION RIGHTS AGREEMENT
As a result of the amended and restated registration rights agreement we
have granted our existing stockholders registration rights. See "Description of
Capital Stock--Registration Rights".
SHARE CONTRIBUTION AGREEMENT
On May 7, 1998, we entered into a share contribution agreement with Peretz
Partners, L.L.C. in which it agreed to contribute to us up to an aggregate of
196,970 shares of common stock. We issued these shares to Brendan Amyot, Dave
Kansas and Simon Clark and two other employees when they exercised options
granted to them under our amended and restated 1998 stock incentive plan.
OFFICE LEASE
On August 14, 1996, we signed a lease with the State Teachers Retirement
System of Ohio to rent space at Two Rector Street, New York, New York 10006.
Cramer Berkowitz & Co., a company controlled by Mr. James Cramer, guaranteed our
obligations under the lease. On September 25, 1997, the landlord transferred
these premises, including its interest in the lease, to Rector Trinity
Associates, L.L.C. Rector Trinity Associates has released Cramer Berkowitz & Co.
from this guarantee as a result of receiving a letter of credit from
TheStreet.com in the amount of approximately $1.4 million.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of our common stock as of March 31, 1999 and as adjusted to reflect
the sale of the shares of common stock offered hereby by:
o each person who we know owns beneficially more than 5% of our common
stock;
o each of our directors, including our chief executive officer;
o our four most highly compensated executive officers, other than our chief
executive officer, who were serving as executive officers at the end of
1998; and
o all of our executive officers and directors as a group.
The following information gives effect to the conversion of all outstanding
shares of our preferred stock and accumulated dividends as of March 31, 1999
into an aggregate of 4,406,129 shares of common stock upon the completion of
this offering assuming that the initial public offering price is $12.00 per
share.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK SHARES OF COMMON STOCK
BENEFICIALLY OWNED BEFORE BENEFICIALLY OWNED AFTER
THE OFFERING(1) THE OFFERING(1)
-------------------------- --------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE(2) NUMBER PERCENTAGE(2)
- ------------------------------------------------------- --------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Kevin W. English....................................... 83,333 * -- *
Dave Kansas............................................ 151,515 * 151,515 *
Simon Clark............................................ 90,909 * 90,909 *
Brendan Amyot.......................................... 181,818 * 181,818 *
James J. Cramer(3)..................................... 3,580,577 18.3% 3,580,577 14.3%
Cramer Partners, L.L.C................................. 2,524,886 12.9 2,524,886 10.1
Martin Peretz(4)....................................... 3,241,110 16.6 3,241,110 12.9
Peretz Partners, L.L.C................................. 2,453,310 12.5 2,453,310 9.8
Fred Wilson(5)......................................... 538,159 2.7 538,159 2.1
Jerry Colonna(5)....................................... 538,159 2.7 538,159 2.1
Edward F. Glassmeyer(6)................................ 1,847,329 9.4 1,847,329 7.4
Michael Golden(11)..................................... -- * -- *
Oak Investment Partners VIII, L.P. and Oak VIII
Affiliates Fund, L.P.(6)............................. 1,847,329 9.4 1,847,329 7.4
Chase Venture Capital Associates, L.P.(7).............. 1,593,057 8.1 1,593,057 6.4
Softbank Technology Ventures IV L.P. and Softbank
Technology Advisors Fund L.P(8)...................... 1,601,235 8.2 1,601,235 6.4
Constellation Venture Capital L.P. and Constellation
Venture Offshore, L.P(9)............................. 1,276,992 6.5 1,276,992 5.1
Spinnaker Clipper Fund, L.P., Spinnaker Founders Fund,
L.P. and Spinnaker Offshore Founders Fund Cayman
Ltd.(10)............................................. 1,231,553 6.3 1,231,553 4.9
The New York Times Company(11)......................... 1,638,288 8.4 1,638,288 6.5
All executive officers and directors as a group (9
persons)............................................. 9,714,750 49.6 9,631,417 38.4
</TABLE>
- ------------------
* Represents beneficial ownership of less than 1%.
(1) Percentage ownership is based on 19,575,037 shares outstanding as of
March 31, 1999 prior to the offering and 25,075,037 shares after the
offering. Shares of common stock subject to options currently exercisable
or exercisable within 60 days of March 31, 1999 are deemed outstanding for
the purpose of computing the percentage ownership of the person holding
such options but are not deemed outstanding for computing the percentage
ownership of any other person. Unless otherwise indicated below, the
persons and entities named in the table have sole voting and sole
investment power with respect to all shares beneficially owned, subject to
community property laws where applicable.
(2) Assumes the underwriters' over-allotment option is not exercised.
(3) Includes 2,524,886 shares owned by Cramer Partners, L.L.C.
(4) Includes 2,453,310 shares owned by Peretz Partners, L.L.C. and 787,800
shares owned by other family members and entities.
(Footnotes continued on next page)
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(Footnotes continued from previous page)
(5) Includes 394,510 shares owned by Flatiron Fund, L.L.C., 130,348 shares
owned by The Flatiron Fund 1998/99, L.L.C. and 13,301 shares owned by
Flatiron Associates, L.L.C. of which Mr. Colonna and Mr. Wilson are general
partners.
(6) Includes 1,812,230 shares owned by Oak Investment Partners VIII, L.P. and
35,099 shares owned by Oak VIII Affiliates Fund, L.P. Mr. Glassmeyer is a
managing member of Oak Associates VIII, L.L.C., which is the general
partner of Oak Investment Partners VIII, L.P. and of Oak VIII Affiliates,
L.L.C., which is the general partner of Oak VIII Affiliates Fund, L.P.
Mr. Glassmeyer disclaims beneficial ownership of these shares.
(7) I. Robert Greene is a general partner of Chase Venture Capital Associates,
L.P. Mr. Greene disclaims beneficial ownership of these shares.
(8) Includes 1,569,845 shares owned by Softbank Technology Ventures IV L.P. and
31,390 owned by Softbank Technology Advisors Fund L.P. Mr. Charles R. Lax
is the managing member of STV IV LLC which is the general partner of each
of Softbank Technology Ventures IV L.P. and Softbank Technology Advisors
Fund L.P. Both Mr. Lax and STV IV LLC disclaim beneficial ownership of
these shares.
(9) Includes 838,945 shares owned by Constellation Venture Capital L.P. and
438,047 shares owned by Constellation Venture Offshore, L.P. Clifford H.
Friedman is a general partner of each of Constellation Venture Capital L.P.
and Constellation Venture Offshore, L.P. Mr. Friedman disclaims beneficial
ownership of these shares.
(10) Includes 123,156 shares owned by Spinnaker Clipper Fund, L.P., 717,207
shares owned by Spinnaker Founders Fund, L.P. and 391,190 shares owned by
Spinnaker Offshore Founders Fund Cayman Ltd. Lawrence Bowman is the
managing member of Bowman Capital Management LLC which is the general
partner of each of Spinnaker Clipper Fund, L.P., Spinnaker Founders Fund,
L.P. and Spinnaker Offshore Founders Fund Cayman Ltd. Both Mr. Bowman and
Bowman Capital Management LLC disclaim beneficial ownership of these
shares.
(11) Mr. Golden is a director of TheStreet.com. He serves as vice chairman and
senior vice president of The New York Times Company.
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DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
Subject to preferences that may apply to shares of preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available for this purpose
at the times and in the amounts as the board of directors may from time to time
determine. Each stockholder is entitled to one vote for each share of common
stock held on all matters submitted to a vote of stockholders. Cumulative voting
for the election of directors is not provided for in our amended and restated
certificate of incorporation, which means that the holders of a majority of the
shares voted can elect all of the directors then standing for election. The
common stock is not entitled to preemptive rights and is not subject to
conversion or redemption. Upon the occurrence of a liquidation, dissolution or
winding-up of TheStreet.com, the holders of shares of common stock would be
entitled to share ratably in the distribution of all of the TheStreet.com's
assets remaining available for distribution after satisfaction of all its
liabilities and the payment of the liquidation preference of any outstanding
preferred stock. Each outstanding share of common stock is, and all shares of
common stock to be outstanding upon completion of this offering will be, fully
paid and nonassessable.
PREFERRED STOCK
The board of directors has the authority, within the limitations and
restrictions stated in our amended and restated certificate of incorporation, to
provide by resolution for the issuance of shares of preferred stock, in one or
more classes or series, and to fix the rights, preferences, privileges and
restrictions of this preferred stock, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences and the
number of shares constituting any series or the designation of such series. The
issuance of preferred stock could have the effect of decreasing the market price
of the common stock and could adversely affect the voting and other rights of
the holders of common stock.
OPTIONS
As of March 31, 1999:
(i) options to purchase a total of 2,632,321 shares of common stock
were outstanding of which 142,667 have vested; and
(ii) up to 1,767,679 additional shares of common stock may be subject
to options granted in the future.
See "Management--Executive Compensation".
REGISTRATION RIGHTS
On December 21, 1998, we entered into an amended and restated registration
rights agreement with our existing stockholders in which we granted them
registration rights in respect of 7,489,444 shares of common stock held by them.
These stockholders are referred to as the "existing stockholders". A copy of the
registration rights agreement has been filed as an exhibit to the registration
statement of which this prospectus forms a part. According to the registration
rights agreement, at any time, on or after the first anniversary of this
offering, some of the existing stockholders who hold in the aggregate at least
3,558,043 shares of common stock may request us to register under the Securities
Act all or any portion of the common stock purchased by the existing
stockholders in the May and December 1998 private placements. These shares are
referred to as the "restricted stock". However, the securities to be registered
must have a reasonably anticipated aggregate public offering price of at least
$500,000.
In addition, the holder of any restricted stock may request that we file a
registration statement on Form S-3, covering all stock as requested by any
holder of restricted stock who requests that we register their holdings. We are
not obligated to effect a registration statement on Form S-3 more than once in
any 180-day period or unless the proceeds of this registration shall reasonably
be expected to exceed $500,000.
These registration rights are subject to our right to delay the filing of a
registration statement in certain circumstances for up to 90 days.
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In addition, the holders of restricted stock will have certain "piggyback"
registration rights. If we propose to register any common stock under the
Securities Act (other than pursuant to this offering or in connection with the
registration of securities issued (i) under an employee benefits plan or
(ii) in consideration for an acquisition), each holder of restricted stock may
require us to include all or a portion of their restricted stock in such
registration; provided however, that the managing underwriter, if any, of any
such offering has certain rights to limit the number of restricted stock
proposed to be included in such registration.
We would bear all registration expenses incurred in connection with these
registrations. Each participating seller of restricted stock would bear their
proportionate share of all underwriting discounts and selling commissions.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF DELAWARE LAW AND THE
THESTREET.COM'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS
Some provisions of our amended and restated certificate of incorporation
and amended and restated bylaws, which provisions are summarized in the
following paragraphs, may be deemed to have an anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider it its best interest, including those attempts that might result
in a premium over the market price for the shares held by stockholders.
CLASSIFIED BOARD OF DIRECTORS
Our board of directors is divided into three classes of directors serving
staggered three-year terms. As a result, approximately one-third of the board of
directors will be elected each year. These provisions, when coupled with the
provision of our amended and restated certificate of incorporation authorizing
the board of directors to fill vacant directorships or increase the size of the
board of directors, may deter a stockholder from removing incumbent directors
and simultaneously gaining control of the board of directors by filling the
vacancies created by such removal with its own nominees.
CUMULATIVE VOTING
Our amended and restated certificate of incorporation expressly denies
stockholders the right to cumulate votes in the election of directors.
STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS
Our amended and restated certificate of incorporation eliminates the
ability of stockholders to act by written consent. It further provides that
special meetings of our stockholders may be called only by the chairman of the
board of directors, the president or a majority of the board of directors.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTORS NOMINATIONS
Our amended and restated bylaws provide that stockholders seeking to bring
business before an annual meeting of stockholders, or to nominate candidates for
election as directors at an annual meeting of stockholders, must provide timely
notice in writing. To be timely, a stockholder's notice must be delivered to or
mailed and received at our principal executive offices not less than 60 days nor
more than 90 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders; provided, that in the event that the annual
meeting is called for a date that is not within thirty (30) days before or after
such anniversary date, notice by the stockholder in order to be timely must be
received not later than the close of business on the 10th day following the date
on which notice of the date of the annual meeting was mailed to stockholders or
made public, whichever first occurs. In the case of a special meeting of
stockholders called for the purpose of electing directors, notice by the
stockholder in order to be timely must be received not later than the close of
business on the tenth (10th) day following the day on which notice of the date
of the special meeting was mailed or public disclosure of the date of the
special meeting was made, whichever first occurs. Our amended and restated
bylaws also specify certain requirements as to the form and content of a
stockholder's notice. These provisions may preclude stockholders from bringing
matters before an annual meeting of stockholders or
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from making nominations for directors at an annual meeting of stockholders.
AUTHORIZED BUT UNISSUED SHARES
The authorized but unissued shares of common stock and preferred stock are
available for future issuance without stockholder approval. These additional
shares may be utilized for a variety of corporate purposes, including future
public offerings to raise additional capital, corporate acquisitions and
employee benefit plans. The existence of authorized but unissued shares of
common stock and preferred stock could render more difficult or discourage an
attempt to obtain control of us by means of a proxy contest, tender offer,
merger or otherwise.
AMENDMENTS; SUPERMAJORITY VOTE REQUIREMENTS
The Delaware General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or bylaws, unless
a corporation's certificate of incorporation or bylaws, as the case may be,
requires a greater percentage. Our amended and restated certificate of
incorporation imposes supermajority vote requirements in connection with
business combination transactions and the amendment of provisions of our amended
and restated certificate of incorporation and amended and restated bylaws,
including those provisions relating to the classified board of directors, action
by written consent and the ability of stockholders special meetings.
RIGHTS AGREEMENT
Under Delaware law, every corporation may create and issue rights entitling
the holders of such rights to purchase from the corporation shares of its
capital stock of any class or classes, subject to any provisions in its
certificate of incorporation. The price and terms of such shares must be stated
in the certificate of incorporation or in a resolution adopted by the board of
directors for the creation or issuance of such rights.
We have entered into a stockholder rights agreement. As with most
stockholder rights agreements, the terms of our rights agreement are complex and
not easily summarized, particularly as they relate to the acquisition of our
common stock and to exercisability. This summary may not contain all of the
information that is important to you. Accordingly, you should carefully read our
rights agreement, which has been filed as an exhibit to the registration
statement of which this prospectus forms a part.
Our rights agreement provides that each share of our prospective common
stock outstanding will have one right to purchase one one-hundredth of a
preferred share attached to it. The purchase price per one one-hundredth of a
preferred share under the stockholder rights agreement is four times the average
closing price of our common stock for the first five days of trading after the
consummation of this offering.
Initially, the rights under our rights agreement are attached to
outstanding certificates representing our common stock and no separate
certificates representing the rights will be distributed. The rights will
separate from our common stock and be represented by separate certificates
approximately 10 days after someone acquires or commences a tender offer for 15%
of our outstanding common stock.
After the rights separate from our common stock, certificates representing
the rights will be mailed to record holders of the common stock. Once
distributed, the rights certificates alone will represent the rights.
All shares of our common stock issued prior to the date the rights separate
from the common stock will be issued with the rights attached. The rights are
not exercisable until the date the rights separate from the common stock. The
rights will expire on the tenth anniversary of the date of the completion of
this offering unless earlier redeemed or exchanged by us.
If an acquiror obtains or has the rights to obtain 15% or more of our
common stock, then each right will entitle the holder to purchase a number of
shares of our common stock equal to two times the purchase price of each right.
Each right will entitle the holder to purchase a number of shares of common
stock of the acquiror having a then current market value of twice the purchase
price if an acquiror
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obtains 15% or more of our common stock and any of the following occurs:
o we merge into another entity;
o an acquiring entity merges into us; or
o we sell more than 50% of our assets or earning power.
Under our rights agreement, any rights that are or were owned by an
acquiror of more than 15% of our outstanding common stock will be null and void.
Our rights agreement contains exchange provisions which provides that after
an acquiror obtains 15% or more, but less than 50% of our respective outstanding
common stock, our board of directors may, at its option, exchange all or part of
the then outstanding and exercisable rights for common shares. In such an event,
the exchange ratio is one common share per right, adjusted to reflect any stock
split, stock dividend or similar transaction.
Our board of directors may, at its option, redeem all of the outstanding
rights under our rights agreement prior to the earlier of (1) the time that an
acquiror obtains 15% or more of our outstanding common stock or (2) the final
expiration date of the rights agreement. The redemption price under our rights
agreement is $0.01 per right, subject to adjustment. The right to exercise the
rights will terminate upon the action of our board ordering the redemption of
the rights and the only right of the holders of the rights will be to receive
the redemption price.
Holders of rights will have no rights as our stockholders including the
right to vote or receive dividends, simply by virtue of holding the rights.
Our rights agreement provides that the provisions of the rights agreement
may be amended by the board of directors prior to 10 days after someone acquires
or commences a tender offer for 15% of our outstanding common stock without the
approval of the holders of the rights. However, after that date, the rights
agreement may not be amended in any manner which would adversely effect the
interests of the holders of the rights, excluding the interests of any acquiror.
In addition, our rights agreement provides that no amendment may be made to
adjust the time period governing redemption at a time when the rights are not
redeemable.
Our rights agreement contains rights that have anti-takeover effects. The
rights may cause substantial dilution to a person or group that attempts to
acquire us without conditioning the offer on a substantial number of rights
being acquired. Accordingly, the existence of the rights may deter acquirors
from making takeover proposals or tender offers. However, the rights are not
intended to prevent a takeover, but rather are designed to enhance the ability
of our board to negotiate with an acquiror on behalf of all the stockholders. In
addition, the rights should not interfere with a proxy contest.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company. Its address is 40 Wall Street, New York, New York
10005, and its telephone number at this location is (212) 936-5100.
LISTING
Our common stock will be listed on the Nasdaq National Market under the
trading symbol "TSCM".
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SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of our common stock in the public market could
adversely affect prevailing market prices of our common stock. Furthermore,
since no shares will be available for sale shortly after this offering because
of contractual and legal restrictions on resale described below, sales of
substantial amounts of common stock in the public market after these
restrictions lapse could adversely affect the prevailing market price and our
ability to raise equity capital in the future.
Upon completion of this offering, we will have outstanding an aggregate of
25,075,037 shares of our common stock, assuming no exercise of the Underwriters'
over-allotment option and no exercise of outstanding options. Of these shares,
all of the shares sold in this offering will be freely tradable without
restriction or further registration under the Securities Act, unless such shares
are purchased by "affiliates" as that term is defined in Rule 144 under the
Securities Act. The remaining shares of common stock held by existing
stockholders are "restricted securities" as that term is defined in Rule 144
under the Securities Act. Restricted securities may be sold in the public market
only if registered or if they qualify for an exemption from registration under
Rule 144 promulgated under the Securities Act, which rules are summarized below.
As a result of the contractual restrictions described below and the
provisions of Rule 144, the restricted securities will be available for sale in
the public market subject to the volume limitations and other conditions of
Rule 144. The shares could be available for resale immediately upon the
expiration of the 180-day lock-up period.
LOCK-UP AGREEMENTS
All of our officers and directors and substantially all of our stockholders
have signed lock-up agreements under which they agreed not to transfer or
dispose of, directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for shares of common stock, for
a period of 180 days after the date of this prospectus. Transfers or
dispositions can be made sooner with the prior written consent of Goldman, Sachs
& Co.
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:
o 1% of the number of shares of common stock then outstanding, which will equal
approximately 250,750 shares immediately after this offering; or
o the average weekly trading volume of the common stock on the Nasdaq National
Market during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to such sale.
Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us.
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering.
STOCK OPTIONS
Following the completion of this offering, we intend to file a registration
statement on Form S-8 under the Securities Act covering 4,400,000 shares of
common stock reserved for issuance under the 1998 Stock Incentive Plan. The
registration statement will become effective automatically upon filing. As of
March 31, 1999, options to purchase 2,632,321 shares of common stock were issued
and outstanding of which 142,667 shares have vested. Accordingly, shares
registered under the registration statement will, subject to vesting provisions
and Rule 144 volume limitations applicable to our affiliates, be
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available for sale in the open market immediately after the 180-day lock-up
agreements expire. See "Description of Capital Stock--Registration Rights".
REGISTRATION RIGHTS
Upon completion of this offering, the holders of 3,558,043 shares of our
common stock, or their transferees, are entitled to request that we register
their shares under the Securities Act. After these shares are registered, they
will become freely tradable without restriction under the Securities Act. Any
sales of securities by these stockholders could have a material adverse effect
on the trading price of our common stock. See "Description of Capital
Stock--Registration Rights".
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
Certain legal matters in connection with this offering will be passed upon for
the underwriters by Brobeck, Phleger & Harrison LLP, New York, New York.
EXPERTS
The financial statements of TheStreet.com, Inc. as of December 31, 1997 and
1998 and for the period from June 18, 1996 (inception) through December 31, 1996
and for the years ended December 31, 1997 and 1998 included in this prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in auditing and accounting.
CHANGE IN ACCOUNTANTS
In July 1998, we decided to replace Anchin, Block & Anchin LLP with Arthur
Andersen LLP as our independent public accountants to audit financial statements
for the period from June 18, 1996 (inception) through December 31, 1996 and for
the years ended December 31, 1997 and December 31, 1998. The decision to change
independent public accountants from Anchin, Block & Anchin LLP to Arthur
Andersen LLP was approved by our board of directors.
We believe, and have been advised by Anchin, Block & Anchin LLP that it
concurs in such belief, that, for the period from June 18, 1996 (inception)
through December 31, 1997, we and Anchin, Block & Anchin LLP did not have any
disagreement on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of Anchin, Block & Anchin LLP would have caused it
to make reference in connection with its report on our financial statements to
the subject matter of the disagreement.
The report of Anchin, Block & Anchin LLP on our financial statements for
the period from June 18, 1996 (inception) through December 31, 1997 did not
contain an adverse opinion or a disclaimer of opinion, and was not qualified or
modified as to uncertainty, audit scope or accounting principles. During that
period there were no "reportable events" within the meaning of
Item 304(a)(1)(v) of Regulation S-K promulgated under the Securities Act.
ADDITIONAL INFORMATION
We filed with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form S-1 under the Securities Act with respect to the
shares of common stock offered hereby. This prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules filed therewith. For further information with respect to TheStreet.com
and the common stock offered hereby, reference is made to the Registration
Statement and the exhibits and schedule filed therewith. Statements contained in
this prospectus regarding the contents of any contract or any other document to
which reference is made are not necessarily complete, and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit
58
<PAGE>
to the Registration Statement, each such statement being qualified in all
respects by such reference. A copy of the Registration Statement and the
exhibits and schedule filed therewith may be inspected without charge at the
public reference facilities maintained by the Commission in Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New
York 10048, and copies of all or any part of the Registration Statement may be
obtained from such offices upon the payment of the fees prescribed by the
Commission. Information on the operation of the Public Reference Room may be
obtained by calling the Commission at 1-800-SEC-0330. The Commission maintains a
World Wide web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of the site is http://www.sec.gov.
59
<PAGE>
THESTREET.COM, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Public Accountants................................................................... F-2
Balance Sheets as of December 31, 1997 and 1998............................................................ F-3
Statements of Operations for the Period from
June 18, 1996 (Inception) to December 31, 1996
and the Years Ended December 31, 1997 and 1998........................................................... F-4
Statements of Stockholders' Equity (Deficit) for the
Period from June 18, 1996 (Inception) to December 31, 1996
and the Years Ended December 31, 1997 and 1998........................................................... F-5
Statements of Cash Flows for the Period from
June 18, 1996 (Inception) to December 31, 1996 and
the Years Ended December 31, 1997 and 1998............................................................... F-6
Notes to Financial Statements.............................................................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To TheStreet.com, Inc.:
We have audited the accompanying balance sheets of TheStreet.com, Inc. (a
Delaware corporation), as of December 31, 1997 and 1998, and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
period from June 18, 1996 (inception) to December 31, 1996 and the two years
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TheStreet.com, Inc. as of
December 31, 1997 and 1998, and the results of its operations and its cash flows
for the period from June 18, 1996 (inception) to December 31, 1996 and the two
years ended December 31, 1998, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
New York, New York
February 9, 1999
F-2
<PAGE>
THESTREET.COM, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1998
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................................... $ 156,692 $ 24,611,958
Accounts receivable, net of allowance for doubtful accounts of
$0 and $40,000 as of December 31, 1997 and 1998,
respectively.................................................. 130,699 811,419
Other receivables and unbilled revenue.......................... -- 663,137
Prepaid expenses and other current assets....................... 27,455 687,639
------------ ------------
Total current assets....................................... 314,846 26,774,153
Property and equipment, net of accumulated depreciation and
amortization of $162,632 and $78,110 as of December 31, 1997
and 1998, respectively........................................ 495,697 599,937
Other assets.................................................... 100,251 207,329
------------ ------------
Total assets............................................... $ 910,794 $ 27,581,419
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Line of credit.................................................. $ -- $ 3,333
Accounts payable................................................ 691,800 1,927,065
Accrued expenses................................................ 789,887 1,250,577
Deferred revenue................................................ 176,125 675,513
------------ ------------
Total current liabilities.................................. 1,657,812 3,856,488
Deferred rent................................................... 74,825 200,636
Long-term debt.................................................. 6,335,000 --
------------ ------------
Total liabilities.......................................... 8,067,637 4,057,124
------------ ------------
Redeemable convertible Series B preferred stock; $0.01 par
value; 9 1/2% cumulative; 0 and 345,366 shares issued and
outstanding in 1997 and 1998, respectively; none outstanding
on a pro forma basis.......................................... -- 21,106,898 $ --
STOCKHOLDERS' EQUITY (DEFICIT):
Common Stock; $0.01 par value; 100,000,000 shares authorized,
6,060,606 and 13,763,838 shares issued and outstanding at
December 31, 1997 and 1998, respectively; 17,762,343 shares
outstanding on a pro forma basis........................... 60,606 137,638 177,623
Convertible Preferred Stock--
Series A; $0.01 par value; 9 1/2% cumulative; 1,500 and
118,441 shares issued and outstanding in 1997 and 1998,
respectively; none outstanding on a pro forma basis...... 15 1,184 --
Series C; $0.01 par value; 1,500 shares issued and
outstanding in 1997 and 1998; none outstanding on a pro
forma basis.............................................. 15 15 --
Additional paid-in capital.................................... 280,364 16,349,199 37,417,311
Deferred compensation......................................... -- (1,578,000) (1,578,000)
Accumulated deficit........................................... (7,497,843) (12,492,639) (12,492,639)
------------ ------------ ------------
Total stockholders' equity (deficit)....................... (7,156,843) 2,417,397 $ 23,524,295
------------ ------------ ------------
Total liabilities and stockholders' equity (deficit)....... $ 910,794 $ 27,581,419
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-3
<PAGE>
THESTREET.COM, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
JUNE 18,
1996
(INCEPTION) FOR THE YEARS ENDED
TO DECEMBER 31
DECEMBER 31 ---------------------------
1996 1997 1998
----------- ----------- ------------
<S> <C> <C> <C>
Net revenues:
Advertising revenues.......................................... $ -- $ 117,652 $ 2,544,409
Subscription revenues......................................... -- 320,682 1,685,446
Other revenues................................................ -- 150,400 393,511
----------- ----------- ------------
Total net revenues......................................... -- 588,734 4,623,366
Cost of revenues................................................ 297,830 1,146,383 3,955,270
----------- ----------- ------------
Gross profit (loss)........................................ (297,830) (557,649) 668,096
----------- ----------- ------------
Operating expenses:
Product development expenses.................................. 468,909 402,379 2,346,354
Sales and marketing expenses.................................. 397,508 2,188,968 9,204,711
General and administrative expenses........................... 547,522 2,209,707 5,158,158
Noncash compensation expense.................................. -- -- 90,000
----------- ----------- ------------
Total Operating expenses................................... 1,413,939 4,801,054 16,799,223
----------- ----------- ------------
Loss from operations....................................... (1,711,769) (5,358,703) (16,131,127)
Interest expense, net of interest income of $0, $0 and $161,423
in 1996, 1997 and 1998, respectively.......................... 21,623 405,748 227,324
----------- ----------- ------------
Loss before provision for income taxes..................... (1,733,392) (5,764,451) (16,358,451)
Provision for income taxes...................................... -- -- --
----------- ----------- ------------
Net loss................................................... $(1,733,392) $(5,764,451) $(16,358,451)
----------- ----------- ------------
----------- ----------- ------------
Net loss per share--basic and diluted........................... $ (0.29) $ (0.95) $ (2.13)
----------- ----------- ------------
----------- ----------- ------------
Weighted average basic and diluted shares outstanding........... 6,060,606 6,060,606 8,575,128
----------- ----------- ------------
----------- ----------- ------------
Pro forma per share data (unaudited):
Pro forma net loss per share--basic and diluted............... $ (0.28) $ (0.95) $ (1.65)
----------- ----------- ------------
----------- ----------- ------------
Pro forma weighted average basic and diluted shares
outstanding................................................ 6,085,606 6,085,606 9,923,454
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
THESTREET.COM, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM JUNE 18, 1996 (INCEPTION) TO DECEMBER 31, 1996
AND THE YEARS ENDED DECEMBER 31, 1997 AND 1998
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK
-------------------------------------
COMMON STOCK SERIES A SERIES C ADDITIONAL
--------------------- ------------------ ----------------- PAID-IN
SHARES PAR VALUE SHARES PAR VALUE SHARES PAR VALUE CAPITAL
---------- --------- ------- --------- ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 18, 1996 (inception)......... -- $ -- -- $ -- -- $-- $ --
Issuance of Common Stock................... 6,060,606 60,606 1,500 15 1,500 15 239,364
Net loss................................... -- -- -- -- -- -- --
---------- --------- ------- ------- ------ --- -----------
Balance at December 31, 1996................. 6,060,606 60,606 1,500 15 1,500 15 239,364
Issuance of warrants....................... -- -- -- -- -- -- 41,000
Net loss................................... -- -- -- -- -- -- --
---------- --------- ------- ------- ------ --- -----------
Balance at December 31, 1997................. 6,060,606 60,606 1,500 15 1,500 15 280,364
Issuance of common stock................... 181,818 1,818 -- -- -- -- 3,637
Capital contribution....................... -- -- -- -- -- -- 375,000
Net loss from January 1, 1998 through
May 7, 1998.............................. -- -- -- -- -- -- --
Termination of LLC......................... -- -- -- -- -- -- (12,815,014)
Conversion of debt to equity............... -- -- 116,941 1,169 -- -- 11,692,786
Net proceeds from private placement in May
1998..................................... 3,418,333 34,183 -- -- -- -- 2,700,483
Net proceeds from private placement in
December 1998............................ 4,072,778 40,728 -- -- -- -- 12,177,606
Recognition of deferred compensation ...... -- -- -- -- -- -- 1,668,000
Noncash compensation expense............... -- -- -- -- -- -- --
Accretion of Redeemable Convertible
Series B Preferred Stock to redemption
value.................................... -- -- -- -- -- -- 481,270
Exercise of options........................ 30,303 303 -- -- -- -- 606
Preferred Stock dividends.................. -- -- -- -- -- -- 747,001
Net loss from May 8, 1998 through
December 31, 1998........................ -- -- -- -- -- -- --
---------- --------- ------- ------- ------ --- -----------
Balance at December 31, 1998................. 13,763,838 $ 137,638 118,441 $ 1,184 1,500 $15 $16,349,199
---------- --------- ------- ------- ------ --- -----------
---------- --------- ------- ------- ------ --- -----------
<CAPTION>
TOTAL
STOCKHOLDERS'
ACCUMULATED DEFERRED EQUITY
DEFICIT COMPENSATION (DEFICIT)
------------ ------------ -------------
<S> <C> <C> <C>
Balance at June 18, 1996 (inception)......... $ -- $ -- $ --
Issuance of Common Stock................... -- -- 300,000
Net loss................................... (1,733,392) -- (1,733,392)
------------ ------------ -----------
Balance at December 31, 1996................. (1,733,392) -- (1,433,392)
Issuance of warrants....................... -- -- 41,000
Net loss................................... (5,764,451) -- (5,764,451)
------------ ------------ -----------
Balance at December 31, 1997................. (7,497,843) -- (7,156,843)
Issuance of common stock................... -- -- 5,455
Capital contribution....................... -- -- 375,000
Net loss from January 1, 1998 through
May 7, 1998.............................. (5,317,171) -- (5,317,171)
Termination of LLC......................... 12,815,014 -- --
Conversion of debt to equity............... -- -- 11,693,955
Net proceeds from private placement in May
1998..................................... -- -- 2,734,666
Net proceeds from private placement in
December 1998............................ -- -- 12,218,334
Recognition of deferred compensation ...... -- (1,668,000) --
Noncash compensation expense............... -- 90,000 90,000
Accretion of Redeemable Convertible
Series B Preferred Stock to redemption
value.................................... -- -- (481,270)
Exercise of options........................ -- -- 909
Preferred Stock dividends.................. (1,451,359) -- (704,358)
Net loss from May 8, 1998 through
December 31, 1998........................ (11,041,280) -- (11,041,280)
------------ ------------ -----------
Balance at December 31, 1998................. $(12,492,639) $(1,578,000) $ 2,417,397
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
THESTREET.COM, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
JUNE 18, 1996 FOR THE YEARS ENDED
(INCEPTION) TO DECEMBER 31
DECEMBER 31 ----------------------------
1996 1997 1998
--------------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss..................................................... $(1,733,392) $(5,764,451) $(16,358,451)
Adjustments to reconcile net loss to net cash used in
operating activities:
Noncash compensation expense............................... -- -- 90,000
Allowance for doubtful accounts............................ -- -- 40,000
Depreciation and amortization.............................. 15,158 158,884 244,505
Noncash expense for warrants............................... -- 41,000 --
Increase in accounts receivable............................ -- (130,699) (720,720)
Increase in other receivables and unbilled revenue......... -- -- (663,137)
(Increase) decrease in prepaid expenses and other current
assets................................................... (85,509) 58,054 (660,184)
Increase in other assets................................... (21,635) (63,659) (122,035)
Increase in accounts payable and accrued expenses.......... 378,924 1,102,763 1,695,955
Increase in deferred revenue............................... -- 176,125 499,388
Increase in deferred rent.................................. 24,087 50,738 125,810
----------- ----------- ------------
Net cash used in operating activities................. (1,422,367) (4,371,245) (15,828,869)
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures......................................... (172,901) (490,429) (333,787)
Organization costs........................................... (21,366) -- --
----------- ----------- ------------
Net cash used in investing activities................. (194,267) (490,429) (333,787)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock....................... 300,000 -- 6,364
Net borrowings under line of credit.......................... -- -- 3,333
Proceeds from notes payable.................................. 1,335,000 5,500,000 5,733,955
Repayment of notes payable................................... -- (500,000) --
Net proceeds from private placements......................... -- -- 34,874,270
----------- ----------- ------------
Net cash provided by financing activities............. 1,635,000 5,000,000 40,617,922
----------- ----------- ------------
Net increase in cash.................................. 18,366 138,326 24,455,266
Cash and cash equivalents, beginning of period................. -- 18,366 156,692
----------- ----------- ------------
Cash and cash equivalents, end of period....................... $ 18,366 $ 156,692 $ 24,611,958
----------- ----------- ------------
----------- ----------- ------------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Income taxes............................................... -- -- --
Interest................................................... -- -- $ 3,098
Supplemental Disclosure of Noncash Investing Activities:
During 1998, the holder of a note payable by the Company
contributed $375,000 of principal to the Company as an
equity contribution........................................
During 1998, the holders of certain notes payable by the
Company converted $11,693,955 of outstanding principal and
interest, into 116,941 of Series A 9 1/2% Cumulative
Convertible Preferred Stock................................
During 1998, the Company entered into a sale-leaseback
transaction for certain of its computers and furniture and
fixtures. The transaction resulted in a deferred loss of
$197,429 which will be recognized in proportion to the rent
expense under the operating lease over a three-year
period.....................................................
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION, NATURE OF BUSINESS AND SUMMARY OF OPERATIONS AND SIGNIFICANT
ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF BUSINESS
TheStreet.com, Inc. (the "Company") is a leading web-based provider of
original, timely, comprehensive and trustworthy financial news, commentary and
information aimed at helping readers make informed investment decisions. The
Company combines the most important qualities of traditional print
journalism--accuracy, intelligence, fairness and wit--with the web's advantages
as a financial news medium--timeliness, interactivity and global distribution.
The Company was formed on June 18, 1996 in the state of Delaware as a
limited liability company ("LLC"). On May 7, 1998, the Company's Board of
Directors approved the reorganization of the LLC into a C corporation.
Accordingly, holders of Class C membership units were converted into 181.81818
shares of Common Stock for each unit. In addition, Class A and Class B
membership units were converted to Series A 9 1/2% Cumulative Preferred Stock
and Series C Preferred Stock at a ratio of one preferred share for each $100 of
Class A and Class B membership units, respectively. Class D and Class E
membership units were converted to Series A 9 1/2% Cumulative Preferred Stock
("Series A Preferred Stock") at a ratio of one preferred share per $100 of
Class D and Class E membership units. All share and per share data has been
retroactively adjusted to reflect the reorganization and the one-for-three
reverse stock split (see Note 11).
The Pro Forma December 31, 1998 information reflected in the accompanying
balance sheet reflects the conversion of all Convertible Preferred Stock plus
accrued dividends into Common Stock upon completion of the proposed initial
public offering (see Note 11).
The Company is proposing an initial public offering of up to 5,500,000
shares of Common Stock excluding the overallotment. See "Risk Factors" in the
accompanying prospectus.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions, specifically for allowance for doubtful accounts for accounts
receivable and the useful lives of fixed assets, that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
REVENUE RECOGNITION
The Company generates its revenues primarily from subscriptions and
advertising.
Subscription revenues represent customer subscriptions that provide
subscribers access to financial news, commentary and information. Subscriptions
are generally charged to customers' credit cards or are charged directly to
companies that subscribe to the service. These are generally billed in advance
on a monthly, quarterly or annual basis. Revenue from subscriptions is
recognized ratably over the subscription period. Deferred revenue relates to
subscription fees for which amounts have been collected but for which revenue
has not been recognized.
Advertising revenue, derived from the sale of sponsorship and banner and
email advertisements and on the Company's web site, is recognized ratably in the
period the advertising is displayed, provided that no significant Company
obligations remain and collection of the resulting receivable is probable.
Company obligations typically include guarantees of a minimum number of
"impressions" or
F-7
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(1) ORGANIZATION, NATURE OF BUSINESS AND SUMMARY OF OPERATIONS AND SIGNIFICANT
ACCOUNTING POLICIES--(CONTINUED)
times that an advertisement is viewed by users of the Company's web site. Such
amounts are recognized as revenue in the month earned.
Other revenues consist primarily of content syndication fees. In 1997,
other revenues entirely consisted of revenues derived from a syndication and
hosting partnership with ABCNEWS.com and Starwave (an affiliate of ABCNEWS.com).
Pursuant to this arrangement, the Company agreed to syndicate a portion of its
news content to ABCNEWS.com in return for technology and hosting services from
Starwave. The fair value of the content delivered and the fair value of the
technology and hosting services were both estimated by management to be
approximately $300,000 during 1998 and, therefore, no gain or loss was
recognized as a result of these transactions.
CASH AND CASH EQUIVALENTS
The Company considers all short-term marketable equity securities with a
maturity of three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, net of accumulated depreciation
and amortization. Property and equipment are depreciated on a straight-line
basis over the estimated useful lives of the assets (3 years for computer
equipment and 5-7 years for furniture and fixtures).
ACCOUNTING FOR LONG-LIVED ASSETS
The Company accounts for long-lived assets under the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS No. 121"). SFAS No. 121 establishes financial accounting and reporting
standards for the impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used, and for
long-lived assets and certain identifiable tangibles to be disposed of.
Management has performed a review of all long-lived assets and has determined
that no impairment of the respective carrying values has occurred as of
December 31, 1998.
INCOME TAXES
The Company was organized on June 18, 1996 as a limited liability company
for Federal and state income tax purposes. Accordingly, the Company was treated
as a partnership and the net losses of the Company were included in the
individual tax returns of the members. On May 7, 1998, the Company converted
from an LLC to a C corporation. At the time of the conversion, the Company
adopted Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" ("SFAS No. 109"). Under SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets or liabilities of a change in tax
rates is recognized in the period that the tax change occurs.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts and other
receivables, and accounts payable approximate fair value due to the short-term
maturity of these instruments. The carrying amounts of outstanding borrowings
approximate fair value.
F-8
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(1) ORGANIZATION, NATURE OF BUSINESS AND SUMMARY OF OPERATIONS AND SIGNIFICANT
ACCOUNTING POLICIES--(CONTINUED)
BUSINESS CONCENTRATIONS AND CREDIT RISK
Financial instruments which subject the Company to concentrations of credit
risk consist primarily of cash and accounts receivable. The Company maintains
cash with various financial institutions. The Company performs periodic
evaluations of the relative credit standing of these institutions. The Company's
clients are primarily concentrated in the United States. The Company performs
ongoing credit evaluations, generally does not require collateral, and
establishes an allowance for doubtful accounts based upon factors surrounding
the credit risk of customers, historical trends and other information. To date,
such losses have been within management's expectations.
NET LOSS PER COMMON SHARE
Historical--
The Company computes net loss per share in accordance with SFAS No. 128,
"Earnings Per Share", and SEC Staff Accounting Bulletin No. 98 ("SAB No. 98").
Under the provisions of SFAS No. 128 and SAB No. 98, basic net loss per common
share ("Basic EPS") is computed by dividing net loss by the weighted average
number of common shares outstanding. Diluted net loss per common share ("Diluted
EPS") is computed by dividing net loss by the weighted average number of common
shares and dilutive common share equivalents then outstanding.
Pro forma--
Pro forma net loss per share is calculated assuming conversion of all
Convertible Preferred Stock and accumulated dividends which converts
automatically upon the completion of the initial public offering (see Note 11).
ADVERTISING COSTS
Advertising costs are expensed as incurred. The Company expenses the
production costs of advertising the first time the advertising takes place. For
the period from June 18, 1996 (inception) to December 31, 1996 and the years
ended December 31, 1997 and 1998, advertising costs were $57,709, $1,797,728 and
$5,668,463, respectively.
STOCK-BASED COMPENSATION
The Company has adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), and elected to
continue the accounting set forth in Accounting Principles Board No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25"). The Company has
provided the necessary pro forma disclosures as if the fair value method had
been applied (Note 7).
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 131, "Disclosures About Segments of an Enterprise and Related Information".
This statement establishes standards for the way public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. This statement is
effective for financial statements for periods beginning after December 15, 1997
and need not be applied to interim periods in the initial year of application.
Comparative information for earlier years presented is to be restated. The
Company does not believe it operates in more than one segment. The chief
operating
F-9
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(1) ORGANIZATION, NATURE OF BUSINESS AND SUMMARY OF OPERATIONS AND SIGNIFICANT
ACCOUNTING POLICIES--(CONTINUED)
decision maker allocates resources and assesses the performance associated with
advertising, subscription or other activities on a single-segment basis.
(2) NET LOSS PER SHARE
As discussed in Note 1, historical net loss per share is calculated in
accordance with SFAS No. 128. The following table reconciles the numerator and
denominator for the calculation:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Numerator:
Net loss........................................... $ (1,733,392) $ (5,764,451) $(16,358,451)
Preferred Stock dividends.......................... -- -- (1,451,359)
Accretion of Redeemable Convertible Series B
Preferred Stock................................. -- -- (481,270)
------------ ------------ ------------
Net loss available to common
shareholders............................. $ (1,733,392) $ (5,764,451) $(18,291,080)
------------ ------------ ------------
------------ ------------ ------------
Denominator:
Weighted average basic and diluted shares
outstanding..................................... 6,060,606 6,060,606 8,575,128
------------ ------------ ------------
------------ ------------ ------------
Net loss per share--basic and diluted................ $ (0.29) $ (0.95) $ (2.13)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
Pro forma net loss per share is calculated assuming conversion of the
Convertible Preferred Stock and accumulated dividends into Common Stock in
connection with the proposed initial public offering as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Numerator--Pro forma:
Net loss available to common shareholders.......... $ (1,733,392) $ (5,764,451) $(18,291,080)
Preferred Stock dividends.......................... -- -- 1,451,359
Accretion of Redeemable Convertible Series B
Preferred Stock................................. -- -- 481,270
------------ ------------ ------------
Pro forma net loss......................... $ (1,733,392) $ (5,764,451) $(16,358,451)
------------ ------------ ------------
------------ ------------ ------------
Denominator--Pro forma:
Weighted average basic and diluted shares
outstanding..................................... 6,060,606 6,060,606 8,575,128
Assumed conversion of--
Redeemable convertible and convertible Preferred
Stock......................................... 25,000 25,000 1,272,496
Preferred Stock dividends....................... -- -- 75,830
------------ ------------ ------------
Pro forma basic and diluted weighted
average shares outstanding............... 6,085,606 6,085,606 9,923,454
------------ ------------ ------------
------------ ------------ ------------
Pro forma net loss per share--basic and diluted...... $ (0.28) $ (0.95) $ (1.65)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
Outstanding options of 0, 0 and 1,497,286 for the periods ended
December 31, 1996, 1997 and 1998, respectively, have been excluded from the
above calculations as they would be antidilutive.
F-10
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(3) PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1998
------------ ------------
<S> <C> <C>
Computer equipment............................................ $373,089 $548,501
Furniture and fixtures........................................ 285,240 129,546
-------- --------
658,329 678,047
Less accumulated depreciation and amortization................ (162,632) (78,110)
-------- --------
Property and equipment, net................................... $495,697 $599,937
-------- --------
-------- --------
</TABLE>
Depreciation and amortization expense aggregated $13,022, $154,611 and
$229,547, respectively, for the period ending December 31, 1996, and the years
ending 1997 and 1998.
During 1998, the Company entered into a sale leaseback transaction. Under
this transaction, assets with a net book value of $944,092 were sold at a loss
of $197,429. This loss is being recognized over the lease term (three years).
(4) ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1998
------------ ------------
<S> <C> <C>
Accrued bonuses............................................... $136,157 $ 565,794
Accrued other................................................. 226,359 162,719
Accrued consulting fees....................................... -- 322,064
Accrued financing costs....................................... -- 200,000
Accrued interest.............................................. 427,371 --
-------- ----------
$789,887 $1,250,577
-------- ----------
-------- ----------
</TABLE>
(5) LONG-TERM DEBT AND LINE OF CREDIT
In September 1998, the Company entered into a line of credit agreement with
a bank and had available borrowings under the agreement of up to the lesser of
$2,000,000 or 80% of eligible accounts receivable, as defined. The borrowings
($3,333 at December 31, 1998) bear interest at the bank's prime lending rate
(8.5% at December 31, 1998). Interest is payable monthly and the agreement
matures in September 1999. The agreement includes certain financial covenants.
As of December 31, 1997, the Company had long-term debt as follows:
<TABLE>
<S> <C>
Note payable--members, due June 1, 1999, interest at prime plus 1% and payable
beginning January 1, 1998.................................................... $ 4,835,000
Note payable--other, due June 1, 1999, interest at prime plus 1% and payable
beginning January 1, 1998.................................................... 1,500,000
-------------
$ 6,335,000
-------------
-------------
</TABLE>
The Note payable--members includes borrowings from the founders of the
Company. During 1996 and 1997, the founders loaned $1,335,000 and $4,000,000,
respectively, to the Company. During 1997, the Company repaid $500,000 of such
borrowings. The borrowings were used for working capital purposes.
During 1998, additional funds were advanced to the Company under Note
payable--members and interest continued to accrue on all notes payable.
F-11
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) LONG-TERM DEBT AND LINE OF CREDIT--(CONTINUED)
In April 1998, the holder of the Note payable--other forgave $375,000 of
principal in consideration of certain membership units under the limited
liability company. The units were given to the holder by two members from
existing membership interests of the Company. There were no new membership
interests issued by the Company as a result of this transaction.
In May 1998, the Note payable--members of $10,443,342, including accrued
interest, and the Note payable--other of $1,250,613, including accrued interest,
were converted into Class D and Class E membership interests. Subsequent
thereto, the membership interests were converted into 116,941 shares of
Series A 9 1/2% cumulative preferred stock.
(6) INCOME TAXES
On May 7, 1998, the Company converted from an LLC to a C corporation for
Federal and state income tax purposes. For the period from May 7, 1998 to
December 31, 1998, the Company incurred approximately $10.9 million of net
operating loss carryforwards available to offset future taxable income through
2013.
In accordance with SFAS No. 109, the Company recognized a deferred tax
asset of $4.3 million primarily resulting from the above mentioned net operating
loss carryforward. A full valuation allowance has been recorded related to the
deferred tax asset as a result of management's uncertainty as to the realization
of such asset. Accordingly, no provision has been recorded. There are no other
significant temporary differences.
Had the Company applied the provisions of SFAS 109 for the period from
inception through May 7, 1998 the Company would have recorded a deferred tax
asset, primarily from net operating loss carryforwards and a corresponding full
valuation allowance.
(7) STOCKHOLDERS' EQUITY (DEFICIT)
The total number of shares of all classes of stock which the Corporation is
authorized to issue is 110,000,000, consisting of 10,000,000 shares of preferred
stock, par value of $0.01 per share and 100,000,000 shares of common stock, par
value of $0.01 (see Note 11).
1998 PRIVATE PLACEMENTS
In May 1998, the Company raised approximately $10 million of gross proceeds
by completing a private placement of 101,475 shares of Redeemable Convertible
Series B 9 1/2% Cumulative Preferred Stock ("Series B Preferred Stock") and
3,418,333 shares of Common Stock to a group of investors. In connection with the
transaction, the Company granted the purchasers of such stock certain
registration rights.
At such time, the Company also entered into a Stockholders' Agreement with
such stockholders which, by its terms, will terminate upon the consummation of
the initial public offering. Subject to certain conditions, the shares of each
series of the Convertible Preferred Stock and dividends carry the following
rights and will automatically convert into Common Stock as follows:
The Series A and B Preferred Stock accumulate dividends annually at
$9.50 per share. These shares are senior to Common Stock and Series C
Convertible Preferred Stock ("Series C Preferred Stock") and are pari passu
to one another. The shares have no voting rights and a liquidation
preference of $100 per share plus accumulated dividends. The shares plus
any accrued and unpaid dividends mandatorily convert to Common Stock upon a
qualified initial public offering ("IPO") at the liquidation preference
payment divided by the IPO price. The Series B Preferred Stock also has a
redemption feature whereby, at the option of the holder, the Series B
Preferred
F-12
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(7) STOCKHOLDERS' EQUITY (DEFICIT)--(CONTINUED)
Stock may be redeemed at the liquidation value of $100 per share plus
accumulated dividends. The shares are redeemable one third per year
beginning in June 2003 through June 2005. During 1998, the Company recorded
approximately $481,000 as a charge to additional paid in capital to accrete
the Series B Preferred Stock to its redemption value. In addition, the
Series B Preferred Stock has been increased by accumulated dividends
which are payable under the redemption feature.
The Series C Convertible Preferred Stock is senior only to the Common
Stock. These shares have no voting rights and a liquidation preference of
$100 per share. The shares mandatorily convert to common stock upon an IPO
at the liquidation preference payment divided by the IPO price.
In December 1998, the Company raised approximately $25 million of gross
proceeds by completing a private placement of 243,891 shares of Series B
Preferred Stock and 4,072,778 shares of Common Stock to a group consisting of
certain existing stockholders and other investors. As of December 31, 1998,
approximately $525,000 of the proceeds had not yet been received and is
reflected in other receivables in the accompanying balance sheet. In connection
with this transaction the Company amended and restated the Registration Rights
Agreement and the Stockholders' Agreement in each case to include, among other
things, the new purchasers.
REGISTRATION RIGHTS
In December 1998, the Company entered into an Amended and Restated
Registration Rights Agreement (the "Registration Rights Agreement") with
existing stockholders pursuant to which the Company granted certain registration
rights in respect of certain shares of Common Stock held by the existing
stockholders. Such stockholders are hereinafter referred to as the "existing
stockholders". Pursuant to the Registration Rights Agreement, at any time, on or
after the first anniversary of the IPO, certain existing stockholders of Common
Stock may request the Company to register all or any portion of the Common Stock
purchased by the existing stockholders in the Private Placements (hereinafter
referred to as the "Restricted Stock"). However, the securities to be registered
must have a reasonably anticipated aggregate public offering price of at least
$500,000.
In addition, the holders of Restricted Stock will have certain "piggyback"
registration rights. If the Company proposes to register and common stock under
the Securities Act of 1933 each holder of Restricted Stock may require the
Company to include all or a portion of their Restricted Stock in such
registration, provided however, that the managing underwriter, if any, of such
offering has certain rights to limit the number of Restricted Stock proposed to
be included in such registration.
STOCK OPTIONS
Under the terms of the Company's 1998 Stock Option and Incentive Plan (the
"Stock Option Plan"), 2,527,272 shares of common stock of the Company have been
reserved for incentive stock options, nonqualified stock options (incentive and
nonqualified stock options are collectively referred to as "Options"),
restricted stock, or any combination thereof. Awards may be granted to such
directors, employees and consultants of the Company as the Compensation
Committee of the Board of Directors shall in its discretion select. Only
employees of the Company are eligible to receive grants of incentive stock
options.
F-13
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(7) STOCKHOLDERS' EQUITY (DEFICIT)--(CONTINUED)
Had compensation for the Stock Option Plan been determined consistent with
the provisions of SFAS No. 123, the effect on the Company's net loss and basic
and diluted net loss per share would have been changed to the following pro
forma amounts:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1998
------------
<S> <C>
Net loss, as reported........................................................ $(16,358,451)
------------
------------
Net loss, pro forma.......................................................... $(16,360,457)
------------
------------
Basic and diluted loss per share, as reported................................ $ (2.13)
------------
------------
Basic and diluted loss per share, pro forma.................................. $ (2.13)
------------
------------
</TABLE>
A summary of the activity of the Stock Option Plan for the year ended
December 31, 1998 is as follows:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Options outstanding, January 1, 1998............................ -- $ --
Options granted............................................... 1,663,953 0.12
Options exercised............................................. (30,303) 0.03
Options cancelled............................................. (136,364) 0.03
---------
Options outstanding, December 31, 1998.......................... 1,497,286 0.12
---------
---------
</TABLE>
During 1998, the Company entered into an agreement with one of its
stockholders whereby the stockholder agreed to provide the shares of Common
Stock due the optionholder upon the optionholder's exercise. During 1998, the
stockholder delivered 136,364 shares upon exercise of the options which are
reflected as cancellations in the above table. As of December 31, 1998, there
are 60,606 options outstanding included in the above table for which the
stockholder is responsible. These options will be vested in 1999.
There were no options granted prior to January 1, 1998. As of December 31,
1998, 50,167 of the above options were exercisable. The above options vest up to
a four-year period and have terms not to exceed 10 years. Generally, options are
granted at fair market value with exercise prices determined by the Company's
Compensation Committee. For options granted at less than fair market value, a
compensation charge will be recognized for the difference between the exercise
price and fair market value over the vesting period.
The fair value of each option grant has been estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions:
<TABLE>
<CAPTION>
DECEMBER 31,
1998
------------
<S> <C>
Expected option lives..................................... 4 years
Risk-free interest rates.................................. 6.0%
Expected volatility....................................... 0%
Dividend yield............................................ 0%
</TABLE>
Because the determination of fair value of all options granted after such
time as the Company becomes a public entity will include an expected volatility
in addition to factors described in the above table, the results may not be
representative of future periods.
F-14
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(7) STOCKHOLDERS' EQUITY (DEFICIT)--(CONTINUED)
The following table summarizes information about options outstanding at
December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------------
WEIGHTED
AVERAGE
NUMBER OF REMAINING WEIGHTED
SHARES CONTRACTUAL AVERAGE
RANGE OF EXERCISE PRICE OUTSTANDING LIFE EXERCISE PRICE
- ------------------------------------------------ ---------- ----------- --------------
<S> <C> <C> <C>
$0.03-0.033..................................... 388,788 4.7 years $ 0.03
0.15........................................... 1,106,832 5.8 years 0.15
3.00........................................... 1,666 5.0 years 3.00
----------
1,497,286
----------
----------
</TABLE>
DEFERRED COMPENSATION
During 1998, the Company granted stock options with exercise prices which
were less than fair market value of the underlying shares of common stock on the
date of grant. As a result, the Company has recorded deferred compensation of
approximately $1,668,000 as of December 31, 1998. This amount will be recognized
as noncash compensation expense over the vesting period of the options (2 to 4
years).
(8) COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company is committed under operating leases, principally for office
space and equipment. Certain leases are subject to rent reviews and require
payment of expenses under escalation clauses. Rent expense and equipment rental
were $40,820, $160,257 and $700,073, respectively, for the three years ended
December 31, 1998. Future minimum base rents under terms of noncancelable
operating leases are as follows for the years ending December 31:
<TABLE>
<S> <C>
1999..................................................... $2,278,997
2000..................................................... 492,145
2001..................................................... 464,866
2002..................................................... 474,796
2003..................................................... 429,036
Thereafter............................................... 1,642,356
</TABLE>
A company controlled by a shareholder has guaranteed obligations under the
operating lease for the Company's office space. Subsequent to year end, the
Company released the shareholder of this obligation after providing a letter of
credit in the amount of approximately $1.4 million to the landlord.
LITIGATION
The Company, from time to time, becomes involved in various routine legal
proceedings in the ordinary course of its business. The Company believes that
the outcome of all pending legal proceedings and unasserted claims in the
aggregate will not have a material adverse effect on its results of operations,
financial position or liquidity.
CONTENT AND DISTRIBUTION AGREEMENTS
The Company has various content and distribution agreements with vendors.
The agreements require the Company to provide certain content and subscriptions
to the vendors in exchange for various services. The agreements expire at
various dates through 2000.
F-15
<PAGE>
THESTREET.COM, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(8) COMMITMENTS AND CONTINGENCIES--(CONTINUED)
EMPLOYMENT AGREEMENTS
The Company has employment agreements with certain of its officers. The
agreements provide for payments of approximately $623,000, $350,000 and $262,000
during December 31, 1999, 2000 and 2001, respectively, and expire at various
dates through September 30, 2001.
(9) EMPLOYEE BENEFIT PLAN
Effective January 1, 1997, the Company adopted a noncontributory savings
plan with a salary reduction arrangement in accordance with Section 401(k) of
the Internal Revenue Code. The 401(k) plan covers all eligible employees and is
funded solely by employee contributions.
(10) MAJOR CUSTOMERS
Revenue from one customer accounted for approximately $1,007,250 (22%) of
total revenue for the year ending December 31, 1998 and had $102,333 of accounts
receivable outstanding at December 31, 1998.
No customer accounted for more than 10% of revenues in 1997 and 1996.
Substantially all of the Company's revenues have been derived from within
the United States.
(11) SUBSEQUENT EVENTS (UNAUDITED)
INITIAL PUBLIC OFFERING
The Company is contemplating an initial public offering of its securities,
the shares of common stock and offering price per share to be determined.
STOCK SPLIT
All share amounts have been retroactively adjusted to reflect the
one-for-three reverse common stock split which was approved by the Company's
Board of Directors on February 16, 1999. This item is subject to stockholder
approval.
RIGHTS AGREEMENT
In February 1999, the Company's Board of Directors adopted a Rights
Agreement whereby certain rights to purchase preferred stock will be issued with
each share of common stock issued after May 7, 1998.
EQUITY INVESTMENTS
On February 22, 1999, the Company sold 37,728 shares of Series B Preferred
Stock and 1,320,901 shares of Common Stock to the New York Times ("NYT") in
exchange for $3 million in cash and $12 million of services. Under the
agreement, the New York Times and its affiliates will provide $12 million of
services over a four-year period in return for its ownership position. Any
unused portion of these services are payable in cash. The $12 million will be
reflected in equity as an advertising receivable. The Company will record
advertising expense based upon the best available advertising contract rates
being charged by the NYT to advertisers spending comparable amounts with a
corresponding credit to the advertising receivable.
In February 1999 the Company sold 83,333 shares of Common Stock for $1
million.
STOCK OPTION PLAN
In March 1999, the Company increased the number of shares reserved for the
issuance of stock options under the Stock Option Plan from 2,527,272 to
4,400,000.
F-16
<PAGE>
UNDERWRITING
TheStreet.com 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.,
Hambrecht & Quist LLC and Thomas Weisel Partners LLC are the representatives of
the Underwriters.
<TABLE>
<CAPTION>
Underwriters Number of Shares
- ------------------------------------------------------------------ ----------------
<S> <C>
Goldman, Sachs & Co...............................................
Hambrecht & Quist LLC.............................................
Thomas Weisel Partners LLC........................................
----------
Total........................................................ 5,500,000
----------
----------
</TABLE>
-------------------------
If the Underwriters sell more than the total number set forth in the table
above, the Underwriters have an option to buy up to an additional 741,667 shares
from TheStreet.com and up to an additional 83,333 shares from Mr. Kevin English,
TheStreet.com's chairman of the board, chief executive officer and president, 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 TheStreet.com. Such amounts
are shown assuming both no exercise and full exercise of the Underwriters'
option to purchase additional shares.
<TABLE>
<CAPTION>
Paid by TheStreet.com
- ---------------------------------------------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share........... $ $
Total............... $ $
</TABLE>
The following tables show the per share and total underwriting discounts
and commissions to be paid to the Underwriters by Mr. English assuming full
exercise of the Underwriters' option to purchase additional shares from Mr.
English.
<TABLE>
<CAPTION>
Paid by Mr.
English
------------------
<S> <C>
Per Share..................... $
Total......................... $
</TABLE>
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.
TheStreet.com, and its directors, officers and substantially all of its
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. See "Shares Eligible for Future Sale" for a
discussion of certain transfer restrictions.
Prior to the offering, there has been no public market for the shares. The
initial public offering price will be negotiated among the TheStreet.com 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 TheStreet.com's historical performance, estimates of the
business potential and
U-1
<PAGE>
earnings prospects of the TheStreet.com, an assessment of the TheStreet.com's
management and the consideration of the above factors in relation to market
valuation of companies in related businesses.
The common stock will be quoted on the Nasdaq National Market under the
symbol "TSCM."
In connection with the offering, the Underwriters may purchase and sell
shares of 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 the 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
the offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the other 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.
A research analyst from Hambrecht & Quist is a contributor to TheStreet.com
web site but does not receive any compensation.
The Underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.
At the request of TheStreet.com, the Underwriters have reserved at the
initial public offering price up to approximately 305,000 shares of common stock
for sale to employees, directors, friends, and persons having business
relationships with TheStreet.com through a directed share program. In addition,
at the request of TheStreet.com, the Underwriters have reserved at the initial
public offering price up to 240,000 shares of common stock for sale through a
directed share program to 5,000 U.S. residents who will be randomly selected
from a pool of subscribers of TheStreet.com as of February 22, 1999. These
persons will have to meet eligibility requirements of the National Association
of Securities Dealers to purchase shares. The number of shares available for
sale to the general public in this offering will be reduced by the number of
reserved shares sold. Any reserved shares not so purchased will be offered to
the general public on the same basis as the other shares offered hereby.
In April 1999, TheStreet.com entered into a memorandum of understanding
with News America Incorporated under which, among other things, News America
will purchase $7.5 million of the common stock to be sold in the offering at a
price per share equal to the initial public offering price. If the shares
reserved for purchase by News America are not purchased, then these shares will
be offered to the general public on the same basis as the other shares offered
hereby.
Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners has been named as a lead or co-manager on 20 filed
public offerings of equity securities, of which six have been completed, and has
acted as a syndicate member in an additional eight public offerings of equity
securities. Thomas Weisel Partners does not have any material relationship with
us or any of our officers, directors or other controlling persons, except with
respect to its contractual relationship with us pursuant to the underwriting
agreement entered into in connection with this offering.
TheStreet.com estimates that its share of the total expenses of the
offering, excluding underwriting discounts and commissions, will be
approximately $2,400,000.
TheStreet.com has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
U-2
<PAGE>
INSIDE BACK COVER
I. Advertisement--The image of a standing man wearing a suit, facing away
from the camera and hiding a knife. This advertisement includes the following
text (left-hand side of page):
What corporate merger is about to get ugly?
Find out on TheStreet.com. Uncut financial news. Provocative market insight.
For a Free 30 Day Trial checkout www.thestreet.com.
www.thestreet.com
1-800-996-4TSC
Also introducing TheStreet.com Intranet Service. For more information, call
1-800-562-9571.
(c) TheStreet.com, All Rights Reserved.
II. Text Box--Headlined "Advertising" with the following text (top
right-hand corner of page):
As part of a comprehensive marketing campaign, TheStreet.com advertises in
a variety of media, including cable television networks, newspapers, magazines,
billboards and other web sites.
III. Advertisement--Includes a TheStreet.com logo and below the logo four
gift-wrapping bows in a line, enclosed by quotation marks. Below the pictures of
bows is the following text (center of the page):
"Think Stocks Not Socks"
- -Business Week, December 7, 1998
IV. Advertisement--Includes the image of an ear and the following text
(center of the page):
PSSST! WHAT'S WALL STREET
whispering?
READ (circled)
www.TheStreet.com
Get One Month Free.
V. Text Box--Headlined "Strategic Partnerships" with the following text
(bottom of the page):
TheStreet.com builds its subscriber base and brand awareness through both
subscription distribution and content syndication relationships with leading
companies.
ABCNEWS.com
America Online
DLJdirect
E*TRADE
Intuit
The New York Times Co.
News America
3Com
Yahoo!
<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
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 6
Forward Looking Statements; Market Data........ 15
Use of Proceeds................................ 16
Dividend Policy................................ 16
Corporate Information.......................... 16
Capitalization................................. 17
Dilution....................................... 18
Selected Financial Data........................ 19
Management's Discussion and
Analysis of Financial Condition
and Results of Operations.................... 21
Business....................................... 28
Management..................................... 40
Certain Transactions........................... 49
Principal Stockholders......................... 51
Description of Capital Stock................... 53
Shares Eligible for Future Sale................ 57
Legal Matters.................................. 58
Experts........................................ 58
Change in Accountants.......................... 58
Additional Information......................... 58
Index to Financial Statements.................. F-1
Underwriting................................... U-1
</TABLE>
------------------------
Through and including , 1999 (the 25th day 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 an underwriter and with respect to an unsold allotment or
subscription.
5,500,000 Shares
THESTREET.COM, INC.
Common Stock
------------------------
------------------------
GOLDMAN, SACHS & CO.
HAMBRECHT & QUIST
THOMAS WEISEL PARTNERS LLC
Representatives of the Underwriters
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
<PAGE>
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table indicates the expenses to be incurred in connection
with the offering described in this Registration Statement, all of which will be
paid by the Company. All amounts are estimates, other than the SEC registration
fee, the NASD fee, and the Nasdaq listing fee.
<TABLE>
<S> <C>
SEC Registration fee....................................... $ 22,859
NASD fee................................................... $ 8,223
Nasdaq listing fee......................................... $ 95,000
Accounting fees and expenses............................... $ 250,000
Legal fees and expenses.................................... $ 850,000
Director and officer insurance expenses.................... $ 150,000
Printing and engraving..................................... $ 700,000
Transfer Agent fees and expenses........................... $ 3,500
Blue sky fees and expenses................................. $ 15,000
Miscellaneous expenses..................................... $ 305,418
----------
Total.................................................... $2,400,000
----------
----------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102 of the Delaware General Corporation Law ("DGCL"), as amended,
allows a corporation to eliminate the personal liability of directors of a
corporation to the corporation or its stockholders for monetary damages for a
breach of fiduciary duty as a director, except where the director breached his
duty of loyalty, failed to act in good faith, engaged in intentional misconduct
or knowingly violated a law, authorized the payment of a dividend or approved a
stock repurchase in violation of Delaware corporate law or obtained an improper
personal benefit.
Section 145 of the DGCL provides, among other things, that the Company may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (other than
an action by or in the right of the Company) by reason of the fact that the
person is or was a director, officer, agent or employee of the Company or is or
was serving at the Company's request as a director, officer, agent, or employee
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' ties, judgment, fines and amounts paid in
settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding. The power to indemnify applies (a) if such
person is successful on the merits or otherwise in defense of any action, suit
or proceeding, or (b) if such person acted in good faith and in a manner he
reasonably believed to be in the best interest, or not opposed to the best
interest, of the Company, and with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The power to
indemnify applies to actions brought by or in the right of the Company as well,
but only to the extent of defense expenses (including attorneys' fees but
excluding amounts paid in settlement) actually and reasonably incurred and not
to any satisfaction of judgment or settlement of the claim itself, and with the
further limitation that in such actions no indemnification shall be made in the
event of any adjudication of negligence or misconduct in the performance of his
duties to the Company, unless the court believes that in light of all the
circumstances indemnification should apply.
Section 174 of the DGCL provides, among other things, that a director, who
willfully or negligently approves of an unlawful payment of dividends or an
unlawful stock purchase or redemption, may be held liable for such actions. A
director who was either absent when the unlawful actions were approved or
dissented at the time, may avoid liability by causing his or her dissent to such
actions to be entered in the books containing the minutes of the meetings of the
board of directors at the time such action occurred or immediately after such
absent director receives notice of the unlawful acts.
II-1
<PAGE>
Our Amended and Restated Certificate of Incorporation includes a provision
that eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability:
-- for any breach of the director's duty of loyalty to TheStreet.com or its
stockholders;
-- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
-- under the section 174 of the Delaware General Corporation Law regarding
unlawful dividends and stock purchases; or
-- for any transaction from which the director derived an improper personal
benefit.
These provisions are permitted under Delaware law.
Our Amended and Restated Bylaws provide that:
-- we must indemnify our directors and officers to the fullest extent
permitted by Delaware law;
-- we may indemnify our other employees and agents to the same extent that
we indemnified our officers and directors, unless otherwise determined
by our Board of Directors; and
-- we must advance expenses, as incurred, to our directors and executive
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware Law.
The indemnification provisions contained in the Company's Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws are not
exclusive of any other rights to which a person may be entitled by law,
agreement, vote of stockholders or disinterested directors or otherwise. In
addition, the Company maintains insurance on behalf of its directors and
executive officers insuring them against any liability asserted against them in
their capacities as directors or officers or arising out of such status.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since its inception, we issued and sold the following securities to certain
corporate and institutional investors and high net worth individuals, including
certain of our directors and officers, in transactions exempt from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereunder:
From our inception as a limited liability company in June 1996, until May
1998, we were financed through contributions from our founders and through loans
at the prime interest rate plus 1%. In return for their contributions, our
founders received certain amounts of our Class A, B, C and D membership units of
the limited liability company and a lender received Class E units.
In May 1998, our Board of Directors approved our reorganization from a
limited liability company into a C Corporation. As part of this reorganization,
each Class C membership unit was converted into 181.81818 shares of our common
stock. In addition, our Class A and Class B membership units were converted into
shares of our Series A 9 1/2% Cumulative Preferred Stock and Series C Preferred
Stock at a ratio of one preferred share per $100 of both Class A and Class B
membership units. Our Class D and Class E membership units were converted into
shares of our Series A 9 1/2% Cumulative Preferred Stock at a ratio of one
preferred share per $100 of Class D and Class E membership units.
In May 1998, we sold 101,475 shares of our Redeemable Convertible Series B
9 1/2% Cumulative Preferred Stock ("Series B Preferred Stock") and 3,418,333
shares of our common stock to a group of investors comprising of our founders,
corporate and institutional investors, venture capital funds and high net worth
individuals including certain of our directors and officers for an aggregate
price of approximately $10,000,000.
In December 1998, we sold 243,891 shares of our Series B Preferred Stock
and 4,072,778 shares of our common stock to a group of investors comprising of
our founders, corporate and
II-2
<PAGE>
institutional investors, venture capital funds and high net worth individuals
including certain of our directors and officers for an aggregate price of
approximately $25,000,000.
In February 1999, we sold 83,333 shares of our common stock to a corporate
investor for an aggregate price of $1,000,000.
In February 1999, we also sold 37,728 shares of our Series B Preferred
Stock and 1,320,901 shares of our common stock to The New York Times Company for
an aggregate consideration of $15,000,000 in cash and services.
From time to time, we have granted stock options to employees. The
following table sets forth information regarding the grants during the past
three fiscal years:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
SHARES GRANTED EXERCISE PRICE
-------------- ----------------
<S> <C> <C>
June 18, 1996 (inception) through December 31, 1996............... -- --
January 1, 1997 through December 31, 1997......................... -- --
January 1, 1998 through December 31, 1998......................... 1,663,953 $ 0.12
</TABLE>
No underwriters were involved in connection with the sales of securities
referred to in this Item 15.
ITEM 16.
(a) EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
- -------- -----------------------------------------------------------------------------------------------------
<S> <C>
1.1 -- Form of Underwriting Agreement
3.1 -- Form of Amended and Restated Certificate of Incorporation of TheStreet.com
3.2 -- Form of Amended and Restated By-laws of TheStreet.com*
4.1 -- Amended and Restated Registration Rights Agreement, dated as of December 21, 1998, among
TheStreet.com and stockholders named therein*
4.2 -- Form of TheStreet.com's Rights Plan*
4.3 -- Specimen Certificate for TheStreet.com's common stock
5.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
10.1 -- License Agreement, dated February 17, 1999, between Yahoo! Inc. and TheStreet.com, Inc.+
10.2 -- The Amended and Restated 1998 Stock Incentive Plan of the TheStreet.com
10.2.1 -- Amendment No. 1, dated March 25, 1999, to the Amended and Restated 1998 Stock Incentive Plan of
TheStreet.com
10.3 -- Interactive Services Agreement, dated April 16, 1998, between America Online, Inc. and TheStreet.com,
L.L.C.+
10.3.1 -- Letter, dated July 24, 1998, from America Online, Inc.*
10.4 -- Content License and Marketing Agreement, dated as of January 12, 1999, between E*TRADE Group, Inc.
and TheStreet.com, Inc.+
10.5 -- Employment Agreement, dated October 6, 1998, between Kevin English and TheStreet.com, Inc.*
10.6 -- Employment Agreement, dated February 22, 1999, between James Cramer and TheStreet.com, Inc.*
10.7 -- Content License Agreement, dated January 1, 1998, between Yahoo! Inc. and TheStreet.com, Inc.+
16.1 -- Letter, dated March 2, 1999, from Anchin, Block and Anchin LLP*
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1)
24.1 -- Power of Attorney*
24.2 -- Power of Attorney of Michael Golden*
99.1 -- Consent of Michael Golden*
99.2 -- Consent of International Data Corporation*
99.3 -- Consent of Forrester Research, Inc.*
99.4 -- Consent of @plan*
99.5 -- Consent of NFO Interactive*
99.6 -- Consent of DoubleClick Inc.
</TABLE>
- ------------------
* Previously filed
+ Confidential treatment has been requested for certain portions of these
documents.
(b) Financial Statement Schedules.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing certificates in such denominations and registered in such names
as required by the Underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the provisions described in Item 14, or otherwise, the
registrant has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. In the event that a claim for
indemnification by the registrant 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 whether
such indemnification by it is against pubic policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497 (h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bonafide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 3 TO THE REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW
YORK, STATE OF NEW YORK, ON APRIL 19, 1999.
TheStreet.com, Inc.
By: *
------------------------------------
Name: Kevin English
Title: Chairman of the Board of
Directors, Chief Executive
Officer and President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 3 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATE INDICATED BELOW.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ --------------------------------------------------- --------------
<C> <S> <C>
* Chairman of the Board of Directors, Chief Executive April 19, 1999
- ------------------------------------------ Officer and President
Kevin English
/s/ Paul Kothari Chief Financial Officer April 19, 1999
- ------------------------------------------
Paul Kothari
* Editor-in-Chief and Director April 19, 1999
- ------------------------------------------
Dave Kansas
* Director April 19, 1999
- ------------------------------------------
James J. Cramer
* Director April 19, 1999
- ------------------------------------------
Martin Peretz
* Director April 19, 1999
- ------------------------------------------
Fred Wilson
* Director April 19, 1999
- ------------------------------------------
Jerry Colonna
* Director April 19, 1999
- ------------------------------------------
Edward F. Glassmeyer
* Director April 19, 1999
- ------------------------------------------
Michael Golden
* By: /s/ Paul Kothari Attorney-In-Fact April 19, 1999
- ------------------------------------------
Paul Kothari
</TABLE>
II-5
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Period from June 18, 1996 (Inception) to December 31, 1996
and the Years Ended December 31, 1997 and 1998
<TABLE>
<CAPTION>
BALANCE AT PROVISIONS BALANCE AT
BEGINNING CHARGED TO END OF
OF PERIOD EXPENSE WRITE-OFFS PERIOD
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1996...................................... $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
December 31, 1997...................................... $ 0 $ 0 $ 0 $ 0
-------- -------- -------- --------
December 31, 1998...................................... $ 0 $ 40,000 $ 0 $ 40,000
-------- -------- -------- --------
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To TheStreet.com, Inc.:
We have audited in accordance with generally accepted auditing standards, the
financial statements of TheStreet.com, Inc. included in this registration
statement and have issued our report thereon dated February 9, 1999. Our audit
was made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The schedule listed in the index above is the responsibility
of the Company's management and is presented for purpose of complying with the
Securities and Exchange Commissions rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, fairly
states in all material respects, the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
February 9, 1999
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT
- ------ ----------------------------------------------------------------------------------------------------------
<S> <C>
1.1 -- Form of Underwriting Agreement
3.1 -- Form of Amended and Restated Certificate of Incorporation of TheStreet.com
3.2 -- Form of Amended and Restated By-laws of TheStreet.com*
4.1 -- Amended and Restated Registration Rights Agreement, dated as of December 21, 1998, among
TheStreet.com and stockholders named therein*
4.2 -- Form of TheStreet.com's Rights Plan*
4.3 -- Specimen Certificate for TheStreet.com's common stock
5.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
10.1 -- License Agreement, dated February 17, 1999, between Yahoo! Inc. and TheStreet.com, Inc.+
10.2 -- The Amended and Restated 1998 Stock Incentive Plan of the TheStreet.com
10.2.1 -- Amendment No. 1, dated March 25, 1999, to the Amended and Restated 1998 Stock Incentive Plan of
TheStreet.com
10.3 -- Interactive Services Agreement, dated April 16, 1998, between America Online, Inc. and
TheStreet.com, L.L.C.+
10.3.1 -- Letter, dated July 24, 1998, from America Online, Inc.*
10.4 -- Content License and Marketing Agreement, dated as of January 12, 1999, between E*TRADE Group, Inc.
and TheStreet.com, Inc.+
10.5 -- Employment Agreement, dated October 6, 1998, between Kevin English and TheStreet.com, Inc.*
10.6 -- Employment Agreement, dated February 22, 1999, between James Cramer and TheStreet.com, Inc.*
10.7 -- Content License Agreement, dated January 1, 1998, between Yahoo! Inc. and TheStreet.com, Inc.+
16.1 -- Letter, dated March 2, 1999, from Anchin, Block and Anchin LLP*
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1)
24.1 -- Power of Attorney*
24.2 -- Power of Attorney of Michael Golden*
99.1 -- Consent of Michael Golden*
99.2 -- Consent of International Data Corporation*
99.3 -- Consent of Forrester Research, Inc.*
99.4 -- Consent of @plan*
99.5 -- Consent of NFO Interactive*
99.6 -- Consent of DoubleClick Inc.
</TABLE>
- ------------------
* Previously filed
+ Confidential treatment has been requested for certain portions of these
documents.
<PAGE>
TheStreet.com, Inc.
Common Stock, par value $0.01 per share
----------------------
Underwriting Agreement
, 19
--------------- --
Goldman, Sachs & Co.
Hambrecht & Quist LLC
Thomas Weisel Partners 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:
TheStreet.com, 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 "Company Optional Shares") of common stock,
par value $0.01 per share ("Common Stock"), of the Company, and the stockholder
of the Company named in Schedule II hereto (the "Selling Stockholder") proposes,
subject to the terms and conditions stated herein, to sell to the Underwriters,
at the election of the Underwriters, up to . . . additional shares of Common
Stock (the "Selling Stockholder Optional Shares"). The aggregate of . . .
Company Optional Shares and Selling Stockholder Optional Shares is herein called
the "Optional Shares." 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. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-72799) (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
1
<PAGE>
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 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");
(ii) 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 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;
(iii) 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
2
<PAGE>
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 or by a Selling Stockholder
expressly for use therein;
(iv) The Company has not 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 material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, business, properties, financial position,
stockholders' equity or results of operations of the Company, otherwise
than as set forth or contemplated in the Prospectus;
(v) The Company has good and marketable title to all personal
property owned by it, in each case free and clear of all liens,
encumbrances and defects except such as are described in the 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 any real property and buildings held under
lease by the Company are held by it 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;
(vi) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the Delaware, with power
and authority (corporate and other) 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 qualification,
except, where the failure to be so qualified or, where applicable, in good
standing, would not have a material adverse effect on the management,
business, properties, financial position, stockholders' equity or results
of operations of the Company;
(vii) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
3
<PAGE>
(including, without limitation, the Selling Stockholder Optional Shares)
have been duly and validly authorized and issued, are fully paid and
non-assessable, and were issued in compliance with federal and state
securities laws; and conform to the description of the capital stock
contained in the Prospectus; The description of the Company's stock option
and rights plan, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents the
information required to be shown with respect to such plans, options and
rights.
(viii) The Firm Shares and the Company Optional 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, will be free and clear of all liens, encumbrances, equities
or claims, and the issuance of the Firm Shares and the Company Optional
Shares shall not have violated any preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
existing stockholders; and the Shares will conform to the description of
the Common Stock contained in the Prospectus;
(ix) The issue and sale of the Firm Shares and the Company Optional
Shares 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 material 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 is a party or by which
the Company is bound or to which any of the property or assets of the
Company is subject, nor will such action result in any violation of the
provisions of the Amended and Restated Certificate of Incorporation or
Amended and Restated 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 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
the sale of the Firm Shares and the Company Optional Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as may
be required by the National Association of Securities Dealers, Inc., the
Nasdaq National Market, or under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters;
(x) The Company is not in violation of its Amended and Restated
Certificate of Incorporation or Amended and Restated By-laws or in default
in the performance or observance of any material obligation, agreement,
covenant
4
<PAGE>
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;
(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 Common Stock and to describe the provisions of
the laws and documents referred to therein, are accurate, complete and
fair;
(xii) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or of
which any property of the Company 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 on the management,
business, properties, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries; and, to the Company's
knowledge, no such proceedings are threatened or contemplated by any
governmental authorities or threatened by others;
(xiii) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company", as such term is
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(xiv) 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;
(xv) Arthur Andersen LLP, who have certified certain financial
statements of the Company, are independent public accountants as required
by the Act and the rules and regulations of the Commission thereunder; the
audited financial statements and the unaudited financial statements of the
Company, together with the related schedules and notes, forming part of the
Registration Statement and Prospectus, fairly present the financial
position and the results of operations of the Company at the respective
dates and for the respective periods to which they apply; all audited
financial statements and unaudited financial statements of the Company,
together with the related schedules and notes filed with the Commission as
part of the Registration Statement, have been prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved except as may be otherwise stated therein. The
selected and summary financial and statistical data included in the
Registration Statement present fairly the information shown therein and
have been compiled on a basis consistent with the audited financial
statements presented therein. No other
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financial statements or schedules are required to be included in the
Registration Statement;
(xvi) Subsequent to the respective dates as of which unaudited
financial information is provided in the Registration Statement and
Prospectus, there has not been (i) material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, business, properties, financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries, (ii) any transaction that is material to the Company,
except transactions entered into in the ordinary course of business, (iii)
any obligation, direct or contingent, that is material to the Company,
incurred by the Company, except obligations incurred in the ordinary course
of business, (iv) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company, or (v) any loss or damage
(whether or not insured) to the property of the Company which has been
sustained or will have been sustained which has a material adverse effect
on the management, business, properties, financial position, stockholders'
equity or results of operations of the Company;
(xvii) The Company has reviewed its operations and any third parties
with which the Company has a material relationship to evaluate the extent
to which the business or operations of the Company will be affected by the
Year 2000 Problem. As a result of such review, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem will have a
material adverse effect on the management, the current or future financial
position, business prospects, stockholders' equity or results of operations
of the Company and its subsidiaries or result in any material loss or
interference with the Company's business or operations. The "Year 2000
Problem" as used herein means any significant risk that computer hardware
or software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the
case of dates or time periods occurring after December 31, 1999, function
at least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000;
(xviii) Other than as set forth in the Prospectus, the Company has
sufficient interests in all patents, trademarks, servicemarks, trade names,
copyrights, trade secrets, information, proprietary rights and process
("Intellectual Property") necessary for its business as described in the
Prospectus and necessary in connection with the products and services under
development, without any conflict with or infringement in the interests of
others, and has taken all reasonable steps necessary to secure interests in
such Intellectual Property from its contractors; except as set forth in the
Prospectus, the Company is not aware of outstanding options, licenses or
agreements of
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any kind relating to the Intellectual Property of the Company that are
required to be set forth in the Prospectus, and, except as set forth in the
Prospectus, the Company is not a party to or bound by any options, licenses
or agreements with respect to the Intellectual Property of any other person
or entity that 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 in violation of any contractual fiduciary obligation binding on
the Company or any of its directors, officers, employees, contractors or
otherwise in violation of the rights of any persons; except as disclosed in
the Prospectus, the Company has not received any written or oral
communications alleging that the Company 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
violation, infringement or conflict which would not have a material adverse
effect on the management, the current or future financial position,
business prospects, stockholders' equity or results of operations of the
Company and its subsidiaries; neither the execution nor delivery of this
Agreement, nor the operation of the Company's business by the employees,
contractors and agents of the Company, nor the conduct of the Company's
business as described in the Prospectus will result in any breach or
violation of the terms, conditions or provisions of, constitute a default
under, any material contract covenant or instrument known to the Company
under which any of such employees, contractors or agents is now obligated;
and the Company has taken and will maintain reasonable measures to prevent
the unauthorized dissemination or publication of its confidential
information and, to the extent contractually required to do so, the
confidential information of third parties in its possession;
(xix) The Company has not distributed and will not distribute prior to
the completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Preliminary Prospectuses, the Prospectus, the Registration Statement and
other materials, if any, permitted by the Act; and
(xx) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(b) The Selling Stockholder represents and warrants to, and agrees with,
each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary for
the execution and delivery by the Selling Stockholder of this Agreement and
the Power of Attorney hereinafter referred to, and for the sale and
delivery of the
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Selling Stockholder Optional Shares to be sold by such Selling Stockholder
hereunder, have been obtained; and the Selling Stockholder has full right,
power and authority to enter into this Agreement and the Power-of-Attorney
and to sell, assign, transfer and deliver the Selling Stockholder Optional
Shares to be sold by the Selling Stockholder hereunder;
(ii) The sale of the Selling Stockholder Optional Shares to be sold by
the Selling Stockholder hereunder and the compliance by the Selling
Stockholder with all of the provisions of this Agreement and the Power of
Attorney and the consummation of the transactions herein and therein
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
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Selling Stockholder is a party or by
which the Selling Stockholder is bound or to which any of the property or
assets of the Selling Stockholder is subject, nor will such action result
in any violation of the provisions of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Selling Stockholder or the property of the Selling Stockholder;
(iii) The Selling Stockholder has, and immediately prior to each Time
of Delivery (as defined in Section 4 hereof) the Selling Stockholder will
have, good and valid title to the Selling Stockholder Optional Shares to be
sold by the Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of the Shares and
payment therefor pursuant hereto, good and valid title to the Selling
Stockholder Optional Shares, free and clear of all liens, encumbrances,
equities or claims, will pass to the several Underwriters;
(iv) 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
offer, sell contract to sell or otherwise dispose of, except as provided in
the lock-up agreement entered into between the Selling Stockholder and the
Underwriters, 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, Common Stock or any such substantially similar securities (other
than pursuant to employee 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 your prior written
consent;
(v) The Selling Stockholder has not taken and will not take, directly
or indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation
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<PAGE>
of the price of any security of the Company to facilitate the sale or
resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by the Selling
Stockholder expressly for use therein, such Preliminary Prospectus and the
Registration Statement did, and the Prospectus and any further amendments
or supplements to the Registration Statement and the Prospectus, when they
become effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act and the
rules and regulations of the Commission thereunder and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading;
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, the Selling Stockholder will deliver to you prior to or at
the Time of Delivery (as hereinafter defined) a properly completed and
executed United States Treasury Department Form W-9 (or other applicable
form or statement specified by Treasury Department regulations in lieu
thereof);
(viii) Certificates in negotiable form representing all of the Selling
Stockholder Optional Shares to be sold by the Selling Stockholder hereunder
have been placed in custody with the Company, and the Selling Stockholder
has duly executed and delivered a Power of Attorney, in the form heretofore
furnished to you (the "Power of Attorney"), appointing the persons
indicated in Schedule II hereto, and each of them, as the Selling
Stockholder's attorneys-in-fact (the "Attorneys-in-Fact") with authority to
execute and deliver this Agreement on behalf of the Selling Stockholder, to
determine the purchase price to be paid by the Underwriters to the Selling
Stockholder as provided in Section 2 hereof, to authorize the delivery of
the Selling Stockholder Optional Shares to be sold by the Selling
Stockholder hereunder and otherwise to act on behalf of the Selling
Stockholder in connection with the transactions contemplated by this
Agreement; and
(ix) The Selling Stockholder Optional Shares represented by the
certificates held in custody for the Selling Stockholder by the Company are
subject to the interests of the Underwriters hereunder; the arrangements
made by the Selling Stockholder for the custody, and the appointment by the
Selling Stockholder of the Attorneys-in-Fact by the Power of Attorney, are
to that extent irrevocable; the obligations of the Selling Stockholder
hereunder shall not be
9
<PAGE>
terminated by operation of law, whether by the death or incapacity of the
Selling Stockholder or any such executor or trustee should die or become
incapacitated, or if any other such event should occur, before the delivery
of the Selling Stockholder Optional Shares hereunder, certificates
representing the Selling Stockholder Optional Shares shall be delivered by
or on behalf of the Selling Stockholder in accordance with the terms and
conditions of this Agreement; and actions taken by the Attorneys-in-Fact
pursuant to the Power of Attorney shall be as valid as if such death,
incapacity, or other event had not occurred, regardless of whether or not
the Attorneys-in-Fact, or any of them, shall have received notice of such
death, incapacity or other event.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and 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 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 and the Selling
Stockholder agree, severally and not jointly, to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company and the Selling Stockholder, 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 and the Selling Stockholder, as and to the extent indicated in
Schedule II hereto, hereby grant, severally and not jointly, 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 shall be made initially with respect
to the Selling Stockholder Optional Shares to be sold by the Selling Stockholder
and only thereafter with respect to the Company Optional Shares to be issued and
sold by the Company. Any such election to purchase Optional Shares may be
exercised only by written notice from you to the Company and the
Attorneys-in-Fact, given within a period of 30 calendar days after the date of
this Agreement, 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 and the
Attorneys-in-Fact otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
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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 and the Selling Stockholder shall be delivered by or on
behalf of the Company and the Selling Stockholder 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 and the Selling Stockholder, as their interests
may appear, to Goldman, Sachs & Co. at least forty-eight hours in advance. The
Company and the Selling Stockholder will cause the certificates representing the
Shares to be made available for checking and packaging at 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 City time, on ............., 19.. 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 and the Selling
Stockholder 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 Brobeck, Phleger & Harrison LLP, 1633 Broadway, 47th Floor, New York, New
York 10019 (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:
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(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 prior to
the last Time of Delivery 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 file
promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus; 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 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 event 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
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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
earning 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
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 offer,
sell, contract to sell or otherwise dispose of, except as provided hereunder 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 employee 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
your prior written consent;
(f) During a period of 180 days from the effective date of the
Registration Statement, the Company will not file a registration statement
registering shares under any of the Company's stock option plans or other
employee benefit plans;
(g) 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 first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;
(h) During a period of five 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 any subsidiaries organized in the future are consolidated in reports
furnished to its stockholders generally or to the Commission);
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(i) 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";
(j) To use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National Market
System ("NASDAQ"); and
(k) 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
(l) 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 and the Selling Stockholder covenant and agree with one
another and with the several Underwriters that (a) the Company will pay or cause
to be paid the following: (i) 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; (ii) 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; (iii) all 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; (iv) all fees and expenses in connection with listing the
Shares for quotation on the NASDAQ; (v) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriters in connection with,
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of the Shares; (vi) the cost of preparing stock
certificates; (vii) the cost and charges of any transfer agent or registrar; and
(viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section; and (b) the Selling Stockholder will pay or cause to be paid all costs
and expenses incident to the performance of the Selling Stockholder's
obligations hereunder which are not otherwise specifically provided for in this
Section, including (i) any fees and expenses of counsel for the Selling
Stockholder, (ii) the Selling Stockholder's fees and expenses of the
Attorneys-in-Fact, and (iii) all expenses and taxes incident to the sale and
delivery of the Selling Stockholder Optional Shares to be sold by the Selling
Stockholder to the Underwriters hereunder. In connection with clause (b) of
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the preceding sentence, Goldman, Sachs & Co. agrees to pay New York State stock
transfer tax, and the Selling Stockholder agrees to reimburse Goldman, Sachs &
Co. for associated carrying costs if such tax payment is not rebated on the day
of payment for any portion of such tax payment not rebated. It is understood,
however, that the Company shall bear, and the Selling Stockholder shall not be
required to pay or to reimburse the Company for, the cost of any other matters
not directly relating to the sale and purchase of the Selling Stockholder
Optional 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 and of the Selling Stockholder herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the Selling
Stockholder shall have performed all of its and their 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) Brobeck, Phleger & Harrison LLP, counsel for the Underwriters,
shall have furnished to you such written opinion or opinions (a draft of each
such opinion is attached as Annex II(a) hereto), dated such Time of Delivery, in
form and substance satisfactory to you and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters;
(c) Skadden, Arps, Slate, Meagher & Flom 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 satisfactory to you and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass upon such
matters.
(d) The counsel for the Selling Stockholder, as indicated in Schedule
II hereto, shall have furnished to you their written opinion with respect to the
Selling Stockholder (a draft of each such opinion is attached as Annex II(c)
hereto), dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
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(i) A Power-of-Attorney has been duly executed and delivered by the
Selling Stockholder and constitutes a valid and binding agreement of the
Selling Stockholder in accordance with its terms;
(ii) This Agreement has been duly executed and delivered by or on
behalf of the Selling Stockholder; and the sale of the Selling Stockholder
Optional Shares to be sold by the Selling Stockholder hereunder and the
compliance by the Selling Stockholder with all of the provisions of this
Agreement and the Power-of-Attorney and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any terms or provisions of, or
constitute a default under, any statute, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such
counsel to which the Selling Stockholder is a party or by which the Selling
Stockholder is bound or to which any of the property or assets of the
Selling Stockholder is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body having
jurisdiction over the Selling Stockholder or the property of the Selling
Stockholder;
(iii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the Selling
Stockholder Optional Shares to be sold by the Selling Stockholder
hereunder, except such as have been obtained under the Act and such as may
be required under state securities or Blue Sky laws in connection with the
purchase and distribution of such Selling Stockholder Optional Shares by
the Underwriters;
(iv) Immediately prior to such Time of Delivery, the Selling
Stockholder had good and valid title to the Selling Stockholder Optional
Shares to be sold at such Time of Delivery by the Selling Stockholder under
this Agreement, free and clear of all liens, encumbrances, equities or
claims, and full right, power and authority to sell, assign, transfer and
deliver the Selling Stockholder Optional Shares to be sold by the Selling
Stockholder hereunder; and
(v) Good and valid title to such Selling Stockholder Optional Shares,
free and clear of all liens, encumbrances, equities or claims, has been
transferred to each of the several Underwriters who have purchased such
Selling Stockholder Optional Shares in good faith and without notice of any
such lien, encumbrance, equity or claim or any other adverse claim within
the meaning of the Uniform Commercial Code.
In rendering the opinion in paragraph (iv), such counsel may rely upon a
certificate of the Selling Stockholder in respect of matters of fact as to
ownership of, and liens,
16
<PAGE>
encumbrances, equities or claims on, the Selling Stockholder Optional Shares
sold by the Selling Stockholder, provided that such counsel shall state that
they believe that both you and they are justified in relying upon such
certificate;
(e) 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, Arthur Andersen LLP
shall have furnished to you (i) 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), and (ii) 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 II hereto (the executed copy of the letter
delivered prior to the execution of this Agreement is attached as Annex II(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 II(b) hereto);
(f) (i) The Company shall not 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
change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, 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;
(g) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of the
Company's debt securities. It is understood as of the date hereof that the
Company has no debt securities outstanding;
17
<PAGE>
(h) 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;
(i) The Shares to be sold at such Time of Delivery shall have been duly
listed for quotation on NASDAQ;
(j) The Company shall have obtained and delivered to the Underwriters
executed copies of an agreement from the directors, officers, stockholders and
optionholders listed on Annex III hereto, substantially 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 director, officer,
stockholder or optionholder shall not offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder or thereunder, any Common 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, Common Stock or any
such substantially similar securities (other than pursuant to employee stock
option plans existing on the date of this Agreement), without your prior written
consent;
(k) 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;
(l) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery a certificate of officers of the Company stating that the
"compliance policy" has been adopted by the Board of Directors and is currently
being applied by the Company; and
(m) The Company and the Selling Stockholder shall have furnished or caused
to be furnished to you at such Time of Delivery certificates of officers of the
Company and the Selling Stockholder, respectively, satisfactory to you as to the
accuracy of the representations and warranties of the Company and the Selling
Stockholder, respectively, herein at and as of such Time of Delivery, as to the
performance by the Company and the Selling Stockholder of all of their
respective obligations hereunder to be performed at or prior to such Time of
Delivery, as to the
18
<PAGE>
matters set forth in subsections (a) and (f) of this Section and as to such
other matters as you may request.
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) The Selling Stockholder 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, 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 the
Selling Stockholder expressly for use therein; 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 Selling
Stockholder 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; provided, further, that the liability of the
Selling Stockholder pursuant to this subsection shall not exceed the product of
the
19
<PAGE>
number of Selling Stockholder Optional Shares sold by the Selling Stockholder
and the initial public offering price of the Shares as set forth in the
Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company and the
Selling Stockholder against any losses, claims, damages or liabilities to which
the Company or the Selling Stockholder 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, 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 and the Selling Stockholder for any legal or other
expenses reasonably incurred by the Company or the Selling Stockholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) 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.
20
<PAGE>
(e) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a), (b)
or (c) 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 and the Selling Stockholder 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 (d) 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 and the Selling Stockholder 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 and the Selling Stockholder on the one hand and
the 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 and the Selling Stockholder 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 or the Selling
Stockholder 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, the Selling Stockholder and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (e) 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 (e). 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 (e) 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 (e), 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
(e) to contribute are several in proportion to their respective underwriting
obligations, and not joint.
21
<PAGE>
(f) The obligations of the Company and the Selling Stockholder under this
Section 8 shall be in addition to any liability which the Company and the
Selling Stockholder 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 or the Selling
Stockholder 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 and the Selling Stockholder 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 and the
Selling Stockholder that you have so arranged for the purchase of such Shares,
or the Company and the Selling Stockholder notify you that it has so arranged
for the purchase of such Shares, you or the Company and the Selling Stockholder
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 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 and
the Selling Stockholder 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 and the Selling Stockholder 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 and
the Selling Stockholder
22
<PAGE>
as provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company and the
Selling Stockholder 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 and the Selling Stockholder to sell the Optional Shares) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company or the Selling Stockholder , except for the expenses to be borne by
the Company or the Selling Stockholder 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, the Selling Stockholder 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 the Selling Stockholder 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,
neither the Company nor the Selling Stockholder shall then be under any
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 and the Selling Stockholder as provided herein, the Company and the
Selling Stockholder will reimburse the Underwriters through you for all
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 and the Selling Stockholder 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; and in all dealings with the Selling Stockholder hereunder, you
and the Company shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of the Selling Stockholder made or given by any or
all of the Attorneys-in-Fact for the Selling Stockholder.
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,
23
<PAGE>
New York 10005, Attention: Registration Department; if to the Selling
Stockholder shall be delivered or sent by mail, telex or facsimile transmission
to counsel for the Selling Stockholder at its address set forth in Schedule II
hereto; and if to the Company shall be delivered or sent by mail 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(d)
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 or the Selling Stockholder by you upon 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, the Company and the Selling Stockholder 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, the Selling Stockholder 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 and the Custodian 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 between each of the
Underwriters, the Company and the Selling Stockholder . 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 and the Selling Stockholder for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
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<PAGE>
Any person executing and delivering this Agreement as Attorney-in-Fact for
the Selling Stockholder represents by so doing that he has been duly appointed
as Attorney-in-Fact by the Selling Stockholder pursuant to a validly existing
and binding Power-of-Attorney which authorizes such Attorney-in-Fact to take
such action.
Very truly yours,
THESTREET.COM, INC.
By:
----------------------------------
Name:
Title:
KEVIN W. ENGLISH
By:
----------------------------------
Name:
Title:
As Attorney-in-Fact acting on behalf
of the Selling Stockholder named
in Schedule II to this Agreement.
Accepted as of the date hereof:
Goldman, Sachs & Co.
Hambrecht & Quist LLC
Thomas Weisel Partners LLC
By:
--------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
25
<PAGE>
SCHEDULE I
Number of
Optional
Shares to be
Total Number of Purchased if
Underwriter Firm Shares Maximum Option
to be Exercised
Purchased ---------
---------
Goldman, Sachs & Co.....................
Hambrecht & Quist LLC
Thomas Weisel Partners LLC
[Names of other Underwriters]...........
--------------- --------------
Total............
=============== ==============
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<PAGE>
SCHEDULE II
Number of
Optional Shares to
Total be Sold if
Number of Firm Maximum Option
Shares to be Sold Exercised
----------------- ---------
The Company.........................
The Selling Stockholder:
Mr. Kevin English (a)
----------------- ------------------
Total..............
================= ==================
(a) This Selling Stockholder is represented by [Name and Address of
Counsel] and has appointed [Names of Attorneys-in-Fact (not less than two)], and
each of them, as the Attorneys-in-Fact for such Selling Stockholder.
27
<PAGE>
ANNEX I
FORM OF DESCRIPTION OF COMFORT LETTER
FOR REGISTRATION STATEMENTS ON FORM S-1
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 furnished to the
representatives of the Underwriters (the "Representatives") and are attached
hereto;
(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 (including, without limitation, the performance of the
procedures set out in Statement on Auditing Standards No. 71 ("SAS 71") for a
review of interim unaudited quarterly financial information for any quarterly
period during 1999) copies of which have been furnished to the Representatives
and are attached hereto 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 cause 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
five 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 five fiscal years
28
<PAGE>
which were included or incorporated by reference in the Company's Annual Reports
on Form 10-K for such fiscal years;
(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 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
29
<PAGE>
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 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;
(vii) In addition to the examination referred to in their report(s)
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; and
(viii) In addition, you shall have received from Arthur Andersen LLP a
letter addressed to the Company and made available to you for the use of the
Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial
30
<PAGE>
statements as of December 31, 1998, did not disclose any weaknesses in internal
controls that they considered to be material weaknesses.
31
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ANNEX II
FORM OF DESCRIPTION OF SAS 86 LETTER
FOR REGISTRATION STATEMENTS ON FORM S-1
<PAGE>
ANNEX III
SCHEDULE OF DIRECTORS, OFFICERS,
STOCKHOLDERS AND OPTIONHOLDERS WHO HAVE
EXECUTED LOCK-UP LETTER AGREEMENTS
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
-------------------------------------------------------------------------------
Pursuant to Sections 242 and 245 of the
Delaware General Corporation Law
-------------------------------------------------------------------------------
THE STREET.COM, INC. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the "GCL"),
does hereby certify as follows:
(1) The name of the Corporation is The Street.com, Inc. The
Corporation was originally incorporated under the name The Street.com, Inc. The
original certificate of incorporation of the Corporation was filed with the
office of the Secretary of State of the State of Delaware on April 30, 1998.
(2) This Amended and Restated Certificate of Incorporation was
duly adopted by the Board of Directors of the Corporation (the "Board of
Directors") and by the stockholders of the Corporation in accordance with
Sections 228, 242 and 245 of the GCL.
(3) This Amended and Restated Certificate of Incorporation
restates and integrates and further amends the certificate of incorporation of
the Corporation, as heretofore amended or supplemented.
(4) The text of the Certificate of Incorporation is amended
and restated in its entirety as follows:
FIRST: The name of the Corporation is TheStreet.com, Inc. (the
"Corporation").
SECOND: The address of the registered office of the Corporation is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle, State of Delaware 19801. The name of its registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may
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be organized under the General Corporation Law of the State of Delaware (the
"GCL").
FOURTH: (a) AUTHORIZED CAPITAL STOCK. The total number of shares of
stock which the Corporation shall have authority to issue is 110,000,000 shares
of capital stock, consisting of (i) 100,000,000 shares of common stock, par
value $0.01 per share (the "Common Stock") and (ii) 10,000,000 shares of
preferred stock, par value $0.01 per share (the "Preferred Stock").
(b) COMMON STOCK. The powers, preferences and rights, and
the qualifications, limitations and restrictions, of each class of the Common
Stock are as follows:
(1) NO CUMULATIVE VOTING. The holders of
shares of Common Stock shall not have cumulative voting rights.
(2) DIVIDENDS; STOCK SPLITS. Subject to
the rights of the holders of Preferred Stock, and subject to any other
provisions of this Amended and Restated Certificate of Incorporation, as it may
be amended from time to time, holders of shares of Common Stock shall be
entitled to receive such dividends and other distributions in cash, stock or
property of the Corporation when, as and if declared thereon by the Board of
Directors from time to time out of assets or funds of the Corporation legally
available therefor.
(3) LIQUIDATION, DISSOLUTION, ETC. In
the event of any liquidation, dissolution or winding up (either voluntary or
involuntary) of the Corporation, the holders of shares of Common Stock shall be
entitled to receive the assets and funds of the Corporation available for
distribution after payments to creditors and to the holders of any Preferred
Stock of the Corporation that may at the time be outstanding, in proportion to
the number of shares held by them, respectively.
(4) MERGER, ETC. In the event of a
merger or consolidation of the Corporation with or into another entity (whether
or not the Corporation is the surviving entity), the holders of each share of
Common Stock shall be entitled to receive the same per share consideration on a
per share basis.
(5) NO PREEMPTIVE OR SUBSCRIPTION RIGHTS. No
holder of shares of Common Stock shall be entitled to preemptive or
subscription rights.
(6) POWER TO SELL AND PURCHASE SHARES.
Subject to the requirements of applicable law, the Corporation shall have the
2
<PAGE>
power to issue and sell all or any part of any shares of any class of stock
herein or here after authorized to such persons, and for such consideration, as
the Board of Directors shall from time to time, in its discretion, determine,
whether or not greater consideration could be received upon the issue or sale of
the same number of shares of another class, and as other wise permitted by law.
Subject to the requirements of applicable law, the Corporation shall have the
power to purchase any shares of any class of stock herein or hereafter
authorized from such persons, and for such consideration, as the Board of
Directors shall from time to time, in its discretion, determine, whether or not
less consideration could be paid upon the purchase of the same number of shares
of another class, and as otherwise permitted by law.
(c) PREFERRED STOCK. The Board of Directors is hereby
expressly authorized to provide for the issuance of all or any shares of the
Preferred Stock in one or more classes or series, and to fix for each such class
or series such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other special
rights and such qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions adopted by the Board of
Directors providing for the issuance of such class or series, including, without
limitation, the authority to provide that any such class or series may be (i)
subject to redemption at such time or times and at such price or prices; (ii)
entitled to receive dividends (which may be cumulative or non-cumulative) at
such rates, on such conditions, and at such times, and payable in preference to,
or in such relation to, the dividends payable on any other class or classes or
any other series; (iii) entitled to such rights upon the dissolution of, or
upon any distribution of the assets of, the Corporation; or (iv) convertible
into, or exchangeable for, shares of any other class or classes of stock, or of
any other series of the same or any other class or classes of stock, of the
Corporation at such price or prices or at such rates of exchange and with such
adjustments; all as may be stated in such resolution or resolutions.
[(d) The powers, preferences and relative, participating,
optional and other special rights, and the
3
<PAGE>
qualifications, limitations and restrictions, of the shares of preferred stock
designated (i) "Series C Preferred Stock", (ii) "Series B 9 1/2% Cumulative
Preferred Stock" and (iii) "Series A 9 1/2% Cumulative Preferred Stock" are as
set forth in this Article FOURTH and in Exhibits A, B and C, respectively, to
this Restated Certificate of Incorporation.] [This provision would need to be
included if the Restated Certificate of Incorporation is filed prior to the
Closing of the initial public offering, i.e., prior to the conversion of the
preferred stock currently outstanding. A Certificate of Elimination for each of
the three series of preferred stock would then be filed with the Delaware
Secretary of State immediately following conversion of the shares of preferred
stock.]
FIFTH: The following provisions are inserted for the management of the
business and 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:
(a) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(b) The number of directors of the Corporation shall be as
from time to time fixed by the Board of Directors, and such number shall never
be less than 3 nor more than 13. Election of directors need not be by written
ballot unless the By-Laws so provide.
(c) The directors shall be divided into three classes,
designated Class I, Class II and Class III. Each class shall consist, as nearly
as may be possible, of one-third of the total number of directors constituting
the entire Board of Directors. The initial division of the Board of Directors
into classes shall be made by the decision of the affirmative vote of a majority
of the entire Board of Directors. The term of the initial Class I directors
shall terminate on the date of the 2000 annual meeting; the term of the initial
Class II directors shall terminate on the date of the 2001 annual meeting; and
the term of the initial Class III directors shall terminate on the date of the
2002 annual meeting. At each succeeding annual meeting of stockholders begin-
4
<PAGE>
ning in 2000, successors to the class of directors whose term expires at that
annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent director.
(d) A director shall hold office until the annual meeting for
the year in which his or her term expires and until his or her successor shall
be elected and shall qualify, subject, however, to prior death, resignation,
retirement, disqualification or removal from office.
(e) Subject to the terms of any one or more classes or series
of Preferred Stock, any vacancy on the Board of Directors that results from an
increase in the number of directors may be filled by a majority of the Board of
Directors then in office, provided that a quorum is present, and any other
vacancy occurring on the Board of Directors may be filled by a majority of the
Board of Directors then in office, even if less than a quorum, or by a sole
remaining director. Any director of any class elected to fill a vacancy
resulting from an increase in the number of directors of such class shall hold
office for a term that shall coincide with the remaining term of that class. Any
director elected to fill a vacancy not resulting from an increase in the number
of directors shall have the same remaining term as that of his predecessor.
Subject to the rights, if any, of the holders of shares of Preferred Stock then
outstanding, any or all of the directors of the Corporation may be removed from
office at any time, but only for cause and only by the affirmative vote of the
holders of at least a majority of the voting power of the Corporation's then
outstanding capital stock entitled to vote generally in the election of
directors. Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
5
<PAGE>
vacancies and other features of such directorships shall be governed by the
terms of this Amended and Restated Certificate of Incorporation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article FIFTH unless expressly provided by such terms.
(f) In addition to the powers and authority 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 GCL,
this Amended and Restated Certificate of Incorporation, and any By-Laws adopted
by the stockholders; PROVIDED, HOWEVER, that no By-Laws hereafter adopted by the
stockholders shall invalidate any prior act of the directors which would have
been valid if such By-Laws had not been adopted.
SIXTH: No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the GCL as the same exists or may hereafter be
amended. If the GCL is amended hereafter to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the Corporation shall be eliminated or limited to the fullest extent authorized
by the GCL, as so amended. Any repeal or modification of this Article SIXTH by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such repeal
or modification.
SEVENTH: The Corporation shall indemnify its directors and officers to
the fullest extent authorized or permitted by law, as now or hereafter in
effect, and such right to indemnification shall continue as to a person who has
ceased to be a director or officer of the Corporation and shall inure to the
benefit of his or her heirs, executors and personal and legal representatives;
PROVIDED, HOWEVER, that, except for proceedings to enforce rights to
indemnification, the Corporation shall not be obligated to indemnify any
director or officer (or
6
<PAGE>
his or her heirs, executors or personal or legal representatives) in connection
with a proceeding (or part thereof) initiated by such person unless such
proceeding (or part thereof) was authorized or consented to by the Board of
Directors. The right to indemnification conferred by this Article SEVENTH shall
include the right to be paid by the Corporation the expenses incurred in
defending or otherwise participating in any proceeding in advance of its final
disposition.
The Corporation may, to the extent authorized from time to
time by the Board of Directors, provide rights to indemnification and to the
advancement of expenses to employees and agents of the Corporation similar to
those conferred in this Article SEVENTH to directors and officers of the
Corporation.
The rights to indemnification and to the advance of expenses
conferred in this Article SEVENTH shall not be exclusive of any other right
which any person may have or hereafter acquire under this Amended and Restated
Certificate of Incorporation, the By-Laws of the Corporation, any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
Any repeal or modification of this Article SEVENTH by the
stockholders of the Corporation shall not adversely affect any rights to
indemnification and to the advancement of expenses of a director or officer of
the Corporation existing at the time of such repeal or modification with
respect to any acts or omissions occurring prior to such repeal or modification.
EIGHTH: A. In addition to any affirmative vote required by law or this
Certificate of Incorporation or the By-Laws of the Corporation, and except as
otherwise expressly provided in Section B of this Article EIGHTH, a Business
Combination (as hereinafter defined) shall require the affirmative vote of not
less than eighty percent (80%) of the votes entitled to be cast by the holders
of all the then outstanding shares of Voting Stock (as hereinafter defined),
voting together as a single-class, excluding Voting Stock beneficially owned by
any Interested Stockholder (as hereinafter defined). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that a
lesser percentage or separate class vote may be specified, by law or in any
agreement with any national securities exchange or otherwise.
7
<PAGE>
B. The provisions of Section A of this Article EIGHTH shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote, if any, as is
required by law or by any other provision of this Certificate of
Incorporation or the By-Laws of the Corporation, or any agreement with
any national securities exchange, if all of the conditions specified
in either of the following Paragraphs 1 or 2 are met or, in the case of
a Business Combination not involving the payment of consideration to
the holders of the Corporation's outstanding Capital Stock (as
hereinafter defined), if the condition specified in the following
Paragraph 1 is met:
1. The Business Combination shall have been approved by a
majority (whether such approval is made prior to or subsequent
to the acquisition of beneficial ownership of the Voting
Stock that caused the Interested Stockholder to become an
Interested Stockholder) of the Continuing Directors (as
hereinafter defined).
2. All of the following conditions shall have been met:
(a) The aggregate amount of cash and the Fair Market
Value (as hereinafter defined), as of the date of
the consummation of the Business Combinations, of
consideration other than cash to be received per
share by holders of Common Stock in such Business
Combination shall be at least equal to the highest
amount determined under clauses (i), (ii), (iii) and
(iv) below:
(i)(if applicable) the highest per share
price (including any brokerage commissions,
transfer taxes and soliciting dealers'
fees) paid by or on behalf of the Interested
Stockholder for any share of Common Stock in
connection with the acquisition by the
Interested Stockholder of beneficial
ownership of shares of Common Stock (x)
within the two-year period immediately prior
to the first public
8
<PAGE>
announcement of the proposed Business
Combination (the "Announcement Date") or (y)
in the transaction in which it became an
Interested Stockholder, whichever is higher,
in either case as adjusted for any
subsequent stock split, stock dividend,
subdivision or reclassification with respect
to Common Stock;
(ii) the Fair Market Value per share of
Common Stock on the Announcement Date or on
the date on which the Interested Stockholder
became an Interested Stockholder (the
"Determination Date"), whichever is higher,
as adjusted for any subsequent stock split,
stock dividend, subdivision or
reclassification with respect to Common
Stock;
(iii) (if applicable) the price per share
equal to the Fair Market Value per share of
Common Stock determined pursuant to the
immediately preceding clause (ii),
multiplied by the ratio of (x) the highest
per share price (including any brokerage
commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of
Common Stock in connection with the
acquisition by the Interested Stockholder
of beneficial ownership of shares of Common
Stock within the two-year period immediately
prior to the Announcement Date, as adjusted
for any subsequent stock split, stock
dividend, subdivision or reclassification
with respect to Common Stock to (y) the Fair
Market Value per share of Common Stock on
the first day in such two-year period on
which the Interested Stockholder acquired
beneficial ownership of any share of Common
Stock, as adjusted for any subsequent stock
split, stock dividend, subdivision or
reclassification with
9
<PAGE>
respect to Common Stock; and
(iv) the Corporation's net income per share
of Common Stock for the four full
consecutive fiscal quarters immediately
preceding the Announcement Date, multiplied
by the higher of the then price/earnings
multiple (if any) of such Interested Stock
holder or the highest price/earnings
multiple of the Corporation within the
two-year period immediately preceding the
Announcement Date (such price/earnings
multiples being determined as customarily
computed and reported in the financial
community).
(b) The aggregate amount of cash and the Fair Market
Value, as of the date of the consummation of the
Business Combination, of consideration other than
cash to be received per share by holders of shares of
any class or series of outstanding Capital Stock,
other than Common Stock, shall be at least equal to
the highest amount determined under clauses (i),
(ii), (iii) and (iv) below:
(i) (if applicable) the highest per share
price (including any brokerage commissions,
transfer taxes and soliciting dealers'
fees) paid by or on behalf of the Interested
Stockholder for any share of such class or
series of Capital Stock in connection with
the acquisition by the Interested
Stockholder of beneficial ownership of
shares of such class or series of Capital
Stock (x) within the two-year period
immediately prior to the Announcement Date
or (y) in the transaction in which it
became an Interested Stockholder, whichever
is higher, in either case as adjusted for
any subsequent stock split, stock dividend,
subdivision or reclassification with
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<PAGE>
respect to such class or series of Capital
Stock;
(ii) the Fair Market Value per share
of such class or series of Capital Stock on
the Announcement Date or on the
Determination Date, whichever is higher, as
adjusted for any subsequent stock split,
stock dividend, subdivision or
reclassification with respect to such class
or series of Capital Stock;
(iii) (if applicable) the price per share
equal to the Fair Market Value per share of
such class or series of Capital Stock
determined pursuant to the immediately
preceding clause (ii), multiplied by the
ratio of (x) the highest per share price
(including any brokerage commissions, trans-
fer taxes and soliciting dealers' fees) paid
by or on behalf of the Interested
Stockholder for any share of such class or
series of Capital Stock in connection with
the acquisition by the Interested
Stockholder of beneficial ownership of
shares of such class or series of Capital
Stock within the two-year period immedi-
ately prior to the Announcement Date, as
adjusted for any subsequent stock split,
stock dividend, subdivision or
reclassification with respect to such class
or series of Capital Stock to (y) the Fair
Market Value per share of such class or
series of Capital Stock on the first day in
such two-year period on which the Interested
Stockholder acquired beneficial ownership
of any share of such class or series of
Capital Stock, as adjusted for any
subsequent stock split, stock dividend,
subdivision or reclassification with
respect to such class or series of Capital
Stock; and (iv) (if applicable) the highest
preferential amount per share to which the
holders of shares of such
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<PAGE>
class or series of Capital Stock would be
entitled in the event of any voluntary or
involuntary liquidation, dissolution or
winding up of the affairs of the Corporation
regardless of whether the Business
Combination to be consummated constitutes
such an event.
The provisions of this Paragraph 2 shall be required
to be met with respect to every class or series of
outstanding Capital Stock, whether or not the
Interested Stockholder has previously acquired bene-
ficial ownership of any shares of a particular class
or series of Capital Stock.
(c) The consideration to be received by holders of a
particular class or series of outstanding Capital
Stock shall be in cash or in the same form as
previously has been paid by or on behalf of the
Interested Stockholder in connection with its direct
or indirect acquisition of beneficial ownership of
shares of such class or series of Capital Stock. If
the consideration so paid for shares of any class or
series of Capital Stock varied as to form, the form
of consideration for such class or series of Capital
Stock shall be either cash or the form used to
acquire beneficial ownership of the largest number
of shares of such class or series of Capital Stock
previously acquired by the Interested Stockholder.
(d) After the Determination Date and prior to the
consummation of such Business Combination: (i) except
as approved by a majority of the Continuing
Directors, there shall have been no failure to de-
clare and pay at the regular date therefor any full
quarterly dividends (whether or not cumulative)
payable in accordance with the terms of any
outstanding Capital Stock; (ii) there shall have been
no
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<PAGE>
reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any
stock split, stock dividend or subdivision of the
Common Stock), except as approved by a majority of
the Continuing Directors; (iii) there shall have been
an increase in the annual rate of dividends paid on
the Common Stock as necessary to reflect any
reclassification (including any reverse stock
split), recapitalization, reorganization or any
similar transaction that has the effect of reducing
the number of outstanding shares of Common Stock,
unless the failure so to increase such annual rate is
approved by a majority of the Continuing Directors;
and (iv) such Interested Stockholder shall not have
become the beneficial owner of any additional shares
of Capital Stock except as part of the transaction
that results in such Interested Stockholder becoming
an Interested Stockholder and except in a transaction
that, after giving effect thereto, would not result
in any increase in the Interested Stockholder's
percentage beneficial ownership of any class or se-
ries of Capital Stock.
(e) After the Determination Date, such Interested
Stockholder shall not have received the benefit,
directly or indirectly (except proportionately as a
stock holder of the Corporation), of any loans,
advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation
of or in connection with such Business Combination or
otherwise.
(f) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934
and the rules and regulations thereunder (the "Act")
(or any subsequent provisions re placing such Act,
rules or regulations)
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<PAGE>
shall be mailed to all stockholders of the
Corporation at least 30 days prior to the
consummation of such Business Combination (whether or
not such proxy or information statement is required
to be mailed pursuant to such Act or subsequent
provisions). The proxy or information statement shall
contain on the first page thereof, in a prominent
place, any statement as to the advisability (or
inadvisability) of the Business Combination that the
Continuing Directors, or any of them, may choose to
make and, if deemed advisable by a majority of the
Continuing Directors, the opinion of an investment
banking firm selected by a majority of the Continuing
Directors as to the fairness (or not) of the terms of
the Business Combination from a financial point of
view to the holders of the outstanding shares of
Capital Stock other than the Interested Stockholder
and its Affiliates or Associates (as hereinafter
defined), such investment banking firm to be paid a
reasonable fee for its services by the Corporation.
(g) Such Interested Stockholder shall not have made
any major change in the Corporation's business or
equity capital structure without the approval of a
majority of the Continuing Directors.
C. The following definitions shall apply with respect to this Article
EIGHTH:
1. The term "Business Combination" shall mean:
(a) any merger or consolidation of the Corporation or
any Subsidiary (as herein after defined) with (i) any
Interested Stockholder or (ii) any other company
(whether or not itself an Interested Stockholder)
which is or after such merger or consolidation would
be an Affiliate or Associate of an Interested
Stockholder; or
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<PAGE>
(b) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition or security
arrangement, investment, loan, advance, guarantee,
agreement to purchase, agreement to pay, extension of
credit, joint venture participation or other ar-
rangement (in one transaction or a series of
transactions) with or for the benefit of any
Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder involving any assets,
securities or commitments of the Corporation, any
Subsidiary or any Interested Stock holder or any
Affiliate or Associate of any Interested Stockholder
having an aggregate Fair Market Value and/or
involving aggregate commitments of $10,000,000 or
more or constituting more than 5 percent of the book
value of the total assets (in the case of
transactions involving assets or commitments other
than capital stock) or 5 percent of the stockholders'
equity (in the case of transactions in capital stock)
of the entity in question (the "Substantial Part"),
as reflected in the most recent fiscal year-end
consolidated balance sheet of such entity existing at
the time the stockholders of the Corporation would
be required to approve or authorize the Business
Combination involving the assets, securities and/or
commitments constituting any Substantial Part; or
(c) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation which
is voted for or consented to by any Interested
Stockholder; or
(d) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any
other transaction (whether or not with or otherwise
involving an Interested Stock holder) that has the
effect, directly or
15
<PAGE>
indirectly, of increasing the proportionate share of
any class or series of Capital Stock, or any
securities convertible into Capital Stock or into
equity securities of any Subsidiary, that is benefi-
cially owned by any Interested Stockholder or any
Affiliate or Associate of any Interested
Stockholder; or
(e) any agreement, contract or other arrangement
providing for any one or more of the actions
specified in the foregoing clauses (a) to (d).
2. The term "Capital Stock" shall mean all capital stock of
the Corporation authorized to be issued from time to time
under Article FOURTH of this Certificate of Incorporation, and
the term "Voting Stock" shall mean all Capital Stock which by
its terms may be voted on all matters submitted to
stockholders of the Corporation generally.
3. The term "person" shall mean any individual, firm, company
or other entity and shall include any group comprised of any
person and any other person with whom such person or any
Affiliate or Associate of such person has any agreement,
arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of Capi-
tal Stock.
4. The term "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary and other than
any profit-sharing, employee stock ownership or other
employee benefit plan of the Corporation or any Subsidiary or
any trustee of or fiduciary with respect to any such plan
when acting in such capacity) who (a) is the beneficial owner
of Voting Stock representing ten percent (10%) or more of the
votes entitled to be cast by the holders of all then
outstanding shares of Voting Stock; or (b) is an Affiliate or
Associate of the Corporation and at any time within the
two-year period immediately prior to the date
16
<PAGE>
in question was the beneficial owner of Voting Stock
representing ten percent (10%) or more of the votes entitled
to be cast by the holders of all then outstanding shares of
Voting Stock.
5. A person shall be a "beneficial owner" of any Capital Stock
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; (b) which such
person or any of its Affiliates or Associates has, directly or
indirectly, (i) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding; or
(c) which are beneficially owned, directly or indirectly, by
any other person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock. For the purposes of
determining whether a person is an Interested Stockholder
pursuant to Paragraph 4 of this Section C, the number of
shares of Capital Stock deemed to be outstanding shall include
shares deemed beneficially owned by such person through
application of this Paragraph 5 of Section C, but shall not
include any other shares of Capital Stock that may be issuable
pursuant to any agreement, arrangement or understanding, or
upon exercise of conversion rights, warrants or options, or
otherwise.
6. The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under
the Act as in effect on the date that this Article EIGHTH is
approved by the Board (the term "registrant" in said Rule
12b-2 meaning in this case the Corporation).
7. The term "Subsidiary" means any company of which a majority
of any class of equity security is beneficially owned by the
17
<PAGE>
Corporation; provided, however, that for the purposes of the
definition of Interested Stockholder set forth in Paragraph 4
of this Section C, the term "Subsidiary" shall mean only a
company of which a majority of each class of equity security
is beneficially owned by the Corporation.
8. The term "Continuing Director" means any member of the
Board of Directors of the Corporation (the "Board of
Directors"), while such person is a member of the Board of
Directors, who is not an Affiliate or Associate or repre-
sentative of the Interested Stockholder and was a member of
the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any
successor of a Continuing Director while such successor is a
member of the Board of Directors, who is not an Affiliate or
Associate or representative of the Interested Stockholder and
is recommended or elected to succeed the Continuing Director
by a majority of Continuing Directors.
9. The term "Fair Market Value" means (a) in the case of cash,
the amount of such cash; (b) in the case of stock, the highest
closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange-Listed Stocks, or,
if such stock is not quoted on the Composite Tape, on the New
York Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange
registered under the Act on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock
during the 30-day period preceding the date in question on
the National Association of Securities Dealers, Inc. Automated
Quotations System or any similar system then in use, or if no
such quotations are available, the fair market value on the
date in question of a share of such stock as determined by a
majority of the Continuing Directors in good faith; and (c)
in the
18
<PAGE>
case of property other than cash or stock, the fair market
value of such property on the date in question as determined
in good faith by a majority of the Continuing Directors.
10. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than
cash to be received" as used in Paragraphs 2.a and 2.b of
Section B of this Article EIGHTH shall include the shares of
Common Stock and/or the shares of any other class or series of
Capital Stock retained by the holders of such shares.
D. A majority of the Continuing Directors shall have the power and duty
to determine for the purposes of this Article EIGHTH, on the basis of
information known to them after reasonable inquiry, (a) whether a
person is an Interested Stockholder, (b) the number of shares of
Capital Stock or other securities beneficially owned by any person, (c)
whether a person is an Affiliate or Associate of another, (d) whether
the assets that are the subject of any Business Combination have, or
the consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $10,000,000 or more,
and (e) whether the assets or securities that are the subject of any
Business Combination constitute a Substantial Part. Any such
determination made in good faith shall be binding and conclusive on all
parties. E. Nothing contained in this Article EIGHTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law. F. The fact that any Business Combination complies with
the provisions of Section B of this Article EIGHTH shall not be
construed to impose any fiduciary duty, obligation or responsibility
on the Board of Directors, or any member thereof, to approve such
Business Combination or recommend its adoption or approval to the
shareholders of the Corporation, nor shall such compliance limit, pro-
hibit or otherwise restrict in any manner the Board of Directors, or
any member thereof, with respect to evaluations of or actions and
responses taken with respect to such Business Combination.
19
<PAGE>
G. Notwithstanding any other provisions of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that a lesser percentage or separate class vote may be
specified by law, this Certificate of Incorporation or the By-Laws of
the Corporation), the affirmative vote of the holders of not less than
eighty percent (80%) of the votes entitled to be cast by the holders
of all the then outstanding shares of Voting Stock, voting together as
a single class, excluding Voting Stock beneficially owned by any
Interested Stockholder, shall be required to amend or repeal, or adopt
any provisions inconsistent with, this Article EIGHTH; provided,
however, that this Section G shall not apply to, and such eighty
percent (80%) vote shall not be required for, any amendment, repeal or
adoption unanimously recommended by the Board of Directors if all of
such directors are persons who would be eligible to serve as Continuing
Directors within the meaning of Section C, Paragraph 8 of this Article
EIGHTH.
NINTH: Unless otherwise required by law, special meetings of
stockholders, for any purpose or purposes may be called by either (i) the
Chairman of the Board of Directors, if there be one, (ii) the President, or
(iii) the Board of Directors. The ability of the stockholders to call a special
meeting is hereby specifically denied.
TENTH: Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at a duly called annual or special meeting
of stockholders of the Corporation, and the ability of the stockholders to
consent in writing to the taking of any action is hereby specifically denied.
ELEVENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
TWELFTH: In furtherance and not in limitation of the powers conferred
upon it by the laws of the State of Delaware, the Board of Directors shall have
the power to
20
<PAGE>
adopt, amend, alter or repeal the Corporation's By-Laws. The affirmative vote of
at least a majority of the entire Board of Directors shall be required to adopt,
amend, alter or repeal the Corporation's By-Laws. The Corporation's By-Laws
also may be adopted, amended, altered or repealed by the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of the shares
entitled to vote at an election of directors.
THIRTEENTH: A. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Amended and Restated
Certificate of Incorporation in the manner now or hereafter prescribed in this
Amended and Restated Certificate of Incorporation, the Corporation's By-Laws or
the GCL, and all rights herein conferred upon stockholders are granted subject
to such reservation; provided, however, that, notwithstanding any other
provision of this Amended and Restated Certificate of Incorporation (and in
addition to any other vote that may be required by law), the affirmative vote of
the holders of at least eighty percent (80%) of the voting power of the shares
entitled to vote at an election of directors shall be required to amend, alter,
change or repeal, or to adopt any provision as part of this Amended and Restated
Certificate of Incorporation inconsistent with the purpose and intent of
Articles FIFTH, EIGHTH, NINTH, TENTH and TWELFTH of this Amended and Restated
Certificate of Incorporation or this Article THIRTEENTH.
21
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Amended
and Restated Certificate of Incorporation to be executed on its behalf this
__ day of __, 1999.
TheStreet.com, Inc.
By:________________________
Name:
Title:
22
<PAGE>
EXHIBIT 4.3
(LOGO OF THESTREET.COM, INC.)
TheStreet.com, Inc.
Number Shares
TSC
Common Stock
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 88368Q 10 3
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE OF
$.01 PER SHARE, OF TheStreet.com, Inc. (the "Corporation") transferable on the
books of the Corporation by the holder hereof in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed. This
Certificate and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws of the Corporation and all
amendments thereto to all of which the holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer Agent and
Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated: Corporate Seal of TheStreet.com, Inc.
/s/ Michael Zuckert /s/ Kevin W. English
SECRETARY CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT
1
<PAGE>
TheStreet.com, Inc.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO
SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND
THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR
RIGHTS. SUCH REQUEST MAY BE MADE TO THE CORPORATION OR THE TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - .........................Custodian..........................
(CUST) (MINOR)
under Uniform Gifts to Minors
Act...................................
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, _ _ _ _ _ _ _ _ _ _ _ _ _ _ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Shares of the Common Stock represented by the
within certificate, and do hereby irrevocably constitute and appoint
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Attorney to transfer the said shares on the books
of the within named Corporation with full power of substitution in the
premises.
Dated _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
2
<PAGE>
X _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between TheStreet.com,
Inc. (the "Corporation") and the Rights Agent thereunder (the "Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of the Corporation.
Under certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be evidenced by
this certificate. The Corporation will mail to the holder of this certificate
a copy of the Rights Agreement, as in effect on the date of mailing, without
charge, promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent holder, may
become null and void.
Signature(s) Guaranteed
By _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
3
<PAGE>
EXHIBIT 5.1
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
April 16, 1999
TheStreet.com, Inc.
2 Rector Street, 14th Floor
New York, NY 10006
Re: TheStreet.com, Inc.
Registration Statement on Form S-1
(File No. 333-72799)
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel to TheStreet.com, Inc., a Delaware
corporation (the "Company"), in relation to the initial public offering by the
Company of up to 6,325,000 shares (including 825,000 shares subject to an
over-allotment option) (the "Shares") of the Company's common stock, par value
$0.01 per share (the "Common Stock").
This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Act").
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement on Form S-1 (File No. 333-72799) as filed with the
Securities and Exchange Commission (the "Commission") on February 23, 1999 under
the Act; (ii) Amendment No. 1 to the Registration Statement as filed with the
Commission on March 10, 1999 under the Act; (iii) Amendment No. 2 to the
Registration Statement
<PAGE>
TheStreet.com, Inc.
April 16, 1999
Page 2
as filed with the Commission on April 2, 1999 under the Act; (iv) Amendment No.
3 to the Registration Statement as filed with the Commission on April 19, 1999
under the Act (such Registration Statement, as so amended, being hereinafter
referred to as the "Registration Statement"); (v) the form of Underwriting
Agreement (the "Underwriting Agreement") proposed to be entered into by and
among the Company, as issuer, and Goldman, Sachs & Co., Hambrecht & Quist and
Thomas Weisel Partners LLC as representatives of the several underwriters named
therein (the "Underwriters") filed as an exhibit to the Registration Statement;
(vi) a specimen certificate representing the Common Stock; (vii) the Amended and
Restated Certificate of Incorporation of the Company, as currently in effect;
(viii) the Amended and Restated By-Laws of the Company, as currently in effect;
and (ix) certain resolutions of the Board of Directors of the Company, dated
February 16, 1999 and March 25, 1999, and drafts of certain resolutions (the
"Draft Resolutions") of the Pricing Committee of the Board of Directors of the
Company (the "Pricing Committee"), relating to the issuance and sale of the
Shares and related matters. We also have examined originals or copies, certified
or otherwise identified to our satisfaction, of such records of the Company and
such agreements, certificates of public officials, certificates of officers or
other representatives of the Company and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. In making our
examination of executed documents, we have assumed that the parties thereto,
other than the Company, had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof on such
parties. As to any facts material to the opinions expressed herein which we have
not independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Company and others.
Members of our firm are admitted to the bar in the State of
New York and we do not express any opinion as to the laws of any jurisdiction
other than the General Corporation Law of the State of Delaware, and we do not
express any opinion as to the effect of any other laws on the opinion stated
herein.
<PAGE>
TheStreet.com, Inc.
April 16, 1999
Page 3
Based upon and subject to the foregoing, we are of the opinion
that when (i) the Registration Statement becomes effective under the Act; (ii)
the Draft Resolutions have been adopted by the Pricing Committee; (iii) the
price at which the Shares are to be sold to the Underwriters pursuant to the
Underwriting Agreement and other matters relating to the issuance and sale of
the Shares have been approved by the Pricing Committee in accordance with the
Draft Resolutions; (iv) the Underwriting Agreement has been duly executed and
delivered; and (v) certificates representing the Shares in the form of the
specimen certificate examined by us have been manually signed by an authorized
officer of the transfer agent and registrar for the Common Stock and registered
by such transfer agent and registrar, and have been delivered to and paid for by
the Underwriters at a price per share not less than the per share par value of
the Common Stock as contemplated by the Underwriting Agreement, the issuance
and sale of the Shares will have been duly authorized, and the Shares will be
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the
Commission as Exhibit 5.1 to the Registration Statement. We also consent to the
reference to us under the caption "Legal Matters" in the Registration Statement.
In giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher
& Flom LLP
<PAGE>
EXHIBIT 10.1
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS DOCUMENT.
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
YAHOO! INC.
LICENSE AGREEMENT
This License Agreement (the "Agreement") is made as of this 17th day of
February, 1999 (the "Effective Date") between Yahoo! Inc., a California
corporation, with offices at 3420 Central Expressway, Suite 201, Santa Clara, CA
95051, ("Yahoo") and The Street.com, Inc., a Delaware corporation, with offices
at Two Rector Street, 14th Floor, New York, NY 10006 ("Licensor").
In consideration of the mutual promises contained herein, the parties agree as
follows:
Section 1: Definitions.
"Affiliates" shall mean any company or any other entity world-wide, including,
without limitation, corporations, partnerships, joint ventures, and Limited
Liability Companies in which Yahoo owns at least a twenty percent (20%)
ownership, equity, or financial interest.
"Click-through" shall mean a user selecting or clicking on the Licensor Content
from the Content Pages that will directly link the user to the full text of the
news story on the Licensor Site.
"Content Pages" shall mean the pages that result from current stock quote pages
of Yahoo Finance for a company after the user submits a request for "News"
relating to that company.
<PAGE>
"Intellectual Property Rights" shall mean all rights in and to trade secrets,
patents, copyrights, trademarks, know-how, as well as moral rights and similar
rights of any type under the laws of any governmental authority, domestic or
foreign.
"Licensor Brand Features" shall mean all trademarks, service marks, logos and
other distinctive brand features of Licensor that are used in or relate to the
Licensor Content, including without limitation, the trademarks, service marks
and logos described in Exhibit A.
"Licensor Content" shall mean, collectively, those headlines of newswires
collected, produced and owned by Licensor which link to certain newswires made
available on Licensor's Site and as described on Exhibit B.
"Licensor Site" shall mean Licensor's World Wide Web site currently located at
http://www.thestreet.com.
"Yahoo Brand Features" shall mean all trademarks, service marks, logos and other
distinctive brand features of Yahoo that are used in or relate to a Yahoo
Property, including, without limitation, the trademarks, service marks and logos
described in Exhibit A.
"Yahoo Finance" shall mean Yahoo's U.S. based property with information relating
to finance and investments and currently located at http://quote.yahoo.com.
"Yahoo Properties" shall mean any Yahoo branded or co-branded media properties,
including, without limitation, Internet guides, developed in whole or in part by
Yahoo or its Affiliates and distributed or made available by Yahoo or its
Affiliates.
Section 2: Licenses; Responsibilities of the Parties.
2.1 Grant of Licenses. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Yahoo, under Licensor's
Intellectual Property Rights:
(a) A non-exclusive, worldwide license to use, modify, reproduce,
distribute, display and transmit the Licensor Content in
electronic form
2
<PAGE>
on the Content Pages and in connection with other Yahoo
Properties and to permit users of the Yahoo Properties to
download and print the Licensor Content. Yahoo's license to
modify the Licensor Content shall be limited to modifying the
Licensor Content to fit the format and overall "look and feel"
of the Content Pages or Yahoo Properties.
(b) A non-exclusive, worldwide, license to use, reproduce and
display the Licensor's Brand Features: (i) in connection with
the presentation of the Licensor Content in the Yahoo
Properties; and (ii) in connection with the marketing and
promotion of the Licensor Content in connection with the
Yahoo Properties.
(c) Subject to the restrictions and obligations herein, Yahoo
shall be entitled to sublicense the rights set forth in this
Section 2.1 (i) to its Affiliates only for inclusion in Yahoo
Properties, (ii) in connection with any mirror site or
derivative site of a Yahoo Property, (iii) in connection with
any distribution arrangement concerning a Yahoo Property, and
(iv) in connection with other devices where a user can access
the internet.
(d) Yahoo agrees that any and all use of Licensor's Brand Features
by Yahoo, its Affiliates, or any other sublicensees will at
all times comply with Licensor's reasonable trademark
guidelines as attached hereto as Exhibit "D" and any updates
to such guidelines as provided by Licensor to Yahoo from time
to time.
2.2 Yahoo's Responsibilities.
(a) Yahoo will be responsible for the design, layout, posting, and
maintenance of the Content Pages. Yahoo shall give its users
the option to add the Licensor Content into the appropriate
areas of their personalized and customizable web pages in
accordance with Yahoo's service currently named "Yahoo
Finance." Licensor shall offer such users the opportunity to
register for subscription to Licensor's service on a limited
free-trial basis through a registration page on the Licensor's
Site ("Registration Page") upon such users' Click-throughs
from
3
<PAGE>
headlines of stories requiring registration on the Licensor
Site ("Licensor Premium Content"). The content, context,
images, format, layout and "look and feel" of the Registration
Page shall be controlled and designed by Licensor, subject to
Yahoo's reasonable approval, not to be unreasonably withheld
or delayed. Click-throughs from head lines of stories which
are not Licensor Premium Content shall go directly on a page
on the Licensor Site containing the full text of that story.
Yahoo shall have the sole right to sell and retain all
revenues with respect to advertising and promotions that
appear on the Yahoo Properties.
(b) Yahoo will not alter or impair any acknowledgment of copyright
or other Intellectual Property Rights of Licensor that may
appear in the Licensor Content and the Licensor Brand
Features, including all copyright, trademark and similar
notices that Licensor may reasonably request.
2.3 Licensor's Responsibilities.
(a) Licensor will provide on-going assistance to Yahoo with regard
to technical, administrative and service-oriented issues
relating to the utilization, transmission and maintenance of
the Licensor Content, as Yahoo may reasonably request.
(b) Licensor also shall provide Yahoo with reasonable prior notice
of any significant enhancements that generally affect the
appearance, updating, delivery or other elements of the
Licensor Content. Licensor will use its reasonable best
efforts to ensure that the Licensor Content is accurate,
comprehensive and updated regularly.
(c) *****
4
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
(d) *****
Section 3: Compensation.
3.1 Slotting Fee. In consideration of Yahoo's performance and obligations
as set forth herein, Licensor will pay Yahoo an annual, non-refundable
slotting fee during the Term (as such term is defined in Section 6
herein) equal to *****. Such fee shall be paid to Yahoo as set forth
below with the first payment designated as a set up fee for the
design, consultation, development, implementation and placement of the
Licensor Content.
Payment Date
--------------------------------------------------------------
$***** upon execution of this Agreement
$*****/month commencing February 15, 1999 and continuing
monthly thereafter until December 15, 1999
3.2 *****
3.3 Payment Information. All slotting fee payments are due on the first day
of each calendar month. ***** Yahoo shall provide Licensor with a
Click- Through report specifying the total number of Click-throughs
recorded by Yahoo for the preceding month within 15 days of the end of
each month during the Term. ***** All payments herein are
non-refundable and non-creditable and shall be made by Licensor via
wire transfer into Yahoo's main account pursuant to the wire transfer
instructions set forth on Exhibit C.
3.4 Late Payments. Any portion of the above payments which has not been
paid to Yahoo on the dates set forth above shall bear interest at the
lesser of (i) one percent (1%) per month commencing five (5) days after
Licensor's receipt of notice of delinquency or (ii) the maximum amount
allowed by law. Notwith-
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
5
<PAGE>
standing the foregoing, any failure by Licensor to make the payments
specified in Sections 3.1 and 3.2 on the dates set forth therein shall
constitute a material breach of this Agreement.
3.5 Audit. Licensor is entitled to more than once every twelve (12) months
during the term of this Agreement on notice to the Yahoo, to audit or
have its external auditors audit the Yahoo's books and records, which
relate directly to the number of Click-throughs reported by Yahoo and
calculation of payments due to Yahoo hereunder. Any such audit will be
conducted during Yahoo's normal business hours and at Yahoo's location
where the relevant records are kept in the normal course of business
and shall be conducted to minimize any disruption to Yahoo's business
activities. In the event the audit reveals that the number of actual
Click-throughs exceeds the number reported by Yahoo, Yahoo will
immediately pay refund the difference (required payment minus actual
payment) to Licensor together with any interest accumulated at the
lesser of (i) one percent (1%) per month commencing upon the date of
Yahoo's receipt of such actual payment from Licensor or (ii) the
maximum amount allowed by law.
Section 4: Indemnification.
Licensor, at its own expense, will indemnify, defend and hold harmless Yahoo,
its Affiliates and their employees, representatives, agents and affiliates,
against any claim, suit, action or other proceeding brought against Yahoo or an
Affiliate based on or arising from a claim that the Licensor Content or any
Licensor Brand Feature infringes in any manner any Intellectual Property Right
of any third party or contains any material or information that is obscene,
defamatory, libelous, slanderous, that violates any person's right of publicity,
privacy or personality, or has otherwise resulted in any tort, injury, damage or
harm to any person; provided however, that in any such case: (x) Yahoo provides
Licensor with prompt notice of any such claim; (y) Yahoo permits Licensor to
assume and control the defense of such action, with counsel chosen by Licensor
(who shall be reasonably acceptable to Yahoo); and (z) Licensor does not enter
into any settlement or compromise of any such claim without Yahoo's prior
written consent, which consent shall not be unreasonably withheld. Licensor will
pay any and all costs, damages, and expenses, including, but not limited to,
reasonable attorneys' fees and costs awarded against or
6
<PAGE>
otherwise incurred by Yahoo or an Affiliate in connection with or arising from
any such claim, suit, action or proceeding. It is understood and agreed that
Yahoo does not intend and will not be required to edit or review for accuracy or
appropriateness any Licensor Content.
Section 5: Limitation of Liability.
EXCEPT AS PROVIDED IN SECTION 5, UNDER NO CIRCUMSTANCES SHALL LICENSOR,
LICENSOR'S LICENSORS, YAHOO, OR ANY AFFILIATE BE LIABLE TO ANOTHER PARTY FOR
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES ARISING FROM
THIS AGREEMENT, EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR
LOST BUSINESS.
Section 6: Term and Termination.
6.1 Initial Term and Renewals. This Agreement will become effective as of
the Effective Date and shall, unless sooner terminated as provided
below or as otherwise agreed, remain effective for an initial term of
twelve (12) months following the first date of public availability of
the Licensor Content on the Content Pages within a Yahoo Property (the
"Initial Term"). After the Initial Term, this Agreement will be
automatically renewed for successive additional one year periods
("Extension Terms"), unless otherwise terminated by either party by
giving notice to the other party not less than sixty (60) days prior to
the end of a Term. As used herein, the "Term" means the Initial Term
and any Extension Term(s).
6.2 Termination for Cause. Notwithstanding the foregoing, this Agreement
may be terminated by either party immediately upon notice if the other
party: (w) becomes insolvent; (x) files a petition in bankruptcy; (y)
makes an assignment for the benefit of its creditors; or (z) breach
any of its obligations under this Agreement in any material respect,
which breach is not remedied within thirty (30) days (ten (10) days in
the case of a failure to pay) following written notice to such party.
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<PAGE>
6.3 Effect of Termination. Any termination pursuant to this Section 6 shall
be without any liability or obligation of the terminating party, other
than with respect to any breach of this Agreement prior to termination.
The provisions of Sections 3, 4, 5, 7, 9, and this Section 6.3 shall
survive any termination or expiration of this Agreement.
Section 7: Ownership.
7.1 By Licensor. Yahoo acknowledges and agrees that: (i) as between
Licensor on the one hand, and Yahoo and its Affiliates on the other,
Licensor owns all right, title and interest in the Licensor Content and
the Licensor Brand Features; (ii) nothing in this Agreement shall
confer in Yahoo or an Affiliate any right of ownership in the Licensor
Content or the Licensor Brand Features. No licenses are granted by
either party except for those expressly set forth in this Agreement.
7.2 By Yahoo. Licensor acknowledges and agrees that: (i) as between
Licensor on the one hand, and Yahoo and its Affiliates on the other,
Yahoo or the Affiliates own all right, title and interest in any Yahoo
Property and the Yahoo Brand Features; (ii) nothing in this Agreement
shall confer in Licensor any license or right of ownership in the Yahoo
Brand Features; and (iii) Licensor shall not now or in the future
contest the validity of the Yahoo Brand Features. No licenses are
hereby granted by Yahoo.
Section 8: Public Announcements and Co-branding Promotions.
The parties will cooperate to create any and all appropriate public
announcements relating to the relationship set forth in this Agreement. Neither
party shall make any public announcement regarding the existence or content of
this Agreement without the other party's prior written approval and consent.
Yahoo shall notify its users of the availability of Licensor Content via the
Content Pages and Yahoo Properties through text links, advertising banners and
other promotional activities ("Promotions"). The parties may agree to co-brand
such Promotions (e.g. "customize Yahoo Financial news to include headlines from
TheStreet.com"), in a manner and for a price that is mutually agreeable to the
parties.
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Section 9: Notice; Miscellaneous Provisions..
9.1 Notices. All notices, requests and other communications called for by
this agreement shall be deemed to have been given immediately if made
by telecopy or electronic mail (confirmed by concurrent written notice
sent first class U.S. mail, postage prepaid), if to Yahoo at 3420
Central Expressway, Santa Clara, CA 95051, Fax: (408) 731-3301
Attention: Vice President (e-mail: *****, with a copy to its General
Counsel *****, and if to Licensor at the physical and electronic mail
addresses set forth on the signature page of this Agreement, or to such
other addresses as either party shall specify to the other. Notice by
any other means shall be deemed made when actually received by the
party to which notice is provided.
Miscellaneous Provisions. This Agreement will bind and inure to the benefit of
each party's permitted successors and assigns. Neither party may assign this
Agreement, in whole or in part, without the other party's written consent;
provided, however, that: (i) either party may assign this Agreement without such
consent in connection with any merger, consolidation, any sale or assignment of
all or substantially all of such party's assets or any other transaction in
which more than fifty percent (50%) of such party's voting securities or
membership interests are transferred. Any attempt to assign this Agreement other
than in accordance with this provision shall be null and void. This Agreement
will be governed by and construed in accordance with the laws of the State of
California, without reference to conflicts of laws rules, and without regard to
its location of execution or performance. If any provision of this Agreement is
found invalid or unenforceable, that provision will be enforced to the maximum
extent permissible, and the other provisions of this Agreement will remain in
force. Neither this Agreement, nor any terms and conditions contained herein may
be construed as creating or constituting a partnership, joint venture or agency
relationship or any other form of legal association between the parties. No
failure of either party to exercise or enforce any of its rights under this
Agreement will act as a waiver of such rights. This Agreement and its Exhibits
are the complete and exclusive agreement between the parties with respect to the
subject matter hereof, superseding and replacing any and all prior agreements,
communications, and understandings, both written and oral, regarding such
subject matter. This Agreement may only be modified, or any rights under it
waived, by a written document executed by both parties. This Agreement may be
executed in any number of
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
9
<PAGE>
counterparts, all of which taken together shall constitute a single instrument.
Execution and delivery of this Agreement may be evidenced by facsimile
transmission.
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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.
YAHOO! INC. THESTREET.COM, INC.
By: /s/ Ellen Simonoff By: /s/ Brendon Amyot
------------------------------ ---------------------------------
Title: VP Business Development Title: VP General Manager - Consumer
-------------------------- ------------------------------
Address: 3420 Central Parkway Address: 2 Rector Street, 14th Floor
------------------------- ----------------------------
Santa Clara, CA 95051 NY, NY 10006
------------------------- ----------------------------
Telecopy: ***** Telecopy:
------------------------ ---------------------------
E-mail: ***** E-mail: *****
-------------------------- -----------------------------
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
11
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EXHIBIT A
LICENSOR BRAND FEATURES
TheStreet.com
TheStreet.com related logos
YAHOO BRAND FEATURES
Yahoo!
Yahoo related logos
12
<PAGE>
EXHIBIT B
LICENSOR CONTENT
Headlines (and related ticker symbols and URIs of full-text stories on
Licensor's own site) of stories relating to business, financial, industry and
technology news. Licensor Content shall include all TheStreet.com stories
EXCEPT those stories which are hosted on Yahoo!. The excluded content shall be:
Wrong!
View from TheStreet.com
Silicon Valley
Online Brokerage
FundWatch
The above list may be modified from time to time by the parties.
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<PAGE>
EXHIBIT C
Wire Transfer Instructions
Yahoo's Bank Information:
Institution Name: *****
Institution Address: *****
ABA: *****
Beneficiary Name: *****
Beneficiary Account Number: *****
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
14
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EXHIBIT D
THESTREET.COM INC. - SERVICE AND TRADEMARK GUIDELINES
When used in these guidelines, for ease of reference the term trademark refers
to both trademarks and service marks.
1. TheStreet.com trademarks must be used as adjectives, not nouns
Trademarks are adjectives, and should always be used with the generic term that
they modify. For example:
CORRECT: TheStreet.com services are excellent.
INCORRECT: TheStreet.com is the ideal service for your needs.
The above is the most important rule of trademark usage. The word "service", or
similar generic language (i.e. financial information service), should
immediately follow all TheStreet.com trademarks in each piece of advertising,
promotion or other written material. On occasion, the generic term may be
omitted where the immediate context makes it clear that a generic term is
intended, such as in repetitive uses of the trademark within a single paragraph
or section, but these exceptions should be used with care. The generic term
should always be used at the beginning of a piece and at significant points
subsequently. In addition, Intuit trademarks must not be used as possessives.
(This follows from the principle that trademarks are adjectives, not nouns). For
example:
CORRECT: The quality of TheStreet.com is outstanding.
INCORRECT: TheStreet.com quality is outstanding.
2. Retain the distinctive appearance of TheStreet.com trademarks without using
specialized type or logo forms.
TheStreet.com trademarks should always be presented in a distinctive, but non-
stylized fashion. Special typefaces/fonts should not be used, and Company logos
and typefaces cannot be used. This means that the marks must appear in a regular
typeface while retaining their distinctive capitalization and/or spacing. Marks
may also appear in all upper-case letters while retaining correct spacing. For
example:
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CORRECT: TheStreet.com service
INCORRECT: TheStreet.com service
3. Use appropriate status and ownership legends with TheStreet.com trademarks.
All TheStreet.com trademarks that are not registered should appear with the
super script TM. The appropriate legend must be used each time TheStreet.com
trademark is printed. (Please contact TheStreet.com if you need information on
the registration status of a particular trademark.) In addition, all written
documents, displays or advertisements which include TheStreet.com trademark must
contain the appropriate ownership legend, ideally at the beginning of the piece.
For example:
TheStreet.com and TheStreet.com logo are service marks of
TheStreet.com, Inc.
4. Do not use TheStreet.com trademarks in company names or on direct business
source identifiers.
TheStreet.com trademarks may not be used in company names or on direct business
source identifiers like stationery, business cards, and company signs unless
specifically authorized. These items identify the name of a business and, thus,
the source of its products or services. In order to avoid any possible confusion
with regard to the source of TheStreet.com services, no use of TheStreet.com
trademarks on these identifiers is allowed unless prior written approval is
obtained. (Of course, the use of TheStreet.com trademarks in detailed brochures,
certain advertisements, presentations and the like, is permitted as long as all
of the other guidelines contained herein are followed.)
5. Only TheStreet.com may use its trade name, trademark and logo trademark. No
one except TheStreet.com may use its name, trademark or logo trademark in
connection with the sale, provision or advertisement of any product or service.
The only use of its name that is permitted (in connection with selling products
or services) is to display the ownership legend for TheStreet.com trademarks, as
shown above.
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EXHIBIT 10.2
AMENDED AND RESTATED
THE STREET.COM, INC.
1998 STOCK INCENTIVE PLAN
SECTION 1. Purposes
The purpose of The Street.Com, Inc. Amended and Restated
1998 Stock Incentive Plan (the "Plan") is to enable The Street.Com, Inc. (the
"Company") and its Related Companies (as defined below) to attract, retain and
reward employees, directors and consultants and strengthen the existing
mutuality of interests between such persons and the Company's stockholders by
offering such persons an equity interest in the Company. For purposes of the
Plan, a "Related Company" means any corporation, partnership, joint venture or
other entity in which the Company owns, directly or indirectly, at least a 20%
beneficial ownership interest.
SECTION 2. Types of Awards
Awards under the Plan may be in the form of (i) Stock
Options; (ii) Restricted Stock; and/or (iii) Tax Offset Payments.
SECTION 3. Administration
3.1 The Plan shall be administered by the Compensation
Committee of the Company's Board of Directors (the "Board") or such other
committee of directors as the Board shall designate (the "Committee"), which
shall consist of not less than two directors. The members of the Committee
shall serve at the pleasure of the Board.
3.2 The Committee shall have the following authority with
respect to awards under the Plan: to grant awards; to adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as it
shall deem advisable; to interpret the terms and provisions of the Plan and
any award granted under the Plan; and to otherwise supervise the
administration of the Plan. In particular, and without limiting its authority
and powers, the Committee shall have the authority:
(a) to determine whether and to what extent any
award or combination of awards will be granted hereunder;
<PAGE>
(b) to select the employees, directors or
consultants to whom awards will be granted;
(c) to determine the number of shares of the common
stock of the Company (the "Stock") to be covered by each award
granted hereunder subject to the limitations contained herein;
(d) to determine the terms and conditions of any
award granted hereunder, including, but not limited to, any vesting
or other restrictions based on such performance objectives (the
"Performance Objectives") and such other factors as the Committee may
establish, and to determine whether the Performance Objectives and
other terms and conditions of the award are satisfied;
(e) to determine the treatment of awards upon an
award holder's retirement, disability, death, termination for cause
or other termination of employment or service;
(f) to determine pursuant to a formula or otherwise
the fair market value of the Stock on a given date; provided,
however, that if the stock is listed, fair market value of the Stock
on a given date shall be the mean between the highest and lowest
quoted selling price, regular way, of the Stock on the NASDAQ
National Market (or the principal exchange upon which the Stock is
listed), or if no such sale of Stock occurs on such date, the mean
between the high and low prices on the nearest trading date before
such date;
(g) to determine that amounts equal to the amount
of any dividends declared with respect to the number of shares
covered by an award (i) will be paid to the employee currently or
(ii) will be deferred and deemed to be reinvested or (iii) will
otherwise be credited to the employee, or that the employee has no
rights with respect to such dividends;
(h) to provide that the shares of Stock received as
a result of an award shall be subject to a right of first refusal,
pursuant to which the employee shall be required to offer to the
Company or its designee(s) any shares that the employee wishes to
sell, subject to such terms and conditions as the Committee may
specify;
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(i) to amend the terms of any award, prospectively
or retroactively; provided, however, that no amendment shall impair
the rights of the award holder without his or her written consent;
and
(j) to substitute new Stock Options for previously
granted Stock Options, or for options granted under other plans or
agreements, in each case including previously granted options having
higher option prices.
3.3 The Committee shall have the right to designate awards
as "Performance Awards." The grant or vesting of a Performance Award shall be
subject to the achievement of Performance Objectives established by the
Committee based on one or more of the following criteria, in each case applied
to the Company on a consolidated basis and/or to a business unit and which the
Committee may use as an absolute measure, as a measure of improvement relative
to prior performance, or as a measure of comparable performance relative to a
peer group of companies: sales, operating profits, operating profits before
interest expense and taxes, net earnings, earnings per share, return on
equity, return on assets, return on invested capital, total shareholder
return, cash flow, debt to equity ratio, market share, stock price, economic
value added, and market value added.
3.4 All determinations made by the Committee pursuant to the
provisions of the Plan shall be final and binding on all persons, including
the Company and Plan participants.
SECTION 4. Stock Subject to Plan
4.1 The total number of shares of Stock which may be issued
under the Plan shall be 7,581,818. Such shares may consist of authorized but
unissued shares or treasury shares.
4.2 To the extent a Stock Option terminates without having
been exercised, or shares awarded are forfeited, the shares subject to such
award shall again be available for distribution in connection with future
awards under the Plan. Shares of Stock equal in number to the shares
surrendered in payment of the option price, and shares of Stock which are
withheld in order to satisfy federal, state or local tax liability, shall not
count against the above limit, and shall again be available for grants under
the Plan.
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4.3 No employee shall be granted Stock Options, Restricted
Stock, or any combination thereof with respect to more than 500,000 shares of
Stock in any fiscal year (subject to adjustment as provided in Section 4.4).
No employee shall be granted a Tax Offset Payment in any fiscal year with
respect to more than the number of shares of Stock covered by awards granted
to such employee in such fiscal year.
4.4 In the event of any merger, reorganization,
consolidation, sale of substantially all assets, recapitalization, Stock
dividend, Stock split, spin-off, split-up, split-off, distribution of assets
or other change in corporate structure affecting the Stock, a substitution or
adjustment, as may be determined to be appropriate by the Committee or the
Board in its sole discretion, shall be made in the aggregate number of shares
reserved for issuance under the Plan, the number of shares as to which awards
may be granted to any individual in any fiscal year, the number of shares
subject to outstanding awards and the amounts to be paid by award holders or
the Company, as the case may be, with respect to outstanding awards; provided,
however, that no such adjustment shall increase the aggregate value of any
outstanding award.
SECTION 5. Eligibility
Employees, directors, and consultants of the Company or a
Related Company are eligible to be granted awards under the Plan. Only
employees are eligible to be granted Incentive Stock Options. The participants
under the Plan shall be selected from time to time by the Committee, in its
sole discretion, from among those eligible.
SECTION 6. Stock Options
6.1 The Stock Options awarded to employees under the Plan
may be of two types: (i) Incentive Stock Options within the meaning of Section
422 of the Code or any successor provision thereto; and (ii) Non-Qualified
Stock Options. To the extent that any Stock Option does not qualify as an
Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
6.2 Subject to the following provisions, Stock Options
awarded under the Plan shall be in such form and shall have such terms and
conditions as the Committee may determine:
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(a) Option Price. The option price per share of
Stock purchasable under a Stock Option shall be determined by the
Committee, and may be less than the fair market value of the Stock on
the date of the award of the Stock Option.
(b) Option Term. The term of each Stock Option
shall be fixed by the Committee.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. The Committee may
waive such exercise provisions or accelerate the exercisability of
the Stock Option at any time in whole or in part.
(d) Method of Exercise. Stock Options may be
exercised in whole or in part at any time during the option period by
giving written notice of exercise to the Company specifying the
number of shares to be purchased, accompanied by payment of the
purchase price. Payment of the purchase price shall be made in such
manner as the Committee may provide in the award, which may include
cash (including cash equivalents), delivery of shares of Stock
already owned by the optionee or subject to awards hereunder,
"cashless exercise", any other manner permitted by law determined by
the Committee, or any combination of the foregoing. If the Committee
determines that a Stock Option may be exercised using shares of
Restricted Stock, then unless the Committee provides otherwise, the
shares received upon the exercise of a Stock Option which are paid
for using Restricted Stock shall be restricted in accordance with
the original terms of the Restricted Stock award.
(e) No Stockholder Rights. An optionee shall have
neither rights to dividends or other rights of a stockholder with
respect to shares subject to a Stock Option until the optionee has
given written notice of exercise and has paid for such shares.
(f) Surrender Rights. The Committee may provide that
options may be surrendered for cash upon any terms and conditions set
by the Committee.
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(g) Non-transferability. Unless otherwise provided
by the Committee, (i) Stock Options shall not be transferable by the
optionee other than by will or by the laws of descent and
distribution, and (ii) during the optionee's lifetime, all Stock
Options shall be exercisable only by the optionee or by his or her
guardian or legal representative.
(h) Termination of Employment. Following the
termination of an optionee's employment with the Company or a
Related Company, the Stock Option shall be exercisable to the extent
determined by the Committee. The Committee may provide different
post-termination exercise provisions with respect to termination of
employment for different reasons. The Committee may provide that,
notwithstanding the option term fixed pursuant to Section 6.2(b), a
Stock Option which is outstanding on the date of an optionee's death
shall remain outstanding for an additional period after the date of
such death.
6.3 Notwithstanding the provisions of Section 6.2, no
Incentive Stock Option shall (i) have an option price which is less than 100%
of the fair market value of the Stock on the date of the award of the
Incentive Stock Option, (ii) be exercisable more than ten years after the date
such Incentive Stock Option is awarded, or (iii) be awarded more than ten
years after the effective date of the Plan specified in Section 13. No
Incentive Stock Option granted to an employee who owns more than 10% of the
total combined voting power of all classes of stock of the Company or any of
its parent or subsidiary corporations, as defined in Section 424 of the Code,
shall (A) have an option price which is less than 110% of the fair market
value of the Stock on the date of award of the Incentive Stock Option or (B)
be exercisable more than five years after the date such Incentive Stock Option
is awarded.
SECTION 7. Restricted Stock
Subject to the following provisions, all awards of
Restricted Stock to employees shall be in such form and shall have such terms
and conditions as the Committee may determine:
(a) The Restricted Stock award shall specify the
number of shares of Restricted Stock to be awarded, the price, if
any, to be paid by the recipient of the Restricted Stock and the date
or dates on which, or the conditions upon the satisfaction of which,
the Restricted Stock will vest. The
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grant and/or the vesting of Restricted Stock may be conditioned upon
the completion of a specified period of service with the Company or a
Related Company, upon the attainment of specified Performance
Objectives or upon such other criteria as the Committee may
determine.
(b) Stock certificates representing the Restricted
Stock awarded to an employee shall be registered in the employee's
name, but the Committee may direct that such certificates be held by
the Company or its designee on behalf of the employee. Except as may
be permitted by the Committee, no share of Restricted Stock may be
sold, transferred, assigned, pledged or otherwise encumbered by the
employee until such share has vested in accordance with the terms of
the Restricted Stock award. At the time Restricted Stock vests, a
certificate for such vested shares shall be delivered to the employee
(or his or her designated beneficiary in the event of death), free of
all restrictions.
(c) The Committee may provide that the employee
shall have the right to vote or receive dividends on Restricted
Stock. Unless the Committee provides otherwise, Stock received as a
dividend on, or in connection with a stock split of, Restricted
Stock shall be subject to the same restrictions as the Restricted
Stock.
(d) Except as may be provided by the Committee, in
the event of an employee's termination of employment before all of
his or her Restricted Stock has vested, or in the event any
conditions to the vesting of Restricted Stock have not been satisfied
prior to any deadline for the satisfaction of such conditions set
forth in the award, the shares of Restricted Stock which have not
vested shall be forfeited, and the Committee may provide that (i) any
purchase price paid by the employee shall be returned to the employee
or (ii) a cash payment equal to the Restricted Stock's fair market
value on the date of forfeiture, if lower, shall be paid to the
employee.
(e) The Committee may waive, in whole or in part,
any or all of the conditions to receipt of, or restrictions with
respect to, any or all of the employee's Restricted Stock.
SECTION 8. Tax Offset Payments
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The Committee may provide for a Tax Offset Payment by the
Company to an employee with respect to one or more awards granted under the
Plan. The Tax Offset Payment shall be in an amount specified by the Committee,
which shall not exceed the amount necessary to pay the federal, state, local
and other taxes payable with respect to the applicable award and the receipt
of the Tax Offset Payment, assuming that the employee is taxed at the maximum
tax rate applicable to such income. The Tax Offset Payment shall be paid
solely in cash.
SECTION 9. Tax Withholding
9.1 Each award holder shall, no later than the date as of
which the value of an award first becomes includible in such person's gross
income for applicable tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any federal, state, local
or other taxes of any kind required by law to be withheld with respect to the
award. The obligations of the Company under the Plan shall be conditional on
such payment or arrangements, and the Company (and, where applicable, any
Related Company), shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the
employee.
9.2 To the extent permitted by the Committee, and subject to
such terms and conditions as the Committee may provide, an employee may elect
to have the withholding tax obligation, or any additional tax obligation with
respect to any awards hereunder, satisfied by (i) having the Company withhold
shares of Stock otherwise deliverable to such person with respect to the award
or (ii) delivering to the Company shares of unrestricted Stock. Alternatively,
the Committee may require that a portion of the shares of Stock otherwise
deliverable be applied to satisfy the withholding tax obligations with respect
to the award.
SECTION 10. Amendments and Termination
The Plan is of unlimited duration. The Board may discontinue
the Plan at any time and may amend it from time to time. No amendment or
discontinuation of the Plan shall adversely affect any award previously
granted without the award holder's written consent. Amendments may be made
without stockholder approval except as required to satisfy regulatory
requirements.
SECTION 11. Change of Control
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11.1 In the event of a Change of Control, if so determined
by the Committee at the time of grant or by amendment (with the holder's
consent) of such grant:
(a) all outstanding Stock Options awarded under the
Plan shall become fully exercisable and vested; and
(b) the restrictions applicable to any outstanding
Restricted Stock awards under the Plan shall lapse and such shares
shall be deemed fully vested.
11.2 A "Change of Control" means the happening of any of the
following:
(a) the acquisition by any person or group deemed a
person under Sections 3(a)(9) and 13(d)(3) of the Securities Exchange
Act of 1934 (the "Exchange Act") (other than the Company and its
subsidiaries as determined immediately prior to that date) of
beneficial ownership, directly or indirectly (with beneficial
ownership determined as provided in Rule 13d-3, or any successor
rule, under the Exchange Act), of a majority of the total combined
voting power of all classes of stock of the Company having the right
under ordinary circumstances to vote at an election of the Board of
Directors of the Company, if such person or group deemed a person
prior to such acquisition was not a beneficial owner of at least five
percent (5%) of such total combined voting power of the Company;
(b) the election to the Board of Directors of the
Company of members as a result of which a majority of the Board of
Directors shall consist of persons who are not members of the Board
of Directors as of the date of grant;
(c) the date of approval by the stockholders of the
Company of an agreement providing for the merger or consolidation of
the Company with another corporation or other entity where (x)
stockholders of the Company immediately prior to such merger or
consolidation would not beneficially own following such merger or
consolidation shares entitling such stockholders to a majority of all
votes (without consolidation of the rights of any class of stock to
elect directors by a separate class vote) to which all stockholders
of the surviving corporation would be entitled in the election of
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<PAGE>
directors, or (y) where the members of the Board of Directors,
immediately prior to such merger or consolidation, would not,
immediately after such merger or consolidation, constitute a majority
of the board of directors of the surviving corporation; or
(d) the sale of all or substantially all of the
assets of the Company.
SECTION 12. General Provisions
12.1 If at any time the Committee determines that the
delivery of Common Stock under the Plan is or may be unlawful under the laws
of any applicable jurisdiction, the right to exercise any Stock Option or
receive any Restricted Stock shall be suspended until the Committee determines
that such delivery is lawful. The Company shall have no obligation to effect
any registration of qualification of the Common Stock under federal or state
laws.
12.2 Any person exercising a Stock Option or receiving
Restricted Stock shall make such representations (including representations to
the effect that such person will not dispose of the Common Stock so acquired
in violation of federal and state securities laws) and furnish such
information as may, in the opinion of counsel for the Company, be appropriate
to permit the Company to issue the Common Stock in compliance with applicable
federal and state securities laws. The Committee may refuse to permit the
exercise of such Stock Option or delivery of such Restricted Stock until such
representations and information have been provided.
12.3 In the event there is a stockholders agreement among
the Company and/or shareholders which agreement imposes restrictions on the
transfer of Common Stock, then, as a condition to the exercise of a Stock
Option or the delivery of Restricted Stock, the award holder may be required
by the Committee to execute appropriate documents making him or her a party to
such agreement. The Company may place an appropriate legend evidencing any
transfer restrictions on all shares of Common Stock issued under the Plan and
may issue stop transfer instructions in respect thereof.
12.4 Nothing set forth in this Plan shall prevent the Board
from adopting other or additional compensation arrangements. Neither the
adoption of the Plan nor any award hereunder shall confer upon any employee of
the Company, or of
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<PAGE>
a Related Company, any right to continued employment or service as a director
or consultant.
12.5 Determinations by the Committee under the Plan relating
to the form, amount, and terms and conditions of awards need not be uniform,
and may be made selectively among persons who receive or are eligible to
receive awards under the Plan, whether or not such persons are similarly
situated.
12.6 No member of the Board or the Committee, nor any
officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination or
interpretation taken or made with respect to the Plan, and all members of the
Board or the Committee and all officers or employees of the Company acting on
their behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company in respect of any such action, determination or
interpretation.
SECTION 13. Effective Date of Plan
The Plan shall be effective on May 6, 1998, subject to
approval by the Company's stockholders.
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<PAGE>
EXHIBIT 10.2(1)
AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED
THESTREET.COM, INC.
1998 STOCK INCENTIVE PLAN
This Amendment No. 1 to the Amended and Restated
TheStreet.com, Inc. 1998 Stock Incentive Plan (the "Plan") is hereby adopted
pursuant to Section 10 of the Plan. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Plan.
WHEREAS, TheStreet.com, Inc. (the "Company") has deter-
mined that it is in its best interest and that of its stockholders to
amend the Plan as set forth herein;
NOW, THEREFORE, the Plan is amended as follows:
A. The first sentence of Section 4.1 of the Plan is amended and
restated in its entirety as follows:
The total number of shares of Stock which may be issued under the
Plan shall be 4,400,000.
B. The first sentence of Section 4.3 of the Plan is amended and
restated in its entirety to read as follows:
No employee shall be granted Stock Options, Restricted Stock, or any
combination thereof with respect to more than 1,000,000 shares of
Stock in any fiscal year (subject to adjustment as provided in
Section 4.4).
Approved by action of the Board of Directors of the Company on March 25, 1999.
<PAGE>
Exhibit 10.3
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS DOCUMENT.
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
CONFIDENTIAL
INTERACTIVE SERVICES AGREEMENT
This agreement (the "Agreement"), effective as of April 16th, 1998 (the
"Effective Date"), is made and entered into by and between America Online, Inc.
("AOL"), a Delaware corporation, with its principal offices at 22000 AOL Way,
Dulles, Virginia 20166, and TheStreet.com, L.L.C. ("Interactive Content
Provider" or "ICP"), a limited liability corporation, with its principal offices
at Two Rector Street, New York, NY 10006 (each a "Party" and collectively the
"Parties").
INTRODUCTION
AOL and ICP each desires that AOL provide access to the ICP Internet
Site (as defined below) through the AOL Network (as defined below), subject to
the terms and conditions set forth in this Agreement. Defined terms used but not
defined in the body of this Agreement or in Exhibit C shall be as defined on
Exhibit B attached hereto.
TERMS
1. DISTRIBUTION; PROGRAMMING
1.1 Anchor Tenancy. Beginning on the Launch Date, ICP shall
receive anchor tenant distribution within the Personal Finance
channel (or any specific successor thereof) offered on the AOL
Service, as follows: AOL shall (a) continuously and
prominently place an agreed-upon ICP icon, symbol, name, logo
or banner (each, an "Anchor Tenant Button") on the "Active
Investor" screen (or any specific successor thereof), on which
ICP's Anchor Tenant Button shall be ***** Anchor Tenant
Buttons, and the "Investing Forums" screen (or any specific
successor thereof), on which ICP's Anchor Tenant Button shall
be ***** (based on relevant factors, e.g. ***** considered as
a whole and not individually) ***** any other anchor tenant's
***** which is continuously displayed on such screen. Such
Anchor Tenant Buttons shall each, through a uniform resource
locator ("URL"), link to the Welcome Mat on the World Wide
Web, or to some other mutually agreed-upon area(s) within the
AOL Network
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
<PAGE>
(i.e. in "Rainman"), (b) provide ICP with the keywords
"TheStreet" "TheStreet.com" and "TSC" which shall link to the
Welcome Mat, and (c) list the ICP Internet Site in AOL's
"Directory of Services" "Keywords" and "Find" features. Except
to the extent expressly described herein, the exact form,
placement and nature of the Anchor Tenant Button shall be
determined by AOL in it's ***** editorial discretion.
1.1.1 AOL further agrees to ***** communicate with ICP
during the Term regarding AOL's editorial needs *****
of integrating ICP's Content into the Personal
Finance channel. Such communication may result in the
promotion of ICP from the main screen of the Personal
Finance channel. Any such promotion shall be at the
sole discretion of AOL.
1.2 Content. The ICP Internet Site shall consist of the Licensed
Content described on Exhibit A hereto. In addition, the
Original Content described on Exhibit A shall be published
within the AOL Network (i.e. in Rainman, AOL's proprietary
publishing tool). ICP shall not authorize or actively
facilitate any third party to distribute any other Content of
ICP through the AOL Network absent AOL's prior written
approval; provided, however, that AOL acknowledges and
understands that ***** without ICP's ***** and AOL agrees that
ICP ***** as a result thereof. 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 A shall be subject to AOL's
prior written approval.
1.3 License. ICP hereby grants AOL a worldwide license to use,
market, store, distribute, display, communicate, perform,
transmit, and promote the ICP Internet Site and the Licensed
Content (or any portion thereof), solely for the personal use
of its AOL Members, through the AOL Network as AOL may
determine in its sole discretion, including without limitation
the right to integrate Content from the ICP Internet Site by
linking to specific areas on the ICP Internet Site, provided
that the presentation of any such Content on the AOL Network
shall conform with the specifications set forth on Exhibit D;
provided, however, *****.
1.4 Management. ICP shall, design, create, edit, manage, update,
and maintain the ICP Internet Site and the Licensed Content or
arrange for same on its behalf. Except as specifically
provided for herein, AOL shall have no obligations of any kind
with respect to the ICP Internet Site. ICP shall be
responsible for any hosting or communication costs associated
with the ICP Internet Site (including, without limitation, the
costs associated with (i) any agreed-upon direct connections
between the AOL
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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<PAGE>
Network and the ICP Internet Site or (ii) a mirrored version
of the ICP Internet Site, provided at the discretion of the
ICP. *****.
1.5 Carriage Fee. ICP shall pay AOL a one-time fee of ***** which
shall be due no later than thirty (30) days after the
Effective Date.
1.6 Impressions Guarantee. AOL shall provide ICP with at least
***** Impressions (as defined below) from ICP's presence on
the AOL Network (the "Impressions Guarantee"). For the
purposes of this Agreement ***** ICP's presence on an AOL
screen shall conform to the specifications set forth on
Exhibit D (each, an "ICP Presence"), provided that only
screens that contain a link to the ICP Internet Site or a
Welcome Mat (as defined herein) will count against the
Impressions Guarantee. In the event that the Impressions
Guarantee is not met during the Term, at AOL's option either
(a) the Term shall be extended for up to ***** months without
additional carriage fees payable by ICP *****, or (b) AOL
shall provide ICP with the remain ing Impressions in the form
of advertising space within the AOL Network of comparable
value ***** to the undelivered Impressions.
2. PROMOTION
2.1 Cooperation. Each Party shall cooperate with and reasonably
assist the other Party in supplying material for marketing and
promotional activities.
2.2 Interactive Site. During the Term, ICP shall include within
each ICP Interactive Site (a) a continuous ***** promotional
button/link for AOL appearing on the first screen of the ICP
Interactive Site, (b) a prominent "Try AOL" feature where
users can obtain promotional information about the AOL Network
and/or any ***** products and services available through the
AOL Network and, at AOL's option, download or order AOL's
then-current version of client software for the America
Online(Registered) brand service or other AOL products, such
as AOL's "Instant Messenger(Registered)"; (c) *****
promotion for the keywords associated with ICP's Internet
Site; and (d)*****.
2.3 Other Media. ICP shall ***** prominently and regularly promote
AOL and the ICP Internet Site's availability through the AOL
Service in publications, programs, features or other forms of
media over which ICP exercises *****.
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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<PAGE>
2.4 Keyword Promotion. In any instances when ICP makes promotional
reference to an ICP Interactive Site, including any listings
of the applicable "URL(s)" for such web site(s) (each a "Web
Reference"), *****.
2.5 Preferred Access Provider.
2.5.1 *****
3. REPORTING
3.1 Usage and Other Data. AOL shall make available to ICP a
monthly report specifying for the prior month aggregate usage
and Impressions with respect to ICP's presence on the AOL
Network. ICP will supply AOL with monthly reports which
reflect total daily Impressions by AOL Members to the ICP
Internet Site during the prior month and the number of and
dollar value associated with the transactions involving AOL
Members at the ICP Internet Site during the period in
question. ICP shall also provide AOL with "click-through" data
with respect to the promotions specified in Section 2.
3.2 Promotional Commitments. ICP shall provide to AOL a monthly
report document ing ICP's compliance with any promotional
commitments undertaken pursuant to this Agreement which report
shall be in the form attached as Exhibit F hereto.
3.3 Payment Schedule. Except as otherwise specified herein, each
Party agrees to pay the other Party all amounts received and
owed to such other Party as described herein on a quarterly
basis within thirty (30) days of the end of the quarter in
which such amounts were collected by such Party. The first
quarter for which payment is to be made shall (i) begin on the
first day of the month following the month of full execution
of Agreement and (ii) include the portion of the month of
execution following the Effective Date (unless the Agreement
was executed on the first day of a month, in which case the
quarter shall be deemed to begin on the first day of such
month).
4. ADVERTISING AND MERCHANDISING
4.1 Advertising Sales. Except as may be specifically provided
below, 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
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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<PAGE>
any AOL forms or pages preceding or framing the ICP Internet
Site). The specific advertising inventory within any such AOL
forms or pages shall be as reasonably determined by AOL.
4.2 Live Event Advertisements. With respect to the live event
programming provided to AOL hereunder and specified on Exhibit
A.2 (the "Live Event Programming"), AOL shall have the
exclusive right to license or sell promotions, advertisements,
links, pointers or similar services or rights in or through
the area for any Live Event Programming ("Live Event
Advertisements"). AOL shall pay ICP ***** of the Advertising
Revenues generated by AOL or its agents with respect to Live
Event Advertisements.
4.3 Original Content Advertisements. With respect to the original
content provided to AOL hereunder and specified on Exhibit A,
(the "Original Content"), AOL hereby grants ICP the right to
license or sell promotions, advertisements, links, pointers or
similar services or rights in or through the area for any
Original Content including ***** associated with the ICP
Internet Site ("Original Content Advertisements" or "AOL
Advertisements"), subject to (i) each Original Content
Advertisement being in compliance with AOL's advertising
policies referred to herein and (ii) *****. ICP shall pay AOL
***** of the Advertising Revenues generated by ICP or its
agents with respect to Original Content Advertisements.
4.4 Advertising Policies. Any AOL Advertisements sold by ICP or
its agents shall be subject to AOL's then-standard advertising
policies, a copy of which shall be furnished to ICP *****
during the Term. 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 steps necessary
to ensure that any AOL Advertisement sold by ICP complies with
all applicable federal, state and local laws and regulations.
To the extent ICP sells an AOL Advertisement as part of an
advertising package including multiple placement locations,
ICP shall allocate the payment for such advertising package
between or among such locations in an equitable fashion,
*****.
4.5 Interactive Commerce. Any merchandising on the ICP Internet
Site shall be subject to (i) the then-current requirements of
AOL's merchant certification program and (ii) ICP implementing
sufficient procedures to protect the security of all
merchandising on the site (i.e., ICP shall as of the Effective
Date use 40-bit SSL technology and, if requested by AOL,
128-bit SSL).
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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<PAGE>
4.5.1 Subscriptions. AOL Members shall receive a *****
discount on any subscriptions to the ICP Internet
Site during the term of this Agreement.
5. CUSTOMIZED LINKED INTERACTIVE SITE
5.1 Performance.
5.1.1 Generally. ICP shall ***** optimize the ICP Internet
Site according to AOL specifications and guidelines
(which may currently be found at keyword:
"Webmaster", and/or at *****) with the objective of
ensuring that (i) the functionality and features
within the ICP Internet Site are optimized for the
client software then in use by a majority of AOL
Members as notified to ICP by AOL and (ii) the forms
used in the ICP Internet Site are designed and
populated in a manner intended to minimize delays
when AOL Members attempt to access such forms. ICP
will use reasonable commercial efforts to ensure that
the performance and availability of the ICP Internet
Site (a) is monitored on a continuous, 24/7 basis and
(b) remains competitive in all material respects with
the performance and availability of other similar
sites based on similar form technology. It shall be
the responsibility of AOL to inform ICP of the
specific AOL client software version then in use by a
majority of AOL Members if and when it is determined,
in AOL's reasonable discretion, that the ICP Internet
Site is not optimized for such client software.
5.1.2 Specific.
(a) ICP shall design the ICP Internet Site to support
the Windows version of the Microsoft Internet
Explorer 3.0 browser, and make commercially
reasonable efforts to support all other AOL browsers
listed at: *****
(b) ICP shall configure the server from which it
serves the ICP Internet Site to examine the HTTP
User-Agent field in order to identify the AOL
User-Agents listed at: ***** (the "AOL User-Agents").
(c) ICP shall design its web site to support HTTP 1.0
or later protocol as defined in RFC 1945 (available
at http://ds.internic.net/rfc/rfc1945.text) and to
adhere to AOL's parameters for refreshing cached
information listed at *****.
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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<PAGE>
(d) AOL reserves the right to review the ICP Internet
Site and/or have its technical personnel meet with
ICP technical personnel with respect to the ICP
Internet Site with the objective of ensuring that
such site is compatible with AOL's then-available
client and host software and the AOL Network.
5.2 Customization. ICP shall customize the ICP Internet Site for
AOL Members as follows:
(a) upon AOL's request create a customized,
co-branded home page for the AOL audience for each
area on the ICP Internet Site linked to and/or from
the AOL Network on a continuous basis (each a
"Welcome Mat"), which Welcome Mat(s) shall be subject
to AOL approval, not to be unreasonably withheld;
(b) ensure that AOL Members linking to the ICP
Internet Site do not receive advertisements,
promotions or links for any entity which AOL has
notified ICP, or shall subsequently notify ICP in
writing, is in competition with AOL or which AOL has
notified ICP, or shall subsequently notify ICP in
writing, is otherwise in violation of AOL's
then-standard advertising policies or exclusivities;
and
(c) provide continuous navigational ability for AOL
Members to return to an agreed-upon point on the AOL
service (for which AOL shall supply the proper
address) from the ICP Internet Site (e.g., the point
on the AOL service from which the ICP Internet Site
is linked), which, at AOL's option, may be satisfied
through the use of a hybrid browser format.
5.3 Links on ICP Internet Site. The Parties will work together on
mutually acceptable links (including links back to AOL) within
the ICP Internet Site in order to attempt to create a robust
and engaging AOL member experience. ICP shall take reasonable
efforts to encourage that AOL traffic is generally either kept
within the ICP Internet Site or channeled back into the AOL
Network. To the extent that AOL notifies ICP in writing that,
in AOL's reasonable judgment, links from such site cause an
excessive amount of AOL traffic to be diverted outside of
such site and the AOL Network in a manner that has a
detrimental effect on the traffic flow of the AOL audience,
then ICP shall promptly take reasonable steps to attempt to
reduce the number of links out of such site(s).
5.4 Hosting Capacity. ICP will provide all computer servers,
routers, switches and associated hardware in an amount
reasonably necessary to meet anticipated traffic demands,
adequate power supply (including generator back-up) and HVAC,
adequate insurance, adequate service contracts and all
necessary equipment racks, floor
7
<PAGE>
space, network cabling and power distribution to support the
ICP Internet Site. AOL shall provide ICP with reasonable, best
available estimates of anticipated traffic demands associated
with the AOL Network and ICP's performance hereunder, which
ICP will rely upon in connection with the foregoing
obligation.
6. TERM AND TERMINATION.
6.1 Term. Unless earlier terminated as set forth herein, the
initial term of this Agreement shall be one (1) year from the
Effective Date. Upon termination of this Agreement, AOL shall
have the option, for a period equal to the initial term, to
use one or more ICP keywords and/or text-based links from the
AOL Network to the ICP Internet Site. This Agreement may be
extended by mutual written agreement of the Parties.
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.
7. TERMS AND CONDITIONS. To the extent not otherwise inconsistent with the
above terms and conditions of this Agreement the legal terms and
conditions set forth on Exhibit C attached hereto are hereby made a
part of this Agreement.
8
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the Effective Date.
AMERICA ONLINE, INC. THESTREET.COM, L.L.C.
By: /s/ Barry Schuler By: /s/ Brendan Amyot
--------------------------------------- ------------------------------
Print Name: Barry Schuler Print Name: Brendan Amyot
------------------------------ -----------------------
Title: President, AOL Interactive Services Title: Chief Operating Officer
----------------------------------- ---------------------------
Date: 4/16/98 Date: April 16, 1998
----------------------------------- ---------------------------
Tax ID/EIN#:
---------------------
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<PAGE>
EXHIBIT A
Description of Content
Content appearing at URL: http://www.TheStreet.com, and original content
appearing on AOL as follows:
1. Overview/Purpose of Site:
"TheStreet.com is an online financial publication dedicated to
providing investors with timely, insightful and irreverent
reporting" ...quote from thestreet.com website.
2. Categories of Programming:
- Original Content, to be published in Rainman:
o ***** Wrong! column provided on a *****
o ***** Herb Greenberg columns *****
o ***** Kansas columns *****
o ***** Options column *****
o ***** Mutual fund columns *****
o AOL version of daily TSC bulletin
o Archives
- Live Event Programming, to be published in Rainman:
o Two live chats per month (one with Jim Cramer and one
with Herb Greenberg)
o ***** auditorium with TSC staff: to start with *****
and gradually move to ***** as we get additional
staff in place.
o Live Event Transcripts and Archives of Transcripts
3. Links:
www.thestreet.com
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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<PAGE>
EXHIBIT B -- DEFINITIONS
DEFINITIONS. The following definitions shall apply to this Agreement:
Advertising Revenues. Aggregate amounts collected plus the fair market value of
any other compensation received (such as barter advertising) by a party to this
Agreement or its agents, as the case may be, arising from the license or sale of
Advertisements, less applicable Advertising Sales Commissions; provided that, in
order to ensure that ***** receives fair value in connection with its
Advertisements, ***** shall be deemed to have received no less than the
Advertising Minimum in instances when ***** makes an Advertisement available to
a third party at a cost below the Advertising Minimum.
*****
Advertising Sales Commission. In the case of an AOL Advertisement, (i) actual
amounts paid as commission to third party agencies in connection with sale of
the Advertisement or (ii) *****, in the event the Party has sold the AOL
Advertisement directly and will not be deducting any third party agency
commissions.
AOL Advertisements. In the case of AOL, exclusive AOL Network and Live Event
Advertisements and in the case of ICP, exclusive Original Content
Advertisements.
AOL Service. The narrow-band U.S. version of the America Online(R) brand
service, specifically excluding (a) AOL.com or any other AOL Interactive Site,
(b) the international versions of an America Online service (e.g., AOL Japan),
(c) ***** "AOL NetFind(Trademark)," "AOL Instant Messenger" or any similar
independent AOL product or service which may be offered by, through or with the
U.S. version of the America Online(Registered) brand service, (d) any
programming or content area offered by or through the U.S. version of the
America Online(Registered) brand service over which AOL does not exercise
substantial operational control (including, without limitation, Content areas
controlled by ***** (e.g., *****), Content areas controlled by other information
providers and member-created Content areas), (e) any yellow pages, white pages,
classifieds or other search, directory or review services or Content offered by
or through the U.S. version of the America Online(Registered) brand service, (f)
any property, feature, product or service which AOL or its affiliates may
acquire subsequent to the Effective Date and (g) any other version of an America
Online service which is materially different from the narrow-band U.S. version
of the America Online brand service, by virtue of its branding, distribution,
functionality, Content and services, including, without limitation, any
co-branded version of the service and any version distributed through any
broadband distribution platform or through any platform or device other than a
desktop personal computer.
Affiliate. Any agent, distributor or franchisee, or an entity
in which a party holds at least a ***** equity interest.
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) and the
total appearance and impression substantially formed by the combination,
coordination and interaction of these elements.
AOL Member(s). Authorized users of the AOL Network, including any sub-accounts
using the AOL Network under an authorized master account.
AOL Network. (i) The AOL Service and (ii) any other product or service owned,
operated, distributed or autho rized to be distributed by or through AOL or its
Affiliates worldwide through which such party elects to offer the ICP Internet
Site (which may include, without limitation, AOL-related Internet sites,
"offline" information browsing products, international versions of the AOL brand
service, or Compuserve).
Confidential Information. Any information relating to, available to or disclosed
in the course of the Agreement, which is labeled "Confidential", or should be
reasonably understood to be, confidential or proprietary to the disclos-
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
11
<PAGE>
ing Party, including, but not limited to, the material terms of this Agreement,
information about AOL Members or ICP Members or subscribers, technical processes
and formulas, source codes, product designs, sales, cost and other unpublished
financial information, product and business plans, projections and marketing
data. "Confi dential Information" shall not include information (a) already
lawfully known to or independently developed by the receiving Party free of any
restriction, (b) disclosed in published materials through no wrongful act or
breach of this Agreement, (c) generally known to the public, (d) lawfully
obtained from any third party without restriction or (e) required to be
disclosed by law.
Content. Text, images, video, audio (including, without limitation, music used
in time relation with text, images, or video), and other data, products,
services, advertisements, promotions, links, pointers, technology and software.
ICP Interactive Site. Any interactive site or area which is managed, maintained
or owned by ICP or its agents or to which ICP provides and/or licenses
information, content or other materials, including, by way of example and
without Stations (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 Microsoft's proposed
"Active Desktop."
ICP Internet Site. The Internet site and Content, cur rently located at
URL:http://www.TheStreet.com, which is managed, maintained or owned by ICP or
its agents or to which ICP licenses information, content or other materials.
Impression. User exposure to the page containing the applicable Promotion, as
such exposure may be reasonably determined and measured by the reporting Party
in accordance with its standard methodologies and protocols which are
reasonably measurable.
Launch Date. The later of (i) the Effective Date, or (ii) one week after the ICP
Internet Site has been approved by the web operations division of AOL, which
approval shall not be unreasonably withheld.
Licensed Content. All Content provided by ICP or its agents through the AOL
Network in accordance with the terms of this Agreement.
Term. The period beginning on the Effective Date and ending upon the expiration
or earlier termination of the Agreement.
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EXHIBIT C -- STANDARD LEGAL TERMS AND CONDITIONS
I. AOL NETWORK
Content. ICP represents and warrants that all Licensed Content (i) does and will
conform to AOL's applicable Terms of Service, the terms of this Agreement and
any other standard, written AOL policy ***** (ii) ***** does not and will not
infringe on or violate any copyright, trademark, U.S. patent or any other third
party right, including without limitation, any music performance or other music
related rights, and (iii) does not and will not contain any Content which
violates any applicable law or regulation (collectively, the "Rules"). In the
event that AOL notifies ICP in writing that any such Content, as reasonably
determined by AOL, does not comply or adhere to the Rules, then ICP shall use
all reasonable commercial and technically feasible efforts to block access by
AOL Members to such Content. In the event that ICP cannot do so, then ICP shall
provide AOL prompt written notice of such fact. AOL may then at its option,
either (i) restrict access from the AOL Network to the Content in question using
technology available to AOL or (ii) in the event access cannot be restricted
request ICP to remove any such Content until such time as the Content in
question is no longer displayed. ICP will cooperate with AOL's reason able
requests to the extent AOL elects to implement any such access restrictions.
Compliance with AOL Policies. Any demands by ***** upon ***** for compliance
with the Rules, as stated above, shall be subject to one of the following: (i)
***** is not in compliance with the Rules, together with delivery of a ***** of
such then-standard applicable ***** Policy or Rule to *****, or (ii) the mutual
agreement of the Parties. Any written communication from ***** to ***** which
states an ***** Policy or Rule, whether via e-mail, fax, or hard-copy delivery,
shall be considered a ***** for the purposes of the Agreement.
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
associated with the Licensed Content (including, without limitation, as
currently specified in Exhibit A) in a manner that substantially modifies the
nature of the placements for ICP described in Section 1.1 in an adverse fashion,
AOL will work with ICP in good faith to provide ICP with a comparable package of
placements which are reasonably satisfactory to ICP and which comes closest to
the original intention of the parties, consistent with the provisions of this
Agreement.
Compliance with Laws/Contests. ***** shall take all steps necessary to ensure
that its activities and performance under this Agreement including any contest,
sweepstakes or similar promotion conducted or promoted through the ICP Internet
Site (a "Contest") complies with all applicable federal, state and local laws
and regulations. ICP shall provide AOL with (i) at least thirty (30) days' prior
written notice of any Contest and (ii) upon AOL's request an opinion from ICP's
counsel confirming that the Contest complies with all applicable federal, state
and local laws and regulations.
AOL Look and Feel. ICP acknowledges and agrees that AOL shall own all right,
title and interest in and to the AOL Look and Feel. In addition, AOL shall
retain editorial control over the portions of the AOL pages and forms which
frame the ICP Internet Site (the "AOL Frames"). AOL may, at its discretion,
incorporate navigational icons, links and pointers or other Content into such
AOL Frames; provided, however, that AOL may not alter, modify, substantively
change or otherwise restructure or revise the Licensed Content, and AOL shall
indemnify and hold ICP harmless from and against any and all liabilities,
losses, damages, costs and expenses (including reasonable attorneys' fees)
associated with any claim or action brought by a third party as a result of AOL
in this regard. Notwith standing the foregoing, AOL shall be entitled to extract
portions of the Original Content and Live Event Program ming, with attribution
to ICP, provided that such extraction does not substantively alter the meaning
of same.
Operations. AOL shall be entitled to request ***** changes, with associate
documentation, to the ICP Internet Site to the extent such site will in AOL's
good faith judgment adversely affect operations of the AOL Network and ICP shall
***** effect such changes.
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***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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Classifieds. ICP shall not implement or promote any classifieds listing features
through the Welcome Mat(s) without AOL's prior written approval. Such approval
may be conditioned upon, among other things, ICP's conformance with any
then-applicable servicewide technical or other standards related to online
classifieds.
Duty to Inform. Both parties shall promptly inform the other of any claim,
demand or liability of or against one party and/or its Affiliates by any third
party, which may have an adverse effect on the other party.
Response to Questions/Comments; Customer Service. ICP shall respond promptly and
professionally to questions, comments, complaints and other reasonable requests
regarding the ICP Internet Site by AOL Members or on request by AOL, and shall
cooperate and assist AOL in promptly answering the same.
Statements through AOL Network. ICP shall not make, publish, or otherwise
communicate through the AOL Network any deleterious remarks concerning AOL or
its Affiliates, directors, officers, employees, or agents (including, without
limitation, AOL's business projects, business capabilities, performance of
duties and services, or finan cial position) which remarks are based on the
relationship established by this Agreement or information exchanged hereunder.
This section is not intended to limit good faith editorial statements made by
ICP based upon publicly available information, or information developed by ICP
independent of its relationship with AOL, its employees and agents.
Production Work. In the event that ICP requests any AOL production assistance,
ICP shall work with AOL to develop detailed production plans for the requested
production assistance (the "Production Plan"). Following receipt of the final
Production Plan, AOL shall notify ICP of (i) AOL's availability to perform the
requested production work, (ii) the proposed fee or fee structure for the
requested production and maintenance work and (iii) the estimated development
schedule for such work. To 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 both 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, or made available through an AOL keyword). 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, acting reason ably
and in good faith.
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 associ ated with its chosen training and support
package. In addition, ICP will pay travel and lodging costs associated with its
participation in any AOL training programs (including AOL's travel and lodging
costs when training is conducted at ICP's offices).
Launch Date. In the event that any terms contained herein relate to or depend on
the launch date of the online area or other property contemplated by this
Agreement which launch date is later than the Effective Date, then it is the
intention of the Parties to record such launch date in a written instrument
signed by both Parties promptly following such launch date; provided that, in
the absence of such a written instrument, the launch date shall be as reasonably
determined by AOL based on the information available to AOL.
Keywords. Any "keywords" on the AOL Service to be granted to ICP by AOL
hereunder shall be (i) subject to availability and (ii) limited to ICP's company
name, service marks, trademarks, trade names and/or brand names. AOL reserves
the right to revoke at any time ICP's use of any "keywords" which are not
registered trademarks of ICP.
II. TRADEMARKS
Trademark License. In designing and implementing any marketing, advertising,
press releases or other promotional materials related to this Agreement and/or
referencing the other Party and/or its trade names, trademarks and service marks
(the "Promotional Materials") and subject to the other provisions contained
herein, ICP shall be entitled to use the following trade names, trademarks and
service marks of AOL: the "America Online(R)" brand service, "AOL(TM)"
service/software and AOL's triangle logo; and AOL and its Affiliates shall be
entitled to use the trade names, trademarks and service marks of ICP
(collectively, together with the AOL marks listed above, the "Marks") solely in
connection with the permitted Promotion and Licensed Content hereunder; provided
that each Party: (i) does not create a unitary composite mark involving a Mark
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of the other Party without the prior written approval of such other Party and
(ii) displays symbols and notices clearly and sufficiently indicating the
trademark status and ownership of the other Party's Marks in accordance with
applicable trademark law and practice.
Rights. Each Party acknowledges that its utilization of the other Party's Marks
will not create in it nor will it represent it has, any right, title or interest
in or to such Marks other than the licenses expressly granted herein. Each Party
agrees not to do anything contesting or impairing the trademark rights of the
other Party.
Quality Standards. Each Party agrees that the nature and quality of its products
and services supplied in connection with the other Party's Marks shall conform
to quality standards communicated in writing by the other Party for use of its
trademarks. Each Party agrees to supply the other Party, upon request, with a
reasonable number of samples of any Materials publicly disseminated by such
Party which utilize the other Party's Marks. Each Party shall comply with all
applicable laws, regulations and customs and obtain any required government
approvals pertaining to use of the other Party's Marks.
Promotional Materials/Press Releases. Each Party will submit to the other Party,
for its prior written approval, which shall not be unreasonably withheld or
delayed, any Promotional Materials; provided, however, that after initial public
announcement of the business relationship between the Parties in accordance with
the approval and other requirements contained herein, either Party's subsequent
factual reference to the existence of a business relationship between AOL and
ICP, including, without limitation, the availability of the Licensed Content
through the AOL Network, or use of screen shots relating to the distribution
under this Agreement (so long as the AOL Network is clearly identified as the
source of such screen shots) for promotional purposes shall not require the
approval of the other Party. Once approved, the Promotional Materials may be
used by a Party and its affiliates for the purpose of promoting the distribution
of the Licensed Content through the AOL Network and reused for such purpose
until such approval is withdrawn with reasonable prior notice. In the event such
approval is withdrawn, existing inventories of Promotional Materials may be
depleted, but not to exceed 30 days.
Live Event Transcripts. ICP may make available on ICP's Internet Site any
transcripts from an ICP/AOL Live Event ("Live Event Transcripts"), without the
prior approval of AOL, so long as the Live Event Transcripts are clearly and
conspicuously identified as having originated on the AOL Service, together with
appropriate attribution and/or references to ICP.
Infringement Proceedings. Each Party agrees to promptly notify the other Party
of any unauthorized use of the other Party's Marks of which it has actual
knowledge. Each Party shall have the sole right and discretion to bring
proceedings alleging infringement of its Marks or unfair competition related
thereto; provided, however, that each Party agrees to provide the other Party,
at such other Party's expense, with its reasonable cooperation and 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) to the best of
its knowledge 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 will
take reasonable steps, at least substantially equivalent to the steps it takes
to protect its own proprietary information, during the term of this Agreement,
and for a period of three years following expiration or termination of this
Agreement to prevent the duplication or disclosure of Confidential Information
of the other Party, other than by or to its employees or agents who must have
access to such Confidential Information to perform such Party's obligations
hereunder, who will each agree to comply with this section. Notwithstanding the
foregoing, either Party may
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issue a press release or other disclosure containing Confidential Information
without the consent of the other Party, to the extent such disclosure is
required by law, rule, regulation or government or court order. In such event,
the disclosing Party will provide at least five (5) business days prior written
notice of such proposed disclosure to the other Party. Further, in the event
such disclosure is required of either Party under the laws, rules or regulations
of the Securities and Exchange Commission or any other applicable governing
body, such Party will (i) redact mutually agreed-upon portions of this Agreement
to the fulled extent permitted under applicable laws, rules and regulations and
(ii) submit a request to such governing body that such portions and other
provisions of this Agreement receive confidential treatment under the laws,
rules and regulations of the Securities and Exchange Commission or otherwise be
held in the strictest confidence to the fullest extent permitted under the
laws, rules or regulations of any other applicable governing body.
V. RELATIONSHIP WITH CUSTOMERS
Solicitation of Subscribers. During the Term and for the ***** period following
the expiration or termination of this Agreement, ***** will use the information
available or obtained as a result of this Agreement to (i) solicit or
participate in the solicitation of AOL Members ***** when that solicitation is
for the benefit of any entity (including a party hereunder) which could
reasonably be construed to be or become in competition with ***** or (ii)
promote any services which could reasonably be construed to be in competition
with services of or available through *****, including, but not limited to,
services available through the Internet. ***** may send any unsolicited e-mail
communications to the ***** AOL Members *****, 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 *****, as the case
may be, has either (i) purchased Products or services or Content from ***** or
(ii) voluntarily provided information to ***** 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. In any commercial e-mail
communications to AOL Members *****, as applicable, which are otherwise
permitted hereunder, the sending party shall provide the recipient with a
prominent and easy means to "opt-out" of receiving any future commercial e-mail
communications from said party.
Collection of Member Information. ***** is prohibited from collecting ICP
Subscriber or AOL Member screennames, as applicable, from public or private
areas of the AOL Network, the ICP Internet Site, ICP Interactive Site or
otherwise, except as specifically provided below. ***** shall ensure that any
survey, questionnaire or other means of collecting information including,
without limitation, requests directed to specific screennames and automated
methods of collecting screennames (an "Infor mation 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 ***** in writing during the
Term and which have been provided to the other party in writing (the "Privacy
Policies"). Each Information Request shall clearly and conspicuously specify to
the AOL Members *****, as applicable, the purpose for which Member Information
collected through the Information Request shall be used (the "Specified
Purpose").
Use of Member Information. ***** shall restrict use of the Member Information
collected through an Information Request to the Specified Purpose. In no event
shall ***** (i) provide names, screennames, addresses or other identifying
information ("Member Information") to any third party (except to the extent
specifically (a) permitted under the Privacy Policies or applicable Membership
or Subscription Agreements 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."
E-mail Newsletters. Any e-mail newsletters sent to AOL Members by ICP or its
agents shall (i) be subject to AOL's policies on use of the e-mail
functionality, including but not limited to AOL's policy on unsolicited bulk
e-mail, (ii) be sent only to AOL Members requesting to receive such newsletters,
i.e. as a result of subscribing to ICP's Internet Site, (iii) not contain
Content which violates AOL's Terms of Service, and (iv) not contain any
advertisements,
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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marketing or promotion for any other Interactive Services Provider.
VI. TREATMENT OF CLAIMS
Liability. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
(EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES),
ARISING FROM BREACH OF OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT, THE USE
OF OR INABILITY TO USE THE AOL NETWORK OR ANY OTHER PROVISION OF THIS
AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE, OR ANTICIPATED PROFITS
OR LOST BUSINESS (COLLECTIVELY, "DISCLAIMED DAMAGES"); PROVIDED THAT EACH PARTY
SHALL REMAIN LIABLE TO THE OTHER PARTY TO THE EXTENT ANY DISCLAIMED DAMAGES ARE
CLAIMED BY A THIRD PARTY AND ARE SUBJECT TO INDEMNIFICATION BELOW. EXCEPT AS
PROVIDED BELOW IN THE "INDEMNITY" SECTION, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER PARTY FOR MORE THAN THE AGGREGATE AMOUNTS PAYABLE HEREUNDER IN THE YEAR IN
WHICH LIABILITY ACCRUED; PROVIDED THAT EACH PARTY SHALL REMAIN LIABLE FOR THE
AGGREGATE AMOUNT OF ANY PAYMENT OBLIGATIONS OWED TO THE OTHER PARTY UNDER THE
PROVISIONS OF THIS AGREEMENT.
No Additional Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT,
NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS, ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND WHATSOEVER, AND
SPECIFICALLY 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, EACH PARTY SPECIFICALLY
DISCLAIMS ANY WARRANTY REGARDING THE PROFITABILITY OR OTHER FINANCIAL
IMPLICATIONS OF AOL NETWORK OR THE ICP INTERNET SITE.
Indemnity. Each Party will defend, indemnify, save and hold harmless the other
Party and the officers, directors, agents, affiliates, distributors, franchisees
and employees of the other Party from any and all third party claims, demands,
liabilities, costs or expenses, including reasonable attorneys' fees
("Liabilities"), resulting from the indemnifying Party's material breach of any
duty, represen tation, or warranty of this Agreement.
If a Party entitled to indemnification hereunder (the "Indemnified Party")
becomes aware of any matter it believes is indemnifiable hereunder involving any
claim, action, suit, investigation, arbitration or other proceeding against the
Indemnified Party by any third party (each an "Action"), the Indemnified Party
shall give the other Party (the "Indemnifying Party") prompt written notice of
such Action. Such notice shall (i) provide the basis on which indemnification is
being asserted and (ii) be accompanied by copies of all relevant pleadings,
demands, and other papers related to the Action and in the possession of the
Indemnified Party. The Indemnifying Party shall have a period of ten (10) days
after delivery of such notice to respond. If the Indemnifying Party elects to
defend the Action or does not respond within the requisite ten (10) day period,
the Indemnifying Party shall be obligated to defend the Action, at its own
expense, and by counsel reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall cooperate, at the expense of the Indemnifying Party,
with the Indemnifying Party and its counsel in the defense and the Indemnified
Party shall have the right to participate fully, at its own expense, in the
defense of such Action. If the Indemnifying Party responds within the required
ten (10) day period and elects not to defend such Action, the Indemnified Party
shall be free, without prejudice to any of the Indemnified Party's rights
hereunder, to compromise or defend (and control the defense of) such Action. In
such case, the Indemnifying Party shall cooperate, at its own expense, with the
Indemnified Party and its counsel in the defense against such Action and the
Indemnifying Party shall have the right to participate fully, at its own
expense, in the defense of such Action. Any compromise or settlement of an
Action shall require the prior written consent of both Parties hereunder, such
consent not to be unreasonably withheld or delayed.
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.
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Acknowledgment. AOL AND ICP EACH ACKNOWL EDGE THAT THE PROVISIONS OF THIS AGREE
MENT WERE NEGOTIATED TO REFLECT AN IN FORMED, 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. ARBITRATION
(a) The Parties shall act in good faith and use commercially reasonable efforts
to promptly resolve any claim, dispute, claim, controversy or disagreement (each
a "Dispute") between the Parties or any of their respective subsidiaries,
affiliates, successors and assigns under this Agreement or any document executed
pursuant to this Agreement. If the Parties cannot resolve the Dispute within
such timeframe, the Dispute shall be submitted to the Management Committee for
resolution. For ten (10) days after the Dispute was submitted to the Management
Committee, the Management Committee shall have the exclusive right to resolve
such Dispute; provided further that the Management Committee shall have the
final and exclusive right to resolve Disputes arising from any provision of the
Agreement which expressly or implicitly provides for the Parties to reach mutual
agreement as to certain terms. "Management Committee" shall mean a committee
made up of a senior executive from each of the Parties for the purpose of
resolving Disputes under this Section and generally overseeing the relationship
between the Parties contemplated by this Agreement. Neither Party shall seek,
nor shall be entitled to seek, binding outside resolution of the Dispute unless
and until the Parties have been unable to amicably resolve the dispute as set
forth in this paragraph (a) and then, only in compliance with the procedures set
forth in this Section.
(b) Except for Disputes relating to issues of (i) proprietary rights, including
but not limited to intellectual property and confidentiality, and (ii) any
provision of the Agreement which expressly or implicitly provides for the
Parties to reach mutual agreement as to certain terms (which shall be resolved
by the Parties solely and exclusively through amicable resolution as set forth
in paragraph (a)), any Dispute not resolved by amicable resolution as set forth
in paragraph (a) shall be governed exclusively and finally by arbitration. Such
arbitration shall be conducted by the American Arbitration Association ("AAA")
in Washington, D.C. and shall be initiated and conducted in accor dance with
the Commercial Arbitration Rules ("Commercial Rules") of the AAA, including the
AAA Supplementary Procedures for Large Complex Commercial Disputes ("Complex
Procedures"), as such rules shall be in effect on the date of delivery of a
demand for arbitration ("Demand"), except to the extent that such rules are
inconsistent with the provisions set forth herein. Notwithstanding the
foregoing, the Parties may agree in good faith that the Complex Procedures shall
not apply in order to promote the efficient arbitration of Disputes where the
nature of the Dispute, including without limitation the amount in controversy,
does not justify the application of such procedures.
(c) The arbitration panel shall consist of three arbitrators. Each Party shall
name an arbitrator within ten (10) days after the delivery of the Demand. The
two arbitrators named by the Parties may have prior relationships with the
naming Party, which in a judicial setting would be considered a conflict of
interest. The third arbitrator, selected by the first two, should be a neutral
participant with no prior working relationship with either Party. If the two
arbitra tors are unable to select a third arbitrator within ten (10) days, a
third neutral arbitrator will be appointed by the AAA from the panel of
commercial arbitrators of any of the AAA Large and Complex Resolution Programs.
If a vacancy in the arbitration panel occurs after the hearings have commenced,
the remaining arbitrator or arbitrators may not continue with the hearing and
determination of the controversy, unless the Parties agree otherwise.
(d) The Federal Arbitration Act, 9 U.S.C. Secs. 1-16, and not state law, shall
govern the arbitrability of all Disputes. The arbitrators shall allow such
discovery as is appropriate to the purposes of arbitration in accomplishing a
fair, speedy and cost-effective resolution of the Disputes. The arbitrators
shall reference the Federal Rules of Civil Procedure then in effect in setting
the scope and timing of discovery. The Federal Rules of Evidence shall apply in
toto. The arbitrators may enter a default decision against any Party who fails
to participate in the arbitration proceedings.
(e) The arbitrators shall have the authority to award compensatory damages only.
Any award by the arbitrators shall be accompanied by a written opinion setting
forth the findings of fact and conclusions of law relied upon in
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reaching the decision. The award rendered by the arbitrators shall be final,
binding and non-appealable, and judgment upon such award may be entered by any
court of competent jurisdiction. The Parties agree that the existence, conduct
and content of any arbitration shall be kept confidential and no Party shall
disclose to any person any information about such arbitration, except as may be
required by law or by any governmental authority or for financial reporting
purposes in each Party's financial statements.
(f) Each Party shall pay the fees of its own attorneys, expenses of witnesses
and all other expenses and costs in connection with the presentation of such
Party's case (collectively, "Attorneys' Fees"). The remaining costs of the
arbitration, including without limitation, fees of the arbitrators, costs of
records or transcripts and administrative fees (collectively, "Arbitration
Costs") shall be borne equally by the parties. Notwithstanding the foregoing,
the arbitrators may modify the allocation of Arbitration Costs and award
Attorneys' Fees in those cases where fairness dictates a different allocation of
Arbitration Costs between the Parties and an award of Attorneys' Fees to the
prevailing Party as determined by the arbitrators.
(g) Any Dispute that is not subject to final resolution by the Management
Committee or to Arbitration under this Section or law (collectively,
"Non-Arbitration Claims") shall be brought in a court of competent jurisdiction
in the Commonwealth of Virginia. 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, over any and all Non-
Arbitration Claims and any and all actions to enforce such claims or to recover
damages or other relief in connection with such claims.
VIII. MISCELLANEOUS
Auditing Rights. Each Party shall maintain complete, clear and accurate records
of all expenses, revenues, fees, transactions and related documentation
(including agree ments) in connection with the performance of this Agreement
("Records"). All such Records shall be maintained for a minimum of five (5)
years following termination of this Agreement. For the sole purpose of ensuring
compli ance 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 *****. 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 without such Party's fault or
negligence and which such Party is unable to overcome by the exercise of
reasonable diligence.
Independent Contractors. The Parties to this Agreement are independent
contractors. Neither Party is an agent, representative or partner of the other
Party. Neither Party shall have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or liability of, or to
otherwise bind, the other Party. This Agreement shall not be interpreted or
construed to create an association, agency, joint venture or partnership between
the Parties or to impose any liability attributable to such a relationship upon
either Party.
Notice. Any notice, approval, request, authorization, direction or other
communication under this Agreement will be given in writing and will be deemed
to have been delivered and given for all purposes (i) on the delivery date if
delivered by electronic mail on the AOL Network (to screenname "AOLNotice" in
the case of AOL) or by confirmed facsimile; (ii) on the delivery date if
delivered personally to the Party to whom the same is directed; (iii) one
business day after deposit with a commercial overnight carrier, with written
verification of receipt; or (iv) five
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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business days after the mailing date, whether or not actually received, if sent
by U.S. mail, return receipt requested, postage and charges prepaid, or any
other means of rapid mail delivery for which a receipt is available. In the case
of AOL, such notice will be provided to both the Senior Vice President for
Business Affairs (fax no. *****) and the Deputy General Counsel (fax no. *****),
each at the address of AOL set forth in the first paragraph of this Agreement.
In the case of ICP, except as otherwise specified herein, the notice address
shall be the address for ICP set forth in the first paragraph of this Agreement,
with the other relevant notice information, including the recipient for notice
and, as applicable, such recipient's fax number or AOL e-mail address, to be as
reasonably identified by AOL.
No Waiver. The failure of either Party to insist upon or enforce strict
performance by the other Party of any provision of this Agreement or to exercise
any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall be
and remain in full force and effect.
Return of Information. Upon the expiration or termination of this Agreement,
each Party shall, upon the written request of the other Party, return or destroy
(at the option of the Party receiving the request) all confidential
information, documents, manuals and other materials specified by the other
Party.
Survival. Sections IV, V, VI, and VII of this Exhibit C, and any other
provisions which must survive in order to give effect to their meaning, shall
survive the completion, expiration, termination or cancellation of this
Agreement.
Entire Agreement. This Agreement sets forth the entire agreement and supersedes
any and all prior agreements of the Parties with respect to the transactions set
forth herein. Neither Party shall be bound by, and each Party specifically
objects to, any term, condition or other provision which is different from or in
addition to the provisions of this Agreement (whether or not it would materially
alter this Agreement) and which is proffered by the other Party in any
correspondence or other document, unless the Party to be bound thereby
specifically agrees to such provision in writing.
Amendment. No change, amendment or modification of any provision of this
Agreement shall be valid unless set forth in a written instrument signed by the
Party subject to enforcement of such amendment.
Further Assurances. Each Party shall take such action (including, but not
limited to, the execution, acknowledgment and delivery of documents) as may
reasonably be requested by any other Party for the implementation or continuing
performance of this Agreement.
Assignment. Except to a parent, subsidiary or affiliated company, ICP shall not
assign this Agreement or any right, interest or benefit under this Agreement
without the prior written consent of AOL. Assumption of the Agreement by any
successor to ICP (including, without limitation, by way of merger or
consolidation) shall be subject to AOL's prior written approval. 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 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 inten tions 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
- ----------------------
***** Confidential treatment has been requested for the redacted portions.
The confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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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 D
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 Internet 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
CERTIFICATION OF COMPLIANCE WITH COMMITMENTS
REGARDING PROMOTIONS
Pursuant to Section 3 of the Interactive Services Agreement between ___________
("ICP") and America Online, Inc. ("AOL"), dated as of __________, 1998 (the
"Agreement"), the following report is delivered to AOL for the month ending
__________ (the "Month"):
I. Promotional Commitments
ICP hereby certifies to AOL that ICP completed the following promotional
commitments previously mutually agreed upon during the Month:
Type of Promotion Date(s) of Duration/Circulation of Relevant Contract
Promotion Promotion 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 G
AOL, Inc.'s Terms of Service Agreement
For quick tips on how to make the most out of AOL, check out the Rules
of the Road at keyword "TOS." All defined terms are referenced at the end of
this document.
1. TERMS OF SERVICE AGREEMENT AND RULES OF THE ROAD
A. America Online, Inc. ("AOL, Inc." or "we") provides its America
Online(R) service ("AOL") to you as a registered subscriber or authorized user
("Member" or "you"), subject to the terms of this agreement and AOL, Inc.'s
operating rules or the "Rules of the Road" ("Rules"). Both of these documents
are binding agreements and referred to collectively as "TOS" (you may access the
TOS by using keyword "TOS"). The TOS comprises the entire agreement between AOL,
Inc. and you, superseding any prior agreements between you and AOL, Inc. with
respect to its subject matter. Additionally, you may be subject to additional
terms and conditions that may apply when you use affiliate services (e.g., the
International Areas), third-party content, software, or services.
B. In order to address the dynamic evolution of the Internet and AOL,
Inc.'s business, AOL, Inc. periodically revises TOS and reserves the right to
revise TOS. If AOL, Inc. revises TOS, the revision shall take effect thirty (30)
days after the date of the last TOS change as posted in the Terms of Service
area (again, at keyword "TOS") ("Effective Date"). The Front Screen of the Terms
of Service area will provide the date of the last TOS change. AOL, Inc. will
also supplement such notice of TOS changes within the monthly "Steve Case
Community Update Area." You agree to review the TOS periodically to be aware of
such changes. If any change is unacceptable to you, you may terminate your
membership as provided in Section 10 below. Your continued use of AOL following
the Effective Date of any such change to the TOS constitutes acceptance of all
such changes.
2. YOUR ACCOUNT INFORMATION
A. You certify that YOU ARE AT LEAST EIGHTEEN (18) YEARS OLD. You
agree to provide AOL, Inc. with accurate, complete, and current registration
information. Failure to do this shall constitute a breach of this agreement and
unauthorized access to AOL. Unauthorized access to AOL could result in immediate
termination of your account and subject you to civil and criminal liability. AOL
Inc. reserves the right to limit the number of memberships for a Member to one,
including trial offers.
B. By registering as a Member, you will receive a password, a "master
account," choice of an associated screen name, and the ability to have up to
four other "sub-accounts" and associated screen names. You may not select or use
a screen name used by another person (unless it is also your name), a name in
violation of a third party's property rights, or a screen name that AOL, Inc.
deems offensive or otherwise inappropriate. AOL, Inc. owns all screen names, and
licenses them to you for a period that
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will not exceed the duration of your AOL membership. Additionally, you may not
use your name in violation of the TOS or in ways AOL deems inappropriate (e.g.,
sending or causing to be sent unsolicited bulk e-mail ("UBE")). AOL, Inc.
reserves the right, in its sole discretion, to suspend the use of any screen
name, or to delete any such screen name or to request deletion.
C. You are entirely liable for all activities conducted through your
master account and any subaccounts. A Member may not permit another individual
to use the Member's master account without direct supervision by the Member. A
Member may permit another individual, including a minor, to use the Member's
sub-accounts subject to the following limitations: The Member hereby agrees (1)
to supervise the other individual's use of the Member's accounts, (2) to assume
any and all resulting liabilities of such use, including responsibility for any
and all content accessed on AOL or the Internet, (3) to indemnify and hold AOL
harmless for any such use of AOL by a person other than the Member, and (4) to
acknowledge that any decision to allow another individual to use the Member's
account is made by the Member and not AOL, Inc. AOL Inc. reserves the right to
limit the number of memberships for a Member to one, including trial offers.
Members' accounts may be automatically logged off due to inactivity. AOL, Inc.
prohibits the use of unauthorized functionality to defeat AOL's automatic
log-off functionality. Because AOL, Inc. sends important notices about your
membership to the master account holder, you agree to check the master account
regularly and bear the risk of failing to do so.
D. Members who have had their AOL membership terminated may not access
AOL without AOL, Inc.'s prior express written (including e-mail) permission.
Members may not allow a former Member or other agent whose membership has been
terminated to use their account. For additional information on re-registration
and multiple accounts, see Section 10 below.
3. CHARGES AND BILLING PRACTICES
A. You may obtain current rates and surcharges for using AOL by calling
AOL, Inc.'s Customer Service at 1-800-827-6364 or by selecting "Billing" under
"Member Services" (or keyword "Billing"). AOL, Inc. explains billing practices
under "Explain Billing Terms." Such rates and surcharges do not include any
sales, use, value-added, personal property, or other governmental tax or levy
imposed on goods or services billed to Member's account. You are responsible for
any such taxes.
B. If you have elected to pay for AOL by credit card and AOL, Inc. does
not receive payment from the card issuer or its agents, you agree to pay all
amounts due upon demand by AOL, Inc. Each time you use AOL you agree and
reaffirm that AOL, Inc. is authorized to charge your designated card or withdraw
funds via electronic funds transfer from your checking account, whichever
situation applies. Your credit card issuer agreement governs your use of your
designated card in connection with AOL, and you must refer to that agreement and
not this TOS with respect to your rights and liabilities as a card holder. You
agree that AOL, Inc. may, at its option, accumulate charges incurred during your
billing cycle and submit them as one or more aggregate charges during or at the
end of each cycle for electronic funds transfer from your checking account or
credit card as applicable. This means that accumulated charges may appear on the
statement you receive from your bank or card issuer. Further, you agree that
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AOL, Inc. may delay obtaining authorization from your card issuer until
submission of the accumulated charges. You acknowledge that if you want to see
the components of accumulated charges you may do so by using keyword "Billing."
C. If AOL, Inc. does not receive the full amount of your AOL account
balance within thirty (30) days of the date of your invoice, an additional 1.5%
(or the highest amount allowed by law, whichever is lower) per month late charge
may be added to your bill and immediately become due and payable. Member shall
be liable for all attorney and collection fees arising from AOL, Inc.'s efforts
to collect any unpaid balance of your account(s). You agree to be billed for and
to pay any outstanding balance in the event of cancellation or termination of
your AOL account. Unless you notify AOL, Inc. of any discrepancies within ninety
(90) days after they first appear on your account statement, the statement will
be deemed acceptable by you for all purposes, including resolution of inquiries
made by your card issuer. You release AOL, Inc. from all liabilities and claim
of loss resulting from any error or discrepancy that is not reported to AOL,
Inc. within ninety (90) days of its publication.
D. AOL, INC. RESERVES THE RIGHT, AT ANY TIME, TO CHANGE ITS FEES AND
BILLING METHODS, INCLUDING THE ADDITION OF SUPPLEMENTAL FEES OR SEPARATE CHARGES
FOR ONLINE AREAS, CONTENT (AS DEFINED BELOW), OR SERVICES PROVIDED BY AOL, ITS
AFFILIATES, OR INTERACTIVE CONTENT PROVIDERS ("ICPs"), EFFECTIVE THIRTY (30)
DAYS AFTER AN ONLINE POSTING IN THE BILLING AREA OF AOL (AGAIN, AT KEYWORD
"BILLING"). AOL, INC. MAY ALSO ELECT, AT ITS DISCRETION, TO SUPPLEMENT SUCH
NOTICE OF BILLING CHARGES THROUGH POP-UPS OR E-MAIL TO YOUR MASTER ACCOUNT
SCREEN NAME OR THROUGH THE U.S. MAIL TO THE MASTER ACCOUNT HOLDER. If any such
change is unacceptable to you, you may terminate your membership as provided
in Section 10 below. Your continued use of AOL following the effective date
shall constitute your acceptance of such change. Your membership fees are
payable in advance, and AOL, Inc. will not refund any portion of your monthly
membership fee upon cancellation or termination of your membership.
E. You are responsible for all charges associated with connecting to
AOL. YOU AGREE THAT ANY TELEPHONE CHARGES INCURRED ARE YOUR RESPONSIBILITY,
INCLUDING ANY CHARGES ASSOCIATED WITH ACCESSING A SURCHARGED 800 OR 888 NUMBER.
DEPENDING ON YOUR PARTICULAR LOCATION, THE NEAREST ACCESS NUMBER MAY NOT BE A
LOCAL PHONE CALL AND YOU MAY BE SUBJECT TO LONG DISTANCE CHARGES. You should
check with your local phone company to determine whether any specific access
number is a local call. If there is no access number in your local area, or if
you use AOL's surcharged 800 or 888 numbers, you may be assessed communication
surcharges on your AOL bill. These apply even if you are using your trial hours
or have selected an unlimited access plan. For more information see keyword
"Access." You are responsible for all activities and charges under your master
and subaccount(s). You acknowledge that if you want to see the detailed
components of accumulated charges, you may do so by using the keyword "Billing."
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4. RIGHTS AND RESPONSIBILITIES
A. CONTENT.
You acknowledge that:
(i) AOL contains information, communications, software, photos,
video, graphics, music, sounds, and other material and
services (collectively "Content");
(ii) Such Content is provided under license by ICPs, other Members,
AOL, Inc. and its affiliates; and
(iii) At minimum, AOL, Inc. owns a copyright in the selection,
coordination, arrangement, and enhancement of such Content.
Each Member and any user of Member's master account or sub-account must
evaluate, and bear the risk associated with any reliance on the accuracy,
completeness or usefulness of any Content. AOL, Inc. does not pre-screen Content
as a matter of policy: however AOL, Inc., its affiliates, and ICPs shall each
have the right, but not the responsibility, to remove Content that it deems
harmful, offensive or otherwise in violation of the TOS. Accordingly, you
acknowledge that neither AOL, Inc., any affiliate, or any ICP shall assume or
have any liability for any action or inaction by it, with respect to Content on,
or Content changes within, AOL.
B. PROPRIETARY RIGHTS.
You acknowledge the following:
(i) AOL, Inc. permits access to Content that is protected by
copyrights, trademarks, and other intellectual and proprietary
rights ("Rights");
(ii) These Rights are valid and protected in all media and
technologies existing now or later developed; and
(iii) Except as explicitly stated otherwise, the TOS, applicable
copyright and other laws govern your use of Content (see the
Rules, Section D, for details).
You agree that you may upload to the software files, message boards, or
otherwise transmit on or through AOL only Content that (1) is not subject to any
Rights, or (2) any holder of Rights has given express authorization for
distribution on AOL. You represent that if you upload any files, you have the
legal authorization to do so. You agree that AOL, Inc. may employ virus-checking
technology to screen for viruses that could be harmful to its system and its
members. By submitting Content to any "public area" of AOL (e.g., message
boards, forums, the Member Directory), you grant AOL, Inc. and its affiliates
the royalty-free, perpetual, irrevocable, non-exclusive right (including any
moral rights) and license to use, reproduce, modify, adapt, publish, translate,
create derivative works from, distribute, communicate to the public, perform and
display the Content (in whole or in part) worldwide and/or to incorporate it in
other works in any form, media or technology now known or later developed, for
the full term of any rights that may exist in such Content. You also warrant
that the holder of any Rights, including moral rights in such Content, has
completely and effectively waived all such Rights and validly
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and irrevocably granted to you the right to grant the license stated above. You
also permit any Member and authorized user to access, display, view, store and
reproduce the Content for personal use. Subject to the foregoing, the owner of
Content placed on AOL retains any and all Rights that may exist in such Content.
C. CONDUCT AND COMMUNICATION
You acknowledge that AOL may contain material that may be inappropriate
for minors. AOL offers Parental Control tools that enables the master account
holder to restrict the access of minors to certain AOL and Internet areas and
features, but makes no warranties with respect to such tools. You recognize that
AOL, from time-to-time may provide additional member empowerment tools, such as
Parental Controls, Mail Controls, and Marketing Preferences, that are intended
to enhance your choices and general experience online or on the Internet. See
keyword "Reach Out" for details. You also recognize that communication over AOL
often occurs in real time or is posted on one of AOL's thousands of message
boards or libraries. You acknowledge that AOL, Inc. cannot, and does not intend
to, screen all communications in advance for accuracy or conformance to the TOS
or any laws. However, AOL, Inc. may elect, at its sole discretion, to monitor
some, all, or none of AOL's public areas for adherence to the TOS or applicable
laws and take appropriate action as described elsewhere in TOS. Accordingly, you
acknowledge that neither AOL, Inc., its affiliates, nor any ICP shall assume or
have any liability for any action or inaction by AOL, Inc., its affiliates, or
any ICP with respect to Content on AOL. Any conduct by a Member that in AOL,
Inc.'s sole discretion restricts or inhibits any other Member, person or entity
from using or enjoying AOL or another service shall entitle AOL, Inc. to
immediately terminate membership without notice. You agree to use AOL only for
lawful purposes.
You may not use, or allow others to use, your AOL account within AOL community
space ("AOL Community Space"), either directly or indirectly, to:
(1) post, transmit, promote, or facilitate the distribution of any
unlawful or illegal Content;
(2) harass, threaten, embarrass, or cause distress, unwanted
attention or discomfort upon another Member or user of AOL or
other person or entity;
(3) post, transmit, promote, or facilitate the distribution of any
harmful, abusive, harassing, sexually explicit, vulgar,
hateful (e.g., racially or ethnically hateful), or other
Content which is deemed by AOL, Inc. to be offensive or
objectionable;
(4) disrupt the normal flow of dialogue in a chat room or on a
message board or otherwise act in a manner that negatively
affects other Members, users, individuals or entities, such as
causing the screen to "scroll" faster than other Members or
users are able to type to it or any action to a similar
disruptive effect;
(5) impersonate any person or entity, including, but not limited
to, an AOL, Inc. employee, official, an ICP, forum leader,
guide or host, or communicate under a false name or a name
that you are not entitled or authorized to use, or impersonate
a minor;
(6) post, transmit, promote, or facilitate the distribution of
chain letters or pyramid schemes;
(7) post, transmit, promote, or facilitate the distribution of any
unsolicited advertising, promotional materials, or other forms
of solicitation to other Members, individuals or
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entities, except in those areas that are expressly designated
for such a purpose (e.g., the classified areas), or collect or
harvest screen names of other Members, without permission;
(8) post, transmit, promote, or facilitate the distribution of any
communication or solicitation designed or intended to obtain
password, account or private financial information from any
Member;
(9) violate any operating rule, policy or guideline of any other
interactive service, including, but not limited to, the
operating policies of the International Areas; or
(10) intentionally or unintentionally violate any applicable local,
state, national, international or foreign law, including, but
not limited to, any rules or regulations having the force of
law.
Please see the Rules for additional examples of prohibited conduct.
AOL, Inc. reserves the right to protect its Members and AOL from offensive
e-mail communication, including, but not limited to, the right to block UBE, or
"junk e-mail" using the Preferred Mail tool or other measures. AOL, Inc. further
reserves the right, in its sole discretion, to temporarily suspend the delivery
of mail through the Preferred Mail tool. With the exception of Section 4C(l)
above, AOL Inc. does not enforce Section 4C in non-AOL Community Space.
You also agree and accept that as new products or services become
available on or through AOL, your use of these products or services is subject
to TOS. In addition to Content and services provided by ICPS, AOL, Inc., and its
affiliates, these service providers and others may each offer Content, software
or other services to Members with its own terms and conditions relating to your
use. Failure to abide by these terms and conditions may result in termination of
membership. Furthermore, other such networks, including Internet areas, may
subject Members to their own usage policies.
5. PRIVACY POLICY
A. INTRODUCTION
(i) General. Because protecting your privacy is very important to AOL,
Inc.,we have established a privacy policy that safeguards your personal
information, and are committed to protecting its confidentiality. We will limit
the collection and use of personal information, or Individual Information (as
defined below), to what is necessary to administer our business, provide you
with the highest quality service, and offer you opportunities we think will be
of interest. We will NOT disclose any Individual Information except in the
limited circumstances specifically described below. AOL does disclose Individual
Information in an aggregated form that does not identify individual Members in
order to describe its services to prospective partners, advertisers and other
third parties. We actively participate in industry associations and community
groups to support strong and effective privacy guidelines and practices in the
interactive environment.
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(ii) Members Marketing Preferences. AOL provides its Members with
choices when it comes to the disclosure of Individual Information (defined
below). Our Marketing Preferences area (keyword "Marketing Preferences")
provides you with an easy means to remove yourself from AOL's mailing lists,
telemarketing lists, pop-up lists and e-mail lists. You can also remove yourself
from the lists that we might make available to third parties using the same
keyword "Marketing Preferences." You understand that you will receive occasional
pop-ups, mailings and e-mails containing important information about AOL or your
membership even if you have elected not to receive product information pop-ups,
mailings or e-mails.
(iii) Kids Only Area. AOL, Inc. recognizes that children need greater
protection of their privacy than teens and adults. AOL, Inc. has special privacy
policies that govern the collection, use, and distribution of information about
children within the Kids Only Area. See keyword "Families" for more information.
(iv) Types of Individual Information. Individual Information
("Individual Information") is any information data or records that relate to
your AOL membership or use of AOL and identifies you or your individual Member
account. The three types of Individual Information are: (1) "identity and
billing information," such as your name, street address, telephone number,
billing information, and any screen names associated with your account; (2)
"navigational and transactional information," such as information about where
you go or what you buy through AOL; and (3) "private communications," such as
the contents of e-mail, or private chat room or instant message communications.
(v) The Internet. Please be aware that AOL is a private online service
that allows access to the Internet but is not the Internet. AOL, Inc. does not
control the content, services, or areas available through the Internet (with
minor exceptions, such as the AOL home page), and providers of Internet sites or
services have separate data and privacy practices independent of AOL, Inc.
Internet areas may appear to be seamlessly incorporated into AOL, but generally
you can tell you are on the Internet whenever AOL's logo spins on the upper
right corner of your screen or when you click on icons labeled as Newsgroups,
Web, Link, FTP, Gopher, or other items relating to the Internet.
(vi) Interactive Content and Service Providers. Companies that are
independent from AOL, Inc. operate many of the online areas that you visit.
Although AOL, Inc. will seek to require these independent companies (e.g., ICPs,
including advertisers and merchants) to adhere to our strong privacy principles,
AOL, Inc. does not bear responsibility for their policies or actions. Be aware
that when you voluntarily disclose personal information (such as your screen
name) in public areas (e.g., the Member Directory, chat rooms, message boards,
Internet newsgroups), others may collect and use your information. (When you
visit Internet sites, your AOL screen name or other identity information
generally is not identifiable.) Also, ordering products through AOL often
requires you to provide an independent company with limited Individual
Information to enable fulfillment of your order.
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B. MEMBER IDENTITY AND BILLING INFORMATION.
(i) Collection and Storage. We maintain the following types of identity
and billing information: your name, street address, telephone number(s), length
of membership, and payment information. If you wish to view your identity
information and billing, please go to keyword "Billing." When feasible, Members
may access and verify their Member Identity and Billing Information, and may
request corrections to this Information. (See keyword "Billing.") AOL, Inc.
generally retains account history records for approximately six months to one
year. We may also keep information on your communica tions with our Customer
Service or Community Action departments, and general account history, such as
accumulated usage credits or written complaints relating to your account. We
safeguard Individual Information from unauthorized access and only authorized
employees or agents who need to carry out legitimate business functions are
permitted access to Members' Individual Information. Employees who violate AOL,
Inc.'s privacy policies are subject to disciplinary actions, including
termination where appropriate. We may use agents, who are bound by strict
confidentiality guidelines, to perform storage, processing, and other limited
functions on AOL, Inc.'s behalf.
(ii) Use. We use identity and billing information to administer our
business, ensure that you are properly billed and offer you opportunities
(through pop-ups, e-mail, phone calls or direct mail) that may be of interest to
you. To develop lists for these opportunities, we may also match Member lists
against publicly available third-party data (demographic information, areas of
interest, etc.).
(iii) Disclosure. We make our mailing list (name and address) available
to select independent companies that offer products and information we think may
interest you. Additionally, we may make the list with telephone numbers
available to companies with which AOL, Inc. has contractual marketing and online
relationships for the purpose of permitting such companies to offer products and
services over the telephone. AOL, Inc. may also match the Member lists against
publicly available third-party data (demographic information, areas of interest,
etc.) to develop lists for use by these companies. AOL, Inc. reviews all
requests for its lists to ensure appropriateness.
We do not release Members' credit card numbers or checking account
numbers. Our policy is not to disclose identity information to third parties
that would link a Member's screen name(s) with a Member's actual name, unless
required to do so by law or legal process served on AOL, Inc. (e.g., a
subpoena). AOL, Inc., at its sole discretion, reserves the right to make
exceptions to this policy in extraordinary circumstances (such as a bomb or
suicide threat, or instances of suspected illegal activity) on a case-by-case
basis.
AOL, Inc. intends to abide by applicable laws governing the disclosure
to governmental entities of Individual Information and other records. If we are
under a legal obligation to disclose Individual Information to a private citizen
or entity, we may make efforts under the circumstances to notify the affected
Member(s) in advance of releasing it in order to provide the Member(s) an
opportunity to pursue any available legal protection.
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C. NAVIGATIONAL AND TRANSACTIONAL INFORMATION.
(i) Collection. We may collect and store certain navigational and
transactional information, such as data on the choices you make from the range
of available services or merchandise, and the times and ways you use AOL and the
Internet.
(ii) Use. AOL, Inc. uses navigational and transactional information to
personalize AOL, for programming and editorial research and to offer special
opportunities to our Members. For example, we use this information to understand
our Members' reactions to menu items, Content, services and merchandise offered
through AOL and to customize AOL based on our Members' interests. AOL, Inc. may
use publicly available third-party data (demographic information, areas of
interest, etc.) to assist us in our programming, editorial research and to offer
special opportunities to our Members.
(iii) Disclosure. AOL, Inc. will not disclose to third parties
navigational or transactional information (e.g., where you go or what you buy on
or through AOL), except to comply with applicable law or valid legal process
(e.g., search warrant or court order). While AOL, Inc. may use such information
as criteria for developing Member lists for companies with which AOL, Inc. has a
contractual marketing and online relationship (referenced in Section B(iii)
above), AOL, Inc. does not disclose to any third-party, including the list
recipient, which profiling information was used to develop the list.
D. PRIVATE COMMUNICATIONS
(i) Collection and Storage. The AOL computer system does not record or
retain any chat room communications, instant message communications, oral online
communications or records of with whom you communicate in chat rooms or through
instant messages or oral online communications. The AOL e-mail system retains
the contents of private e-mail communications for a limited period only. To
retain copies of any communication you should store them on your personal
computer hard drive or in print form. You agree that AOL, Inc. may employ e-mail
virus-checking technology to protect its system and its Members from viruses.
(ii) Use. AOL, Inc. treats private communications on or through AOL as
strictly confidential. AOL, Inc. does not access, use or disclose the contents
of private communications, except in limited circumstances as specifically
provided below. You acknowledge that private communications directed at a person
or entity, including AOL, Inc., may be used or disclosed by the intended
recipient(s) without restrictions relating to privacy or confidentiality.
(iii) Disclosure. AOL, Inc. does not access or disclose the contents of
private communications (e.g., e-mail, instant messages, Member-created private
rooms, oral online communications), unless it in good faith believes that such
action is necessary (1) to comply with applicable law or valid legal process
(e.g., search warrant or court order); (2) to protect the rights or property of
AOL, Inc. or may be necessarily incident to the rendition of AOL; or (3) in
emergencies when AOL, Inc. believes that physical safety is at risk. AOL, Inc.
reserves the right to treat as public any private chat room whose directory or
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room name is published or becomes generally known or available. AOL, Inc.
reserves the right to access and review password-protected Member web sites for
conformance to TOS.
6. INTERNATIONAL CONTENT AND THE INTERNET
A. AOL INTERNATIONAL AREAS.
You acknowledge that your use of AOL allows access to International
Areas (as defined at the end of this agreement) containing Content originating
from AOL, Inc. and its affiliates, other Members and users of AOL, ICP, as well
as other third parties which may originate from countries other than the United
States ("International Content"). Your access to and use of the International
Areas and International Content will be governed (in addition to the TOS) by
separate terms and operating policies and applicable national laws and customs.
B. INTERNET
AOL offers Members access to the Internet. The Internet is not owned,
operated, or managed by AOL, Inc. or any of its affiliates. You agree that your
Internet use is solely at your own risk and is subject to all applicable local,
state, national, international and foreign laws and regulations. Neither AOL,
Inc., its affiliates, ICPs, nor telecommunications providers for AOL, Inc.,
shall be held responsible or liable, directly or indirectly, for any loss or
damage caused or alleged to have been caused by your use of or reliance on any
content, goods or services available through the Internet or your inability to
access the Internet or any of its sites. You acknowledge that some Internet
sites may impose additional charges for your use or access to their site. Such
charges are separate and apart from your AOL membership fee and any other
charges incurred for use of AOL. This paragraph's provisions apply with equal
force even where AOL features or displays a link with any particular Web site.
Accordingly, AOL, Inc. and its affiliates specifically disclaim any
responsibility or liability for any conduct, content, goods and services
available on or through the Internet (including, without limitation, any part of
the Web). AOL, Inc. retains the right, but not the obligation, at its sole
discretion and without prior notice or liability, to restrict and/or terminate a
Member's access to the Internet via AOL or to AOL if your use of the Internet,
in AOL, Inc.'s sole discretion, violates any applicable law or regulation, any
prohibitions on your conduct in connection with the Internet, or otherwise
inhibits any other user from enjoying the Internet or AOL. The foregoing does
not limit the other rights available to AOL, Inc. under the Rules (see Sections
2C and 2E of the Rules for details).
AOL, Inc. retains the right, but not the obligation, in its sole
discretion and without prior notice or liability, to block or otherwise limit
the transmission through AOL Inc.'s proprietary computers and computer networks
from the Internet of any UBE, or other Internet content. AOL, Inc. reserves the
right, in its sole discretion, to determine whether e-mail transmissions to its
Members from the Internet constitute UBE. You acknowledge and agree that your
receipt of UBE from the Internet may be limited by the technical measures taken,
or policies adopted, by AOL, Inc. to maintain the functionality and integrity of
its proprietary computers and computer networks, or to preclude the unwanted
receipt of UBE from the Internet by Members.
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7. AOL SOFTWARE LICENSES
AOL, Inc. grants to you a non-exclusive, limited license to use AOL
software to connect to AOL from authorized locations in accordance with this
agreement. This license is subject to the restriction that, except where
expressly permitted by law, you may not translate, reverse-engineer or reverse
compile or decompile, disassemble or make derivative works from, AOL software.
You may not modify AOL software or use it in any way not expressly authorized in
these Rules. From time to time, it will be necessary for AOL to update the
client software to provide additional services and products. You hereby consent
to these automatic upgrades. You agree and accept that AOL's introduction of
various technologies may not be consistent across all platforms (e.g.,
Macintosh).
8. WARRANTY
MEMBER EXPRESSLY AGREES THAT THE USE OF AOL, AOL SOFTWARE, AND THE
INTERNET ARE AT MEMBER'S SOLE RISK. AOL, AOL SOFTWARE, AOL PRODUCTS, VIRUS-
CHECKING SOFTWARE, AND THE INTERNET ARE PROVIDED "AS IS" AND "AS AVAILABLE" FOR
YOUR PERSONAL USE, WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED,
UNLESS SUCH WARRANTIES ARE LEGALLY INCAPABLE OF EXCLUSION. AOL, INC. PROVIDES
THE AOL SERVICE ON A COMMERCIALLY REASONABLE BASIS AND DOES NOT GUARANTEE THAT
MEMBERS WILL BE ABLE TO ACCESS THE SERVICE AT A TIME OR LOCATION OF THEIR
CHOOSING, OR THAT IT WILL HAVE ADEQUATE CAPACITY FOR THE SERVICE AS A WHOLE OR
FOR PARTICULAR PRODUCTS. AOL, INC.'S ENTIRE LIABILITY AND YOUR EXCLUSIVE REMEDY
WITH RESPECT TO USE OF AOL, AOL SOFTWARE, AND THE INTERNET SHALL BE THE
REPLACEMENT OF ANY AOL SOFTWARE FOUND TO BE DEFECTIVE. BECAUSE SOME STATES OR
JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR THE LIMITATION OF LIABILITY FOR
CONSEQUENTIAL OR INCIDENTAL DAMAGES, IN SUCH STATES OR JURISDICTIONS, AOL,
INC.'S LIABILITY SHALL BE LIMITED TO THE EXTENT PERMITTED BY LAW. AOL, INC. DOES
NOT ENDORSE, WARRANT OR GUARANTEE ANY PRODUCT OR SERVICE OFFERED BY OR THROUGH
AOL, EXCEPT AS EXPRESSLY PROVIDED ELSEWHERE, AND WILL NOT BE A PARTY TO OR IN
ANY WAY MONITOR ANY TRANSACTION BETWEEN YOU AND THIRD-PARTY PROVIDERS OF
PRODUCTS OR SERVICES.
9. INDEMNIFICATION
Upon AOL, Inc.'s request, Member agrees to defend, indemnify and hold
harmless AOL, Inc., its affiliated companies, its employees, contractors,
officers, directors, telecommunications providers, ICPs from all liabilities,
claims, and expenses, including attorneys' fees, that arise from breach of the
TOS by use of, or in connection with, the transmission of any Content on AOL or
the Internet by or through Member's master or sub-accounts. AOL, Inc. reserves
the right, at its own expense, to assume the exclusive defense and control of
any matter otherwise subject to indemnification by Member hereunder. In such
event, Member shall have no further obligation to provide indemnification for
such matter.
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10. TERMINATION
A. Either you or AOL, Inc. may terminate your membership at any time.
This is your sole right and remedy with respect to any dissatisfaction with AOL,
including, but not limited to, (1) any TOS term, policy or practice of AOL, Inc.
in operating AOL, (2) Content available through AOL or change therein, or (3)
any amount or type of fees, surcharges, billing methods, or change therein. You
can terminate your membership by delivering notice to AOL, Inc.'s Customer
Service Department at 1-800-827-6364, or by sending your cancellation request
via US Mail to: AOL, PO Box 1559, Ogden UT 84401. Your termination will take
effect within a reasonable time after AOL, Inc.'s receipt of your notice as
described above.
B. In the event that your account is terminated or canceled, no refund,
including any monthly membership fees, will be granted; no online time or other
credits (e.g., points in an online game) will be credited to you or be converted
to cash or other form of reimbursement. Members whose accounts AOL, Inc. has
terminated may not access AOL without AOL Inc.'s prior express written
permission. Active AOL Members may not allow former Members or other agents
whose memberships have been terminated to use their accounts. Any delinquent or
unpaid accounts or accounts with unresolved issues with the Community Action
department or other AOL departments must be concluded before you may re-register
with AOL, Inc. AOL reserves the right to limit the number of memberships for a
Member to one, including trial offers.
11. LAW
A. To the extent any conflict between this agreement and the Rules
exists, this agreement shall take precedence. If any part of the TOS is held
invalid or unenforceable, that portion shall be construed consistent with
applicable law to reflect, as nearly as possible, the original intentions of the
parties, and the remaining portions remain in full force and effect. The laws of
the Commonwealth of Virginia, excluding its conflicts-of-law rules, govern the
TOS and your membership. As noted above, Member conduct may be subject to other
local, state, and national laws. Member expressly agrees that exclusive
jurisdiction for any claim or dispute resides in the courts of the Commonwealth
of Virginia. Member further agrees and expressly consents to the exercise of
personal jurisdiction in the Commonwealth of Virginia in connection with any
dispute or claim involving AOL, Inc.
B. You agree to abide by U.S. and other applicable export control laws
and not to transfer, by electronic transmission or otherwise, any Content or
software subject to restrictions under such laws to a national destination
prohibited under such laws, without first obtaining, and then complying with,
any requisite government authorization. You further agree not to upload to AOL
any data or software that cannot be exported without prior written government
authorization, including, but not limited to, certain types of encryption
software. This assurance and commitment shall survive termination of this
agreement. Control laws currently prohibit the export of the 128-bit version of
any browser, including Internet Explorer, available through AOL. Control laws
also prohibit nationals of Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria
from gaining access to certain Content on AOL.
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12. LEGAL NOTICES
Under California Civil Code Section 1789.3, California Members are
entitled to the following specific consumer rights information:
1. Pricing Information. Current rates for using AOL may be obtained by
calling 1-800-827-6364. AOL, Inc. reserves the right to change fees,
surcharges, monthly membership fees or to institute new fees at any time upon
thirty (30) days' prior notice, as provided for in the Terms of Service at
Section 3.
2. Complaints. The Complaint Assistance Unit of the Division of Consumer
Services of the Department of Consumer Affairs may be contacted in writing at
1020 N. Street, #501, Sacramento, CA 95814, or by telephone at 1-916-445-1254.
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DEFINITIONS AND REFERENCES
"America Online," "AOL, Inc." or "we" = America Online, Inc.
"AOL" = The America Online(Registered) service
"Member" or "you" = A registered subscriber or authorized user of AOL
"Rules" = Rules of the Road
"TOS" = The Terms of Service and the Rules of the Road, collectively
"Effective Date" = Thirty (30) days after the date of the last TOS change as
posted in the Terms of Service area
"UBE" = Unsolicited bulk e-mail
"ICPs" = Interactive Content Providers
"Content" = Information, communications, software, photos, video, graphics,
music, sounds and other material and services, collectively
"Rights" = Copyrights, trademarks, and other intellectual and proprietary rights
"Public Areas" = Areas on AOL that are freely open to all Members, including,
but not limited to, public chat rooms, online forums, message boards, and
software libraries.
"AOL Community Space" = AOL programmed areas where new Content is created by
AOL, Inc., its affiliates, ICPs, or Members for participation in that area's
online community of interest, including, but not limited to, message boards,
online forums, chat rooms, software libraries, and web pages that are searchable
through AOL's web page search.
"Individual Information" = Any information, data or records that relate to your
AOL membership or use of AOL and identifies you or your individual Member
account.
"International Areas" = Areas within AOL containing International Content
"International Content" = Content originating from AOL Inc. and its affiliates,
other Members and users of AOL, ICPs, as well as other third parties which may
originate from countries other than the United States.
"PP2" or "Personal Publisher 2" = Product available to AOL Members to create
their own web site using AOL publishing tools.
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Exhibit 10.4
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
CONTENT LICENSE AND MARKETING AGREEMENT
This Content License and Marketing Agreement ("Agreement") is made and entered
into as of the 12th day of January, 1999 (the "Effective Date"), by and
between The Street.com, Inc., with offices at Two Rector Street, 14th Floor,
New York, NY 10006 ("TheStreet.com") and E*TRADE Group, Inc., with offices at
Four Embarcadero Place, 2400 Geng Road, Palo Alto, CA 94303 ("E*TRADE").
WHEREAS, TheStreet.com is in the business of preparing and publishing
editorial, evaluation and analysis reports related to business and financial
news and information and sells subscriptions to its materials which are
available through computer, communication and network access and facilities in
the commercial marketplace through such media which includes, but is not
necessarily limited to, the Internet and WorldWide Web; and
WHEREAS, E*TRADE wishes to offer business and financial news and informational
services to its customers through its own WebSite and E*TRADE also wishes to
offer certain of its own customers the availability of subscriptions and/or
access to TheStreet.com's published materials under favorable terms and
conditions;
NOW THEREFORE, IN CONSIDERATION OF the mutual promises and covenants set forth
in this Agreement, TheStreet.com and E*TRADE hereby agree as follows:
1. Definitions
1.1 "Account Holder" refers to any E*TRADE individual user who establishes an
on-line investment account with E*TRADE.
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1.2 "Active Trader" refers to any member of the Power E*TRADE program for
Account Holders whose trading activity is greater than that of the average
Account Holder and is entitled to receive premium services or benefits from
E*TRADE, including, but not limited to, those provided under this Agreement.
1.3 "Active User" refers to any Active Trader who accesses the Premium
Licensed Content at least once during the monthly billing cycle.
1.4 "Co-branded Web Pages" refer to web pages created by TheStreet.com and
E*TRADE pursuant to this Agreement which contain the Licensed Content.
1.5 "Expired Free-Trial User" refers to those TheStreet.com users who (i) have
registered for a limited, free-trial membership to TheStreet.com which has
subsequently expired; and (ii) have not subscribed to TheStreet.com service
following such expiration.
1.6 A "frame" refers to a border superimposed or otherwise perceptible
material or information of one party which surrounds, adjoins, is commingled
or is otherwise perceivable simultaneously with the availability or
perceptibility of a page.
1.7 "Licensed Content" shall have the meaning as defined in Section 2.1 below
and include the "Premium Licensed Content" and "Free Licensed Content" as
defined Section 1.10 below.
1.8 A "link" means a perceptible or otherwise visible indication, logo, icon,
insignia, word and/or image, selected by or available to an individual on one
page of a WebSite which directs and forwards that individual's perceived or
actual connection onward to another page on the same or any other WebSite. A
link has specific uniform resource locator (URL) or Internet WebSite and page
address information (whether perceptible or not) which establishes a direct
connection to the new page, when the link is selected from another page.
1.9 A "page" on a WebSite refers to each and every individual display or image
which is accessible or made available and which can be perceived, downloaded
or printed by an individual, either directly or with the aid of a machine or
device.
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1.10 "Premium Licensed Content" means that portion of the Licensed Content
that TheStreet.com generally makes available to its customers and clients on a
paid subscription-only basis. "Free Licensed Content" means that portion of
the Licensed Content that TheStreet.com generally makes available to anyone
visiting TheStreet.com's WebSite at no charge.
1.11 "Registered Member" refers to any E*TRADE individual user, other than an
Account Holder, who registers with E*TRADE as a member to receive certain
financial information and related materials through E*TRADE's WebSite.
1.12 "Submitted Application" shall mean an application to open a standard
brokerage account with E*TRADE that is completed in all material respects in
accordance with the instructions provided by E*TRADE in the application kit
and received by E*TRADE, and where the application has originated as a direct
response from the offer to receive a free subscription to TheStreet.com.
E*TRADE shall determine which applications are submitted as a direct response
to TheStreet.com offer through a designated offer code.
1.13 "WebSite" refers to any computer and communication facilities and
resources under the control of or operated for the benefit of a party and made
available via the Internet to permitted individuals and/or access devices to
or from which information, graphic or other images, sounds, data and/or any
other digital or electronic content or materials may be perceived, accessed,
transmitted or utilized. For the avoidance of ambiguity, WebSites include one
WebSite which may be a mirror image or duplicate, in whole or in part, or even
containing modifications from an original WebSite.
2. Licensed Content
2.1 Subject to the provisions of this Agreement, TheStreet.com agrees to make
available to E*TRADE, the proprietary financial and business editorial,
evaluation and analysis reports specified in the attached Exhibit A, and
other, comparable or successor content which, during the term of this
Agreement, is made available to TheStreet.com subscribers at the same or
comparable subscription levels or categories as that which is currently in
effect and applicable to current Licensed Content, and any other materials as
may be mutually agreed upon in writing ("Licensed Content"). The parties agree
that any new categories of content, subscription levels or distribution
methods (e.g., streaming) which TheStreet.com may develop in the future shall
be subject to good faith evaluation and negotiations to include same within
the framework of this Agreement,
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if appropriate and mutually acceptable to both parties. Licensed Content shall
be made available by TheStreet.com to E*TRADE electronically or digitally in
the form of Co branded Web Pages hosted by TheStreet.com pursuant to Exhibit
B, attached hereto. At a minimum, such Co-branded Web Pages shall include
links to E*TRADE detailed quotes from all tickers referenced in the Licensed
Content and the Licensed Content shall not include any third party
advertisements or links to third party advertisements except as permitted
under Section 2.3. Each party shall commit sufficient technical resources to
deploy the-Co-branded Web Pages within one (1) month after the Effective Date.
TheStreet.com agrees to maintain the availability of Licensed Content in
accordance with the Service Level Agreement attached hereto as Exhibit C.
2.2 Subject to and in consideration of the payment terms and conditions
specified in Section 4 herein, TheStreet.com hereby grants to E*TRADE, a
nonexclusive (subject to Section 2.4), worldwide license to access, use,
reproduce (solely for the purposes and subject to this Agreement), display and
transmit the Licensed Content, solely for the purpose of enabling such
Licensed Content to be available and accessible to E*TRADE Registered Members
and Account Holders through E*TRADE's WebSite. E*TRADE agrees that the license
granted herein supersedes any license granted by TheStreet.com to E*TRADE with
respect to the Licensed Content or any other content, materials or information
licensed to E*TRADE by TheStreet.com prior to the Effective Date and that such
prior license(s) shall be considered null and void.
2.3 TheStreet.com acknowledges and agrees that E*TRADE may, and has the right
to, directly or indirectly sell, include, insert, or place advertising,
marketing, promo tional or other materials relating to or associated with
third party products, services or the like, and other E*TRADE products and
services, on the Co-branded Web Pages. *****
2.4 Except with respect to the Licensed Content and any other materials in the
form provided or licensed by TheStreet.com under this Agreement and subject to
Section 4.2 below, TheStreet.com shall have no liability, responsibility or
obligation whatsoever, regardless of the form of action or basis of the claim
(whether in contract, tort, including negligence, or otherwise), with respect
to E*TRADE's customers, potential customers or any other third parties as a
result of the acts, omissions or activities of E*TRADE or any other third
party in connection with or as a result of this Agreement.
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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2.5 Nothing in this Agreement shall be construed to prohibit or prevent
TheStreet.com from using Licensed Content or any substantially equivalent
content in connection with its own subscription services; provided, however,
*****.
2.6 TheStreet.com retains all right, title and interest in the Licensed
Content and TheStreet.com will be solely and exclusively responsible for the
unmodified Licensed Content provided to E*TRADE hereunder. E*TRADE agrees to
be solely and exclusively responsible for any and all modifications,
restructuring, alterations, combinations, translations and/or any changes to
the Licensed Content made by E*TRADE in any manner whatsoever.
2.7 Except for the specific rights and licenses granted to E*TRADE and
applicable obligations and restrictions under the provisions of this
Agreement, nothing in this Agreement shall or shall be construed to restrict,
impair, transfer, license, convey or otherwise alter or deprive TheStreet.com
of any of its rights or proprietary interests in any intellectual property,
information, systems, software, programs, processes, technology, services,
methodologies, products or any other materials or rights, tangible or
intangible.
2.8 Except for the specific rights and license granted to TheStreet.com and
applicable obligations and restrictions under the provisions of this
Agreement, nothing in this Agreement shall or shall be construed to restrict,
impair, transfer, license, convey or otherwise alter or deprive E*TRADE of any
of its rights or proprietary interests in any intellectual property,
information, systems, software, programs, processes, technology, services,
methodologies, products or any other materials or rights, tangible or
intangible.
3. Co-Marketing Obligations
3.1 The parties shall undertake and perform the obligations for the marketing
and promotion of each other's services as described below.
3.1.1 Pursuant to Exhibit B, attached hereto, E* TRADE and
TheStreet.com shall create Co-branded Web Pages which mirror
TheStreet.com web pages and which are accessible from the E*TRADE
WebSite.
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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3.1.2 As of the Effective Date and at mutually agreed upon intervals
thereafter, E*TRADE shall, through electronic mail, and may, through
its WebSite, notify Registered Members and visitors to the E*TRADE
WebSite of the opportunity to obtain a one-year subscription to the
Premium Licensed Content on the Co-branded Web Pages at no charge in
the event E*TRADE receives a Submitted Application from them.
3.1.3 E*TRADE and TheStreet.com agree that E*TRADE will have the
option to provide current Account Holders, Registered Members and
other visitors to the E*TRADE WebSite access to the Premium Licensed
Content on the Co-branded Web Pages at no charge in a manner to be
mutually agreed upon by the parties after the Effective Date.
3.1.4 As of the Effective Date and at mutually agreed upon intervals
thereafter, TheStreet.com shall contact Expired Free-Trial Users via
electronic mail to notify them of the opportunity to obtain a
one-year subscription to the Premium Licensed Content on the
Co-branded Web Pages at no charge in the event that E*TRADE receives
a Submitted Application from them.
3.1.5 E*TRADE and TheStreet.com shall provide all E*TRADE Active
Traders with access to the Premium Licensed Content on the Co-branded
Web Pages at no charge to such Active Traders.
3.1.6 TheStreet.com shall provide all current E*TRADE Registered
Members and Account Holders with access to the Free Licensed Content
on the Co-branded Web Pages at no charge.
3.1.7 Upon E*TRADE's written approval, TheStreet.com may, but is
under no obligation to, sell subscriptions to the Premium Licensed
Content on the Co-branded Web Pages to E*TRADE Registered Members and
Account Holders who are not Active Traders and who are not otherwise
entitled to a free subscription. Such Account Holders will receive,
at a minimum, a ***** discount off TheStreet.com's normal rates.
TheStreet.com shall not provide a greater discount for any other
comparable licensee of substantially the same content under
substantially the same terms unless TheStreet.com matches such
discount for E*TRADE. TheStreet.com shall pay E*TRADE ***** of all
subscription fees derived from such subscription sales.
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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3.2 Subject to all the terms and conditions of this Agreement, each party (the
"Licensor") hereby grants to the other (the "Licensee") a nonexclusive,
nontransferable, non-sublicensable license to use Licensor's Licensed Marks
(defined below) on the Licensee's WebSite solely in connection with the
marketing and promotion of Licensor's WebSite and related online services. The
"Licensed Marks" shall mean solely the names, servicemarks and trademarks and
logos specified in Exhibit D hereto, subject to any usage guidelines and
notice requirements provided in writing by the Licensor; provided, however,
that the Licensor, in its sole discretion from time to time, may change the
appearance and/or style of the Licensed Marks or add or subtract from the list
in Exhibit D, provided that, unless required earlier by a court order or to
avoid potential infringement liability, Licensee shall have fourteen (14) days
to implement any such changes. Licensee hereby acknowledges and agrees that
(i) Licensor's Marks are either owned solely and exclusively by Licensor or
Licensor has the right to provide the license to Licensee set forth in this
Section, (ii) except as set forth herein, Licensee has no rights, title or
interest in or to Licensor's Marks and (iii) all use of the Licensor's Marks
by Licensee shall inure to the benefit of Licensor. Licensee agrees not to
apply for registration of the Licensor's Marks (or any mark confusingly
similar thereto) anywhere in the world. Licensee agrees that it shall not
knowingly engage, participate or otherwise become involved in any activity or
course of action that diminishes and/or tarnishes the image and/or reputation
of any of Licensor's Marks. Licensee further agrees that the use of any
Licensed Mark is subject to the approval of Licensor.
3.3 TheStreet.com, in connection with Co-branded Web Pages, may notify or
otherwise advise any party having access to Licensed Content through E*TRADE
as a result of this Agreement, that they are only permitted to make one
printed copy of the Licensed Content for individual use (or download same for
the same limited purpose) and they are not permitted to reproduce,
republish, broadcast or otherwise distribute the Licensed Content without
prior written permission of TheStreet.com and except for any payment or other
terms inconsistent with the provisions of this Agreement, are otherwise
subject to the terms and conditions of TheStreet.com subscriber or membership
agreement available for inspection on TheStreet.com site.
3.4 With the exception of requiring minimum trading activity or a Submitted
Application, E*TRADE may not charge E*TRADE Account Holders or any others any
separate fee or charge or impose additional costs or restrictions in order to
allow access or make available the Licensed Content, other than those standard
charges and
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restrictions it normally charges or imposes on E*TRADE Account Holders or
others for the use of its own WebSite.
3.5 E*TRADE shall not furnish, permit or otherwise provide, make available,
link, reproduce, transmit, furnish or distribute Licensed Content itself or
through or to third parties for use on or through any other facility other
than E*TRADE, the Co-branded Web Pages or the links to TheStreet.com as
permitted hereunder.
4. Payment
4.1 Subject to the terms and conditions of this Agreement, E*TRADE agrees to
pay to TheStreet.com the following:
(a) A minimum payment of $***** per month in advance on the first day
of each month, beginning upon the launch of Co-branded Web Pages on the
E*TRADE WebSite. The $***** minimum payment shall constitute an up-front
payment for any combination of Submitted Applications at $***** each and
Active Users at either $***** each (if Active Users number ***** or fewer
during such month) or $***** each (if Active Users number greater than *****
during such month).
(b) Once the $***** minimum has been exceeded, additional payments
shall be calculated at $***** for each additional Submitted Application and
either $***** per Active User (if Active Users number ***** or fewer) or
$***** per Active User (if Active Users number greater than *****). Such
additional payments shall be due within thirty (30) days after the end of the
month in which such excess occurs.
4.2 The parties believe that the structure of the payments described in
Section 4.1 are consistent with the applicable laws and regulations governing
the activities of broker-dealers and unregistered entities. Notwithstanding
the foregoing, however, if the payments in Section 4.1 are determined to be
prohibited under those laws and regulations governing the activities of
broker-dealers, then the parties shall negotiate and agree upon a mutually
acceptable non-refundable fee structure as an alternative to the payment
described in this Section 4.1, failing which either party may terminate this
Agreement on thirty (30) days' written notice to the other party.
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
8
<PAGE>
5. Prices
5.1 Except as specifically set forth in this Agreement, each party remains
responsible for establishing its own prices and charges to customers,
subscribers or otherwise in connection with its own offerings, products and/or
services available in the commercial marketplace. Furthermore, except as
otherwise provided herein or subsequently mutually agreed upon in writing,
each party bears its own expenses and costs associated with performing its
obligations under this Agreement.
6. Right to Audit
6.1 Each party shall keep, maintain and preserve in a readily accessible place
allowing for access within twenty-four (24) hours, and for the earlier of at
least three (3) years: (i) from the date of the transactions and activities
being audited; or (ii) following termination or expiration of the term of this
Agreement or any renewal(s) thereof, accurate records relating to such party's
payment and other obligations hereunder. Such records shall be maintained as
confidential, but shall be available for inspection and audit as provided
herein. Each party shall have the right at least once per calendar year to
have an independent public accountant, reasonably acceptable to the other
party, examine such other party's relevant books, records and accounts for the
purpose of verifying the fulfillment of obligations to the other party as
required under this Agreement. Each party acknowledges and agrees that such
accountant shall not have access to the books, records, and accounts relating
to other products or services except as such books, records and accounts also
directly relate to its obligations hereunder. Each audit will be conducted at
the audited party's place of business, or other place agreed to by
TheStreet.com and E*TRADE, during the audited party's normal business hours
and conducted to minimize any disruption to the audited party's business
activities, with at least five (5) business days prior written notice to the
audited party. The auditing party shall pay the fees and expenses of the
auditor for the examination.
7. Warranties
7.1 Each party represents and warrants to the other that: (i) it has the right
to enter into this Agreement and its obligations are not in conflict with any
other of its obligations; (ii) all services will be performed in a timely,
competent and professional manner; (iii) materials, information and services
furnished and/or the use of same as permitted under this Agreement, do not
violate or inftinge the rights of any other party
9
<PAGE>
or the laws or regulations of any governmental, regulatory, or judicial
authority; (v) materials, information and services furnished and/or the use of
same as permitted under this Agreement, do not contain any libelous,
defamatory, obscene or unlawful material under the laws of the United States
in effect at the time such materials, information and/or services are produced
and provided to the other hereunder. Furthermore, TheStreet.com warrants that
it has full ownership of, all right, title and interest in and to, or all
necessary licenses to furnish, all Licensed Content as required hereunder.
TheStreet.com represents and warrants that the Co-branded Pages and the
Licensed Content are Year 2000 Compliant. For purposes of this Agreement,
"Year 2000 Compliant" shall mean that The Co-branded Pages and the Licensed
Content and the access and use thereof will not be materially affected by any
inability to, individually and in combination, completely and accurately
address, present, produce, store and calculate data involving dates before, on
or after January 1, 2000; specifically: (i) no value for current date will
cause any interruption in operation; (ii) date-based functionality will behave
consistently when dealing with dates before, on or after January 1, 2000;
(iii) use and access to the Co-branded Pages and the Licensed Content will not
produce abnormal endings or incorrect results when working with dates before,
on or after January 1, 2000; (iv) in all interfaces and data storage, the
century will be specified explicitly and will be unambiguously derived; and
(v) year 2000 will be recognized as a leap year. The foregoing representation
and warranty shall not and shall not be construed to apply to or remedy Year
2000 problems in third party interfaces, data, software, or other materials or
information which is not supplied by or within the control of TheStreet.com
and if incorrect date information is provided by the user or from any other
external product or other source, this information will be used by the
Licensed Content and Co-Branded Pages as received.
7.2 EXCEPT AS SPECIFICALLY SET FORTH ABOVE, NEITHER PARTY MAKES ANY OTHER OR
DIFFERENT REPRESENTATIONS OR WARRANTIES TO THE OTHER OR TO ANY THIRD PARTY,
WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8. Confidential Information
8.1 Each party agrees to regard and preserve as confidential all information
related to the business and activities of the other, its customers, clients,
suppliers and other entities with whom such other party does business, that
may be obtained from any
10
<PAGE>
source or may be developed as a result of this Agreement ("Confidential
Information"). Each party agrees to hold such Confidential Information in
confidence for the other and shall not, except in furtherance of the purposes
of this Agreement, use (directly or indirectly) any such Confidential
Information for its own benefit or the benefit of any other party, nor
disclose such Confidential Information to any person, firm or enterprise,
unless authorized by the other party in writing, and even then, to limit
access to and disclosure of such Confidential Information to its employees on
a "need to know" basis only.
8.2 Information shall not be considered Confidential Information to the extent
it is: (i) already known to the receiving party free of any restriction at the
time it is obtained; (ii) subsequently learned from an independent third party
free of any restriction and without breach of this or any other Agreement;
(iii) is or becomes publicly available through no wrongful act or (iv) is
independently developed by one party without reference to any Confidential
Information of the other. Disclosure of Confidential Information pursuant to
the compulsion of proper judicial or other legal process is permitted;
provided, however, that the parties notify each other and use all available
legal means to protect and limit such disclosure to only those persons with a
"need to know" for purposes of such proceedings.
9. Intellectual Property Indemnification
9.1 Each party agrees to defend and/or handle at its own cost and expense any
claim or action against the other by a third party for actual or alleged
infringement of any intellectual or industrial property right, including,
without limitation, trademarks, service marks, patents, copyrights or the
misappropriation of trade secrets or other proprietary rights, or for personal
injury, defamation, slander or libel, based upon any materials or services as
furnished by such party or the possession and/or use thereof by the other
party. Each party agrees to promptly notify the other party of any such claim
or action and provides the indemnifying party with reasonable assistance in
the defense thereof. The party responsible for defense of any such claim or
action further agrees to indemnify and hold the other party harmless from and
against any and all liabilities, losses, damages, costs and expenses
(including reasonable attorneys' fees) associated with any such claim or
action and shall have the sole right to conduct the defense of any such claim
or action and all negotiations for its settlement or compromise, unless
otherwise mutually agreed to in writing. Neither party is authorized to agree
to any
11
<PAGE>
settlement, compromise or the like which would require that the other make any
payment or bear other obligations without prior written approval of the other
party.
9.2 Without limiting Section 9.1 above, E*TRADE agrees to defend and/or handle
at its own cost and expense any claim or action against TheStreet.com based
upon any alterations, modifications or changes made by E*TRADE to the Licensed
Content, any frames, links, or any other material or information added by
E*TRADE that is displayed, perceived or associated with the Licensed Content
as permitted hereunder, including, without limitation, any advertising,
promotional or other materials hereunder; provided that TheStreet.com provides
prompt notice of any such claim or action and provides E*TRADE with reasonable
assistance in the defense thereof. E*TRADE further agrees to indemnify and
hold TheStreet.com harmless from and against any and all liabilities, losses,
damages, costs and expenses (including reasonable attorneys' fees) associated
with any such claim or action and shall have the sole right to conduct the
defense of any such claim or action and all negotiations for its settlement or
compro mise, unless otherwise mutually agreed to in writing.
10. General
10.1 Term: This Agreement shall commence as of the Effective Date and shall
continue in full force and effect for an initial term of one (1) year. E*TRADE
reserves the right to terminate this Agreement without cause at any time
during the initial term of this Agreement upon sixty (60) days written notice.
Thirty (30) days prior to the expiration of the initial one (1) year term, the
parties shall agree whether or not to renew this Agreement. If the parties
agree to renew, this Agreement shall continue thereafter on a month to month
basis unless otherwise terminated upon at least thirty (30) days written
notice to the other. Termination of this Agreement shall not affect any
rights, obligations or interests arising prior to the effective date of
termination and which, to give effect to their meaning, must continue in
accordance with their terms.
10.2 Material Breach: If there is any material breach of this Agreement by one
party, the other party may (reserving cumulatively all other remedies and
rights under this Agreement and in law and in equity) terminate this
Agreement, in whole or in part, by giving thirty (30) days' written notice;
provided, however, that such termination shall not be effective if the breach
has been cured prior to the expiration of said thirty (30) days.
12
<PAGE>
10.3 Insolvency: Either party may immediately terminate this Agreement in the
event the other party becomes bankrupt or insolvent, within the meaning of the
United States Bankruptcy Code or any substantial and relevant portion of its
assets are included in any arrangement with its creditors, an order to windup
or submission to control by a receiver, assignee or trustee for the purpose of
preserving the assets, whether by the voluntary act of the affected party or
otherwise.
10.4 Limitation of Liability: IN NO EVENT WILL EITHER PARTY BE LIABLE, TO THE
OTHER OR TO ANY THIRD PARTY, FOR ANY SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES IN ANY MANNER IN CONNECTION WITH OR ARISING
OUT OF THIS AGREE MENT, REGARDLESS OF THE FORM OF ACTION OR THE BASIS OF THE
CLAIM OR WHETHER OR NOT THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
10.5 Excusable Delay: Neither party will be liable to the other for any delay
or failure to perform due to causes beyond its control and without its fault
or negligence.
10.6 Assignment: Except in connection with a merger, sale, transfer,
conveyance, acquisition or other corporate reorganization or change in control
or ownership relating to all or any material portion of its stock, assets,
operations or business, neither party may assign, transfer or subcontract this
Agreement and/or any rights and/or obligations hereunder, without the written
consent of the other and any attempt to do so shall be void.
10.7 Waiver: The failure of either party at any time to enforce any right or
remedy available to it under this Agreement with respect to any breach or
failure by the other party shall not be construed to be a waiver of such right
or remedy with respect to any other breach or failure by the other party.
10.8 Severability: If any provision of this Agreement shall be held illegal,
invalid or unenforceable, in whole or in part, such provision shall be
modified to the minimum extent necessary to make it legal, valid and
enforceable, and the legality, validity and enforceability of all other
provisions of this Agreement shall not be affected thereby.
10.9 Survival: The provisions of Sections 6, 7, 8, 9 and 10 and the last three
sentences of Section 3.2 shall survive the termination of this Agreement for
whatever reason, and,
13
<PAGE>
in addition, the obligations of the parties under this Agreement that by their
nature continue beyond the expiration of this Agreement shall survive any
termination or cancellation of the Agreement.
10.10 Notices: Unless otherwise specified all notices shall be in writing and
delivered personally, mailed, first class mail, postage prepaid, or delivered
by confirmed electronic or digital means, to the addresses set forth at the
beginning of this Agreement and to the attention of the undersigned. Either
party may change the addresses or addressees for notice by giving notice to
the other. All notices shall be deemed given on the date personally delivered,
when placed in the mail as specified or when electronic or digital
confirmation is received.
10.11 Advertising: The parties agree to use reasonable efforts to mutually
agree on and issue a press release within five (5) days of the Effective Date
of this Agreement. All press releases, promotions and advertisements with
respect to E*TRADE and TheStreet.com and the subject matter of this Agreement
shall be subject to mutual prior written approval in advance of the first
release or use thereof. Except as specifically set forth in this Agreement,
neither party shall use the name, service or trademarks, or refer to the
other, its products and/or services in any advertising, publicity releases or
marketing communication, without prior written approval of such other party.
10.12 Independent Contractors: Each party is acting as an independent
contractor. Neither party's personnel are employees or agents of the other
party for federal, state or other taxes or any other purposes whatsoever, and
are not entitled to compensation, employee benefits or other incidents of
employment from any of the other parties. Each party assumes sole and full
responsibility for the acts and omissions of its own employees,
representatives and agents. Personnel of one party have no authority to make
commitments or enter into contracts on behalf of, bind or otherwise obligate
any other party in any manner whatsoever. Except for the specific obligations
set forth in this Agreement, nothing hereunder shall be deemed to constitute,
create, give effect to or otherwise recognize a joint venture, partnership or
business entity of any kind, nor shall anything in this Agreement be deemed to
constitute any party the agent or authorized representative of the other.
Except for payments mutually agreed upon and specifically described herein or
otherwise mutually agreed upon in writing, nothing shall be construed as
providing for the sharing of profits or losses arising out of the efforts of
either or both of the parties.
14
<PAGE>
10.13 Governing Law & Interpretation: This Agreement shall be construed and
enforced under the substantive laws of the State of New York, without regard
to its conflict of laws provisions. Headings are solely for reference and
shall not affect the meaning of any terms. If any part of this Agreement is
held invalid, illegal or unenforceable, the remaining provisions will be
unimpaired. No modification, course of conduct, amendment, supplement to or
waiver of this Agreement or any provisions hereof shall be binding upon the
parties unless made in writing and duly signed by both parties. In any action
to enforce this Agreement, the prevailing party will be entitled to recover
costs and reasonable attorneys' fees.
10.14 Entire Agreement: The Exhibits, materials, information and documents
attached, referred to or specified in this Agreement are incorporated by
reference and constitute a part of this Agreement as if fully set forth
herein. This constitutes the entire agreement between the parties and
supersedes any prior or inconsistent agreements, negotiations, representations
and promises, written or oral, regarding the subject matter. Except as
otherwise expressly provided herein, any provision of this Agreement may be
amended or modified only with the written consent of both parties.
10.15 Counterparts: This Agreement may be executed in counterparts, each of
which shall be deemed an original but both of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
The Street.com, Inc. E*Trade Group, Inc.
By: /s/ Brendan Amyot By: /s/ Jerry Gramaglia
-------------------------------- -----------------------
Name: Brendan Amyot Name: Jerry Gramaglia
[Type or Print] [Type or Print]
-------------------------------- -----------------------
Title: VP General Manager- Consumer Title: SVP; Marketing
-------------------------------- -----------------------
Date: 1/12/99 Date: 1/12/99
-------------------------------- -----------------------
15
<PAGE>
EXHIBIT A
Licensed Content
Licensed Content hereunder shall consist of the following information and
materials of market commentary and editorial content:
1. Markets commentary:
"Wake-Up Call"
"Midday Musings"
"Market Roundup"
"Evening Update"
"Silicon Saturday"
"Sunday's Little Letters, Big Ideas"
"The Coming Week"
"Bond Focus"
"Euro Markets"
"Market Update"
"Euro Vision"
"Best of TSC"
"Special Features"
2. Companies:
"Top Stories"
"Silicon Valley"
"Options Buzz"
"Online Trading"
"Stock Mart"
"Articles Elsewhere"
"Latin Loot"
"The Ax"
"Short Stories"
"The Ball Game"
"Moscow Journal"
"Mall Rat"
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<PAGE>
"Wall Street Whistleblower"
3. Funds:
"Fund Watch"
"Under the Hood"
"The Buysider"
"Syre & Bailey"
"TSC Fund Forum"
"TSC Tax Forum"
"Looking Out for the Shareholder"
"Game Plan"
"TSC 10"
"Ahead of the Pack"
"Latest Laggard"
4. Commentary/Columns:
"Editor's Letter"
"Wrong"
"Herb on TheStreet"
"Tech Savvy"
"The Invisible Mouth"
"Technician's Take"
"Wing Tips"
"Jim Griffin"
"Marc Chandler"
"Andy Kessler"
"The Chartist"
"Building Blocks"
"Eye to the Keyhole"
"Power Lines"
"Noglows on the Net"
"MonEmailbag"
"Investors' Bookshelf"
"Drinks & Diversions"
"Fundamental Questions"
17
<PAGE>
"Greed & Fear"
"Sports Scoop"
"View from the North"
"Silicon Babylon"
"Easy Money"
"How We Did"
"Special Features"
5. Educational:
"TSC Schoolhouse
"TSC Glossary"
18
<PAGE>
EXHIBIT B
Implementation Specifications
Overview
TheStreet.com will develop a Co-branded mirror site of their full subscription
website, made available exclusively to E*TRADE visitors, members, and
customers. E*TRADE users will have access to the Co-branded site in five
different ways:
<TABLE>
<CAPTION>
Type of Access Content Provided Eligible Users
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1) Power E*TRADE - unlimited access o Premium Licensed Content o Power E*TRADE users (Active Traders)
2) One-year free subscription o Premium Licensed Content o E*TRADE visitors and members who convert to
customers as a direct result of the offer
o TSC expired free-trial users who become
E*TRADE customers as a direct result of the
offer
3) Standard E*TRADE member and cus- o Free Licensed Content (with link to o E*TRADE members
tomer access discounted subscription sign-up) o Non-Power E*TRADE and non-1-year-free-
subscription customers
4) E*TRADE visitors o Free Licensed Content (without link o E*TRADE visitors (non-members and
to discounted subscription sign-up) non-customers)
5) Free trial (mechanics tbd;
either 30 days free to users who o Premium Licensed Content o E*TRADE members
request it, or two weeks free
to everyone every 60-90 days) o Non-Power E*TRADE and non-1-year-free-
subscription customers
</TABLE>
19
<PAGE>
Accessing TheStreet.com content
- -------------------------------
o Power E* TRADE users will launch the TSC/ET Co-branded site from a link
on the Power E*TRADE home page; the site will launch in a spawned browser
window
o Visitors, members, and customers (including Power E*TRADE customers) will
access TSC/ET Co-branded site from a link on the Portfolio & Markets
page, receiving either Free or Premium Licensed Content, depending on
their level of access
o Visitors, members, and customers will also be able to access a marketing
jump page (describing TheStreet.com offer, linking to an E*TRADE online
application, and linking to the Co-branded site) from site banners and a
link from the E*TRADE home page
Customer experience
- --------------------
o Should be a seamless login experience for users; they should not have to
provide any information to get access to TheStreet (unless they are
paying for a subscription, in which case they go through the normal TSC
subscription process)
o *****
o Visitors, members, and customers receiving access to the Free Licensed
Content should get a marketing upsell page when they attempt to access a
Premium feature (e.g., If you open a new E*TRADE account, get free access
for a year . . . . if you're a current customer, open another account,
join Power E*TRADE, or click here to subscribe at an E*TRADE discounted
rate . . . . if you're a customer who should be getting access to premium
features, please log on) with links to the appropriate areas on
TheStreet.com's site (for subscriptions) and E*TRADE (for new account
sign-ups and customer log on)
o Members and customers should have a link to a page for discounted
subscription sip-ups; visitors should not be given this link
o At the end of a user's one-year free subscription, Power E*TRADE access,
or free trial, users should receive a one-time marketing page (when they
try to access the Co-branded site the very next time), informing them
that they are now only
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
20
<PAGE>
eligible for the Free content, but that they can continue receiving the
Premium content if they open an account, subscribe, or join Power E*TRADE
o TheStreet.com has a daily email bulletin service; default for receiving
these bulletins should be off, unless mem bers/customers explicitly ask
to receive the bulletins (in which case the bulletins must be stripped of
competitor references and links)
o Clicking on a symbol in TheStreet's content should refresh the E*TRADE
browser window with a quote of the selected security
Account conversions
- -------------------
o Visitors, members, and customers should have a link on the Co-branded
site and on the Premium feature marketing upsell page to another page
describing TheStreet.com 1-year subscription offer, and from there back
to E*TRADE to apply for a new account (which passes a source code,
indicating their response to TheStreet.com offer)
o Online application and Request-by-mail form must allow customers to input
TheStreet.com source code, and Customer Service/Softbank must be prepared
to handle telephone requests for TheStreet.com offer using the same
source code
o Marketing jump page (accessed from the E*TRADE home page or special offer
banner ads) should provide a link to the E*TRADE online application,
passing TheStreet.com source code
21
<PAGE>
EXHIBIT C
Service Level Agreement
I. Performance/Scale
A. TheStreet.com product performance/scale
1. TheStreet.com will launch a production-quality,
co-branded mirror site of the normal subscription
site for E*TRADE users (visitors, Registered
Members, and Account Holders) on or before market
open on March lst.
2. TheStreet.com will support ***** simultaneous
E*TRADE users with the service levels outlined in
this SLA, a number no more than ***** of
TheStreet.com's total system capacity.
B. System performance metrics to be measured by E*TRADE
1. TheStreet.com servers will average less than 3
seconds response time for 90% of requests every
calendar month. This measures server response time
only, not network transmission time. Response time is
measured according to the definition provided by
Accrue's reporting software, that is the amount of
time elapsed between the server's receipt of the
request and the beginning of the transmission of that
response.
2. TheStreet.com servers will average 99.9% up time
every calendar month. This would be exclusive of
regularly scheduled maintenance and causes outside
the control of TheStreet.com (e.g., force majeure
events). E*TRADE will be given 48 hours notice of any
scheduled maintenance that affects the performance of
TheStreet.com services with respect to E*TRADE users.
Regularly scheduled maintenance will be scheduled to
minimize interruption or disruption to services to
E*TRADE users unless
- -----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
22
<PAGE>
commercially impractical. There will be no
scheduled mainte nance during market (NYSE - EST or
EDST) hours.
3. TheStreetcom will post an online error message,
pre-approved by E*TRADE in the event of a system
outage within 2 minutes of TheStreet.com being
aware of such outage.
C. TheStreet.com customer service telephone metrics
1. Using a three-week trailing average, 95% of all
calls from E*TRADE Registered Members and Account
Holders to TheStreet.com will be answered within 30
seconds.
2. Using a three week trailing average, there should be
no greater than a 10% hourly abandonment rate for
E*TRADE Registered Members and Account Holders.
II. Monitoring/Reporting
A. System performance monitoring (TheStreet.com)
TheStreet.com will provide monthly reporting which details the
following details per period as it relates to E*TRADE users:
o Average response time
o Actual daily response time detail
o Average server up time
o Actual daily server up time detail
o Number of total monthly page views
o Number of total monthly unique users
This information will be e-mailed to the appropriate contact within
E*TRADE (e-mail address TBD and will be provided to TheStreet.com)
within 5 business days after the first working day of each month for
the previous month's reports. Alternatively, TheStreet.com can post
the above reports on a mutually-agreed upon secure web site for
review by TheStreet.com and E*TRADE.
23
<PAGE>
B. Customer service telephone monitoring
1. E*TRADE representatives may monitor calls to
TheStreet.com every two weeks, or more often if
deemed necessary to enhance service quality and shall
bear all costs and expenses related thereto.
2. E*TRADE may conduct unscheduled test calls.
3. TheStreet.com will provide the following reports
monthly as it relates to E*TRADE Registered Members
and Account Holders (following the same schedule as
detailed in section A):
o Daily average response time
o Daily average rep talk time
o Daily call total
o Daily average abandonment rate
III. Escalation Procedures
1. In all cases of service outage greater than 2
minutes of which TheStreet.com is aware,
TheStreet.com must notify E*TRADE via the following
email addresses:
Name Email
E*TRADE operators [email protected]
E*TRADE customer service [email protected]
Brent Blackaby *****
2. When TheStreet.com notifies E*TRADE of a service
outage, TheStreet.com will provide, to the extent
known by TheStreet.com at that time,:
o Explanation of the outage
o ETA for service restoral
3. TheStreet.com will continue to notify E*TRADE with
updated status for the duration of the outage.
4. TheStreet.com will provide a post-incident summary.
This summary will include:
- -----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
24
<PAGE>
o Cause of the problem
o Method used to correct the problem
o Measures TheStreet.com will take to prevent further
occurrences
5. E*TRADE / TheStreet.com contact and escalation list
o E*TRADE and TheStreet.com will respond in a
synchronous fashion (e.g., a phone conversation) to
escalated issues within one hour of each escalation
o E*TRADE and TheStreet.com will each start with
#1 contact and move up from there until
synchronous communication can be established
E*TRADE business contacts
1) ***** Product marketing manager
Email: *****
Work phone: *****
Home phone: *****
2) ***** Group product marketing manager
Email: *****
Work phone: *****
Cell phone: *****
Home phone *****
3) ***** Director of product marketing
Email: *****
Work phone: *****
Cell phone: *****
Home phone: *****
E*Trade technical contacts
1) ***** Technical lead
Email: *****
Work phone: *****
Home phone:
- -----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
25
<PAGE>
2) ***** Manager -Product development
Email: *****
Work phone: *****
Cell phone: *****
Home phone: *****
3) ***** VP- Product development
Email: *****
Work phone: *****
Cell phone: *****
Home phone: *****
TheStreet.com business contacts
1) ***** Marketing Manager
Email: *****
Work phone: *****
Cell phone: *****
Home phone: *****
2) ***** Circulation Director
Email: *****
Work phone: *****
Cell phone:
Home phone: *****
3) ***** VP. GM Consumer Marketing
Email: *****
Work phone: *****
Cell phone: *****
Home phone: *****
TheStreet.com technical contacts
- ------------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
26
<PAGE>
1) ***** Dir. of Content Management
Email: *****
Work phone: *****
Cell phone: *****
Home phone: *****
2) ***** Dir. of Commerce Technology
Email: *****
Work phone: *****
Cell phone:
Home phone: *****
3) ***** VP, Chief Technology Officer
Email: *****
Work phone: *****
Cell phone: *****
Home phone: *****
IV. Business Resumption
1. TheStreet.com must maintain the ability to switch processing
from the primary server to a hot backup server within 10
minutes. Reasonable periodic testing of this procedure, no
more frequently than twice annually, will be conducted as
requested by E*TRADE on a designated weekend by both
TheStreet.com and E*TRADE personnel.
2. Any modifications and/or network configuration changes
(including systems maintenance) as well as upgrades and
removal of devices that may adversely impact the levels of
service to E*TRADE users need to be advised of before they
occur by designated/qualified personnel.
V. Product Maintenance
1. TheStreet.com shall provide ongoing software maintenance of
TheStreet.com services emanating from the Co-Branded mirror
site for Account Holders, including but not limited to the
following:
- ---------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
27
<PAGE>
o Use all reasonable commercial efforts to fix
catastrophic ("Level I") bugs within 24 hours;
Level I bugs are defined as bugs that prevent
subscribers from using the product or accessing key
data in the product.
o Use all reasonable commercial efforts to fix
non-catastrophic ("Level 2") bugs within 7 business
days; Level 2 bugs are defined as bugs that prevent
TheStreetcom services from running as described in
the product documentation.
o Evaluate and consider deployment or implementation
of en hancements requested by E*TRADE; a
enhancement is defined as an important change to
the UI, underlying code, or server technology
which, while not a bug fix, will significantly
improve usability, connection speed, processing
speed, branding, or data accuracy
o Deploy non-high priority enhancements as mutually
agreed upon on a case-by case basis; a non-high
priority enhancement is one which improves the
performance of the product but is prioritized lower
than Level 1 & 2 bugs as well as high priority
enhance ments
o TheStreet.com shall notify E*TRADE in writing of
any material changes related to the Licensed
Content provided on the Co-Branded mirror site for
E*TRADE users, at least one week before going into
production.
VI. Revenue Impact Recoupment
1. In the event that TheStreet.com fails to meet any of the
performance objectives outlined in this SLA on more than
***** within any 30-day period, E*TRADE will notify
TheStreet.com detailing and describing such *****, and
E*TRADE shall be permitted to pay TheStreet.com an amount
equal to only ***** of the monthly compensation specified in
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
28
<PAGE>
Section 4.1 of the Agreement during the month in which such
breach of the SLA occurred.
29
<PAGE>
EXHIBIT D
LICENSED MARKS
Marks licensed by E*TRADE to TheStreet.com Marks licensed by TheStreet.com
to E*TRADE
30
<PAGE>
EXHIBIT 10.7
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS DOCUMENT.
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
YAHOO! INC.
CONTENT LICENSE AGREEMENT
THIS CONTENT LICENSE AGREEMENT (the "Agreement") is made as of this 1st
day of January, 1998 (the "Effective Date") between YAHOO!, INC., a California
corporation, with offices at 3400 Central Expressway, Suite 201, Santa Clara, CA
95051, ("YAHOO") and TheStreet.com, L.L.C., ("Licensor"), a Delaware limited
liability company, with offices at Two Rector Street, 14th Floor, New York, NY
10006.
In consideration of the mutual promises contained herein, the parties agree as
follows:
SECTION 1: DEFINITIONS
Unless otherwise specified, capitalized terms used in this Agreement
shall have the meanings attributed to them in Exhibit A hereto.
SECTION 2: GRANT OF LICENSES
2.1 Grant of Licenses. Subject to the terms and conditions of this Agreement,
Licensor hereby grants to Yahoo, under Licensor's Intellectual Property
Rights:
(a) A non-exclusive, worldwide license to use, modify, reproduce, distribute,
display and transmit the Licensor Content in electronic form in
connection with Yahoo Properties via the Internet, and to permit users of
the Yahoo Properties to download and print the Licensor Content for
personal use. Yahoo's license to modify the Licensor content shall be
limited to modifying the Licensor Content to fit the format and look and
feel of the Yahoo Property.
(b) A non-exclusive, worldwide, fully paid license to use, reproduce and
display the Licensor's Brand Features: (i) in connection with the
presentation of the Licensor Content on the Content Pages in the Yahoo
Properties; and (ii) in connection with the marketing and promotion of
the Yahoo Properties.
<PAGE>
(c) Subject to the restrictions and obligations herein, Yahoo shall be
entitled to sublicense the rights set forth in this Section 2.1 (1) to
its Affiliates only for inclusion in Yahoo Proper ties, and (2) in
connection with any mirror site, derivative site, or distribution
arrangement concerning a Yahoo Property.
SECTION 3: DELIVERY OF LICENSOR CONTENT; ADVERTISING REVENUE
3.1 Yahoo's Responsibilities. In addition to any responsibilities
that may be set forth in Exhibit C, Yahoo will be responsible
for the design, layout, posting, and maintenance of the
Content Pages. In no event is Yahoo under any obligation,
express or implied, to post or otherwise include any of the
Licensor Content in any Yahoo Property, including without
limitation, in any Content Pages.
3.2 Licensor Assistance. In addition to any responsibilities that
may be set forth in Exhibit C, Licensor will provide on-going
assistance to Yahoo with regard to technical, administrative
and service-oriented issues relating to the utilization,
transmission and maintenance of the Licensor Content, as Yahoo
may reasonably request. Licensor will use its reasonable best
efforts to ensure that the Licensor Content is accurate,
comprehensive and updated regularly as set forth in Exhibit C.
3.3 Advertising Rights. *****
3.4 Notices. Yahoo will not alter or impair any acknowledgment of
copyright or other Intellectual Property Rights of Licensor
that may appear in the Licensor Content and the Licensor Brand
Features, including all copyright, trademark and similar
notices that Licensor may reasonably request.
3.5 Links. The parties will maintain the hypertext links specified
in Exhibit D.
SECTION 4: DELIVERY OF LICENSOR CONTENT
During the term of this Agreement, Licensor shall deliver updates of
the Licensor Content to Yahoo in accordance with the Delivery Specifications set
forth in Exhibit C. Licensor also shall provide Yahoo with reasonable prior
notice of any significant Enhancements that generally affect the appearance,
updating, delivery or other elements of the Licensor Content, and shall make
such Enhancements available to Yahoo upon commercially reasonable terms.
SECTION 5: INDEMNIFICATION
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
2
<PAGE>
Licensor, at its own expense, will indemnify, defend and hold harmless
Yahoo, its Affiliates and their employees, representatives, agents and
affiliates, against any claim, suit, action, or other proceeding brought against
Yahoo or an Affiliate based on or arising from a claim that the Licensor Content
as delivered to Yahoo or any Licensor Brand Feature infringes in any manner any
Intellectual Property Right of any third party or contains any material or
information that is obscene, defamatory, libelous, slanderous, that violates any
person's right of publicity, privacy or personality, or has otherwise resulted
in any tort, injury, damage or harm to any person; provided, however, that in
any such case: (x) Yahoo provides Licensor with prompt notice of any such claim;
(y) Yahoo permits Licensor to assume and control the defense of such action,
with counsel chosen by Licensor (who shall be reasonably acceptable to Yahoo);
and (z) Licensor does not enter into any settlement or compromise of any such
claim without Yahoo's prior written consent, which consent shall not be
unreasonably withheld. Licensor 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 Yahoo or an Affiliate in connection
with or arising from any such claim, suit, action or proceeding. It is
understood and agreed that Yahoo does not intend and will not be required to
edit or review for accuracy or appropriateness any Licensor Content.
SECTION 6: LIMITATION OF LIABILITY / WARRANTY
EXCEPT AS PROVIDED IN SECTION 5, UNDER NO CIRCUMSTANCES SHALL LICENSOR,
YAHOO, OR ANY AFFILIATE BE LIABLE TO EACH OTHER OR ANOTHER PARTY FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES ARISING FROM THIS
AGREEMENT, EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR
LOST BUSINESS.
SECTION 7: TERM AND TERMINATION
7.1 Initial Term and Renewals. This Agreement will become
effective as of the Effective Date and shall, unless sooner
terminated as provided below or as otherwise agreed, remain
effective for an initial term of twelve (12) months following
the first date of public availability of the Licensor Content
on a Content Page within a Yahoo Property (the "Initial
Term"). After the Initial Term, this Agreement will be
automatically renewed for successive additional one year
periods ("Extension Terms"). This Agreement may be terminated
by either party at any time by giving notice to the other
party of not less than sixty (60) days prior to the end of a
Term. As used herein, the "Term" means the Initial Term and
any Extension Term(s).
3
<PAGE>
7.2 Termination for Cause. Notwithstanding the foregoing, this
Agreement may be terminated by either party immediately upon
notice if the other party: (w) be comes insolvent; (x) files a
petition in bankruptcy; (y) makes an assignment for the
benefit of its creditors; or (z) breaches any of its
obligations under this Agreement in any material respect,
which breach is not remedied within thirty (30) days following
written notice to such party.
7.3 Effect of Termination. Any termination pursuant to this
Section 7 shall be without any liability or obligation of the
terminating party, other than with respect to any breach of
this Agreement prior to termination. The provisions of
Sections 5, 6, 7, 8, 9, 10, and this Section 7.3 shall survive
any termination or expiration of this Agreement.
SECTION 8: OWNERSHIP
8.1 By Licensor. Yahoo acknowledges and agrees that: (i) as
between Licensor on the one hand, and Yahoo and its Affiliates
on the other, Licensor owns all right, title and interest in
the Licensor Content and the Licensor Brand Features; (ii)
nothing in this Agreement shall confer in Yahoo or an
Affiliate any right of ownership in the Licensor Content or
the Licensor Brand Features; and (iii) neither Yahoo or its
Affiliates shall now or in the future contest the validity of
the Licensor Brand Features. No licenses are granted by either
party except for those expressly set forth in this Agreement.
8.2 By Yahoo. Licensor acknowledges and agrees that: (i) as
between Licensor on the one hand, and Yahoo and its Affiliates
on the other, Yahoo or the Affiliates own all right, title and
interest in any Yahoo Property and the Yahoo Brand Features;
(ii) nothing in this Agreement shall confer in Licensor any
license or right of ownership in the Yahoo Brand Features; and
(iii) Licensor shall not now or in the future contest the
validity of the Yahoo Brand Features. No licenses are hereby
granted by Yahoo. Yahoo or its Affiliates shall own all
derivative works created by Yahoo from the Licensor Content,
including the Content Pages, pursuant to this Agreement, to
the extent such is separable from the Licensor Content.
SECTION 9: PUBLIC ANNOUNCEMENTS
The parties will cooperate to create any and all appropriate public
announcements relating to the relationship set forth in this Agreement. Neither
party shall make any public announce-
4
<PAGE>
ment regarding the existence or content of this Agreement without the other
party's prior written approval and consent.
SECTION 10: NOTICE, MISCELLANEOUS PROVISIONS
10.1 Notices. All notices, requests and other communications called
for by this agreement shall be deemed to have been given
immediately if made by telecopy or electronic mail (confirmed
by concurrent written notice sent first class U.S. mail,
postage prepaid), if to Yahoo at 3400 Central Expressway,
Suite 201, Santa Clara, CA 95051, Fax: (408) 731-3301
Attention: Vice President (e-mail: ***** ), with a copy to its
General Counsel (e-mail: ***** ), and if to Licensor at the
physical and electronic mail addresses set forth on the
signature page of this Agreement, or to such other addresses
as either party shall specify to the other. Notice by any
other means shall be deemed made when actually received by the
party to which notice is provided.
10.2 Miscellaneous Provisions. This Agreement will bind and inure
to the benefit of each party's permitted successors and
assigns. Neither party may assign this Agreement, in whole or
in part, without the other party's written consent; provided,
however, that: (i) either party may assign this Agreement
without such consent in connection with any merger,
consolidation, any sale of all or substantially all of such
party's assets or any other transaction in which more than
fifty percent (50%) of such party's voting securities are
transferred. Any attempt to assign this Agreement other than
in accordance with this provision shall be null and void. This
Agreement will be governed by and construed in accordance with
the laws of the State of California, without reference to
conflicts of laws rules, and without regard to its location of
execution or performance. If any provision of this Agreement
is found invalid or unenforceable, that provision will be
enforced to the maximum extent permissible, and the other
provisions of this Agreement will remain in force. Neither
this Agreement, nor any terms and conditions contained herein
may be construed as creating or constituting a partnership,
joint venture or agency relationship between the parties. No
failure of either party to exercise or enforce any of its
rights under this Agreement will act as a waiver of such
rights. This Agreement and its exhibits are the complete and
exclusive agreement between the parties with respect to the
subject matter hereof, superseding and replacing any and all
prior agreements, communications, and understandings, both
written and oral, regarding such subject matter. This
Agreement may only be modified, or any rights under it waived,
by a written document executed by both parties. This Agreement
may be executed in any number of counterparts,
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
5
<PAGE>
all of which taken together shall constitute a single
instrument. Execution and delivery of this Agreement may be
evidenced by facsimile transmission.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first written
above.
YAHOO! INC. THESTREET.COM
By: /s/ Ellen Simonoff By: /s/ Brendan Amyot
----------------------------- -------------------------------
Title: VP Title: COO
-------------------------- ----------------------------
Address: 3400 Central Expressway Address: 2 Rector Street
----------------------- --------------------------
Santa Clara, CA 95051 New York, NY 10006
------------------------ --------------------------
Telecopy: ***** Telecopy:
----------------------- -------------------------
E-mail: ***** E-mail: *****
------------------------- --------------------------
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
6
<PAGE>
EXHIBIT A
DEFINITIONS
"Advertising Rights" shall mean the advertising and promotional rights
sold or licensed with respect to Content Pages.
"Affiliates" shall mean any company or any other entity world-wide,
including, without limitation, corporations, partnerships, joint ventures, and
Limited Liability Companies, in which Yahoo owns at least a twenty percent
ownership, equity, or financial interest.
"Content Pages" shall mean those pages in the Yahoo Property that
contain Licensor Content and that are co-branded with both Licensor Brand
Features and Yahoo Brand Features.
"Enhancements" shall mean any updates, improvements or modifications
made to, or derivative works created from, the Licensor Content by Licensor.
"Intellectual Property Rights" shall mean all rights in and to trade
secrets, patents, copyrights, trademarks, know-how, as well as moral rights and
similar rights of any type under the laws of any governmental authority,
domestic or foreign.
"Internet" shall mean the collection of computer networks commonly
known as the Internet, and shall include, without limitation, the World Wide
Web.
"Licensor Brand Features" shall mean all trademarks, service marks,
logos and other distinctive brand features of Licensor that are used in or
relate to the Licensor Content, including, without limitation, the trademarks,
service marks and logos described in Exhibit B hereto.
"Licensor Content" shall mean, collectively, all materials, data, and
similar information collected, produced, and owned by Licensor, which is a
collection of HTML files and certain related scripts, as further described in
Exhibit B attached hereto, including, without limitation, all Enhancements.
"Yahoo Brand Features" shall mean all trademarks, service marks, logos
and other distinctive brand features of Yahoo that are used in or relate to a
Yahoo Property, including, without limitation, the trademarks, service marks and
logos described in Exhibit B.
"Yahoo Properties" shall mean any Yahoo branded or co-branded media
properties, including, without limitation, Internet guides, developed in whole
or in part by Yahoo or its Affiliates and distributed or made available by Yahoo
or its Affiliates over the Internet.
7
<PAGE>
EXHIBIT B
LICENSOR CONTENT
(1) Wrong! -- a column by James Cramer written at least once per day on
which the New York Stock Exchange is open
(2) FundWatch -- a column on mutual funds written at least once per day on
which the New York Stock Exchange is open
(3) -- a second daily mutual funds column to be agreed upon by
both parties
(4) -- a daily column by Dave Kansas to be agreed upon by both
parties
LICENSOR BRAND FEATURES
TheStreet.com
TheStreet.com related logos
YAHOO BRAND FEATURES
Yahoo!
Yahoo related logos
8
<PAGE>
EXHIBIT C
DELIVERY AND TECHNICAL SPECIFICATIONS
A. Licensor's Responsibilities:
1 Deliver FundWatch and Wrong! columns within ***** of when they
appear on THESTREET.COM's site.
2. Deliver the other columns specified in Exhibit B by ***** on a
daily basis for days on which the New York Stock Exchange is
open.
B. Yahoo's Responsibilities:
1. Archive no more than ***** worth of content on its site.
2. Display Licensor Content on a co-branded page with the links
specified in Exhibit D.
3. Display Licensor copyright information on story pages.
C. Format of Content Delivery: text format via email
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
9
<PAGE>
EXHIBIT D
LINKS
During the Term of this Agreement, the following links will be maintained:
<TABLE>
<CAPTION>
LOCATION OF LINK LINK TO WHERE SPECIFICS OF LINK
- ---------------- ------------- -----------------
<S> <C> <C>
Story pages the part of the co-branded banner in
http://www.thestreet.com which TheStreet.com's logo
appears
bottom of story pages http://register.thestreet.com/sc text to be provided by Licensor and
ripts/adpage/Request.d11? to be approved by Yahoo!
NewUserOffer&offer_code
=TSFree Trial
</TABLE>
10
<PAGE>
ADDENDUM 1
TO THE CONTENT LICENSE AGREEMENT EFFECTIVE JANUARY 1, 1998
BETWEEN YAHOO! INC. AND THESTREET.COM, L.L.C.
This Addendum No. 1 to the Content License Agreement (the "Agreement")
with an effective date of January 1, 1998, by and between Yahoo! Inc. ("Yahoo")
and TheStreet.com, L.L.C. ("Licensor") is made as of September 1, 1998, and
modifies certain terms of the Agreement.
The parties agree as follows:
1. Exhibit B is amended to include the following additional content:
(5) Silicon Valley -- a daily (on days on which the New
York Stock Exchange is open) column
from the "Companies" section of
Licensor's web site. On days on which
the New York Stock Exchange is open
and Licensor has no Silicon Valley
column, Licensor will deliver a Top
Stories column from the "Companies"
section of its web site.
(6) Online Brokerage -- a weekly column on the online
brokerage industry. On weeks during
which Licensor has no Online Brokerage
column, Licensor will deliver a
Silicon Saturday column from the
"Markets" section of its web site.
2. Exhibit C, Section A is amended to read as follows:
Licensor's Responsibilities:
1. Deliver Wrong! columns within ***** of when they
appear on TheStreet.com's site.
2. Deliver Silicon Valley and Online Brokerage columns
(or their replacements as specified in Exhibit B)
within ***** of when they appear on TheStreet.com's
site.
3. Deliver the other columns specified in Exhibit B at
***** they are posted on Licensor's site.
3. Except as otherwise set forth in this Addendum No. 1, the
terms of the Agree ment remain in full force and effect.
The parties have caused this Addendum No. 1 to be executed by their
duly authorized representatives as of the date first written above.
YAHOO! INC. LICENSOR
By: /s/ Ellen Simonoff By: /s/ Brendan Amyot
------------------------- --------------------------
Title: VP Title: COO
---------------------- -----------------------
- ----------
***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
11
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To TheStreet.com, Inc.:
As independent public accountants, we hereby consent to the use of our reports
and to all references to our Firm included in or made part of this registration
statement.
ARTHUR ANDERSEN LLP
New York, New York
April 16, 1999
<PAGE>
April 16, 1999
To TheSteet.com, Inc.
We hereby consent to the inclusion of cdertain facts regarding unique visitors
and page views derived from the December 1998 and March 1999 reports generated
by DoubleClick Inc.'s DART Service in TheStreet.com Registration Statement on
Form S-1 (File No. 333-72799) (the "Registration Statement"). We also hereby
consent to the mention of DoubleClick Inc. in the technology risk factor section
of the Registration Statement.
Sincerely yours,
/s/ Elizabeth Wang
Elizabeth Wang
General Counsel
