<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY , 1999
REGISTRATION NO. 333-75291
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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EDGAR ONLINE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7375 06-1447017
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
50 WASHINGTON STREET
NORWALK, CONNECTICUT 06854
(203) 852-5666
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
MARC STRAUSBERG
CHAIRMAN OF THE BOARD
EDGAR ONLINE, INC.
50 WASHINGTON STREET
NORWALK, CONNECTICUT 06854
(203) 852-5666
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MITCHELL C. LITTMAN, ESQ. ROBERT ROSENMAN, ESQ.
STEVEN D. USLANER, ESQ. PAUL H. ZUMBRO, ESQ.
LITTMAN KROOKS ROTH & BALL P.C. CRAVATH, SWAINE & MOORE
655 THIRD AVENUE WORLDWIDE PLAZA
NEW YORK, NEW YORK 10017 825 EIGHTH AVENUE
(212) 490-2020 NEW YORK, NEW YORK 10019
(212) 474-1000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ----
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ----
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ----
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE(2)
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<S> <C> <C> <C>
Common Stock, $.01 par value.................... 3,450,000 shares $9.50 $34,500,000
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<CAPTION>
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TITLE OF EACH CLASS OF REGISTRATION
SECURITIES TO BE REGISTERED FEE(2)(3)
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<S> <C>
Common Stock, $.01 par value.................... $9,591.00
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</TABLE>
(1) Includes 450,000 shares that the underwriters have the option to purchase
from certain existing shareholders to cover over-allotments, if any.
(2) Estimated pursuant to Rule 457(a) solely for the purpose of calculating the
amount of the registration fee.
(3) This fee has been paid previously.
-----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY , 1999
PROSPECTUS
3,000,000 SHARES
[EDGAR ONLINE LOGO]
COMMON STOCK
-------------------------
This is the initial public offering of EDGAR Online, Inc. and we are offering
3,000,000 shares of our common stock. We anticipate that the initial public
offering price will be between $8.50 and $9.50 per share.
We have applied to have the shares we are offering approved for quotation on the
Nasdaq National Market under the symbol "EDGR."
-------------------------
THIS INVESTMENT INVOLVES SUBSTANTIAL RISK. SEE "RISK FACTORS" BEGINNING ON PAGE
6.
-------------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
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<S> <C> <C>
Public offering price....................................... $ $
Underwriting discounts...................................... $ $
Proceeds, before expenses, to EDGAR Online.................. $ $
</TABLE>
Certain of our shareholders have granted the underwriters a 30-day option to
purchase up to 450,000 additional shares to cover over-allotments.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------
The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the shares against payment in New York, New York
on , 1999.
-------------------------
C.E. UNTERBERG, TOWBIN FAHNESTOCK & CO. INC.
The undersigned is facilitating Internet distribution.
DLJdirect INC.
, 1999
<PAGE> 3
[THE INSIDE FRONT COVER TO CONTAIN THE FOLLOWING: PICTURES OF HOME PAGE AND
VARIOUS OTHER PAGES FROM THE EDGAR ONLINE WEB SITE]
<PAGE> 4
TABLE OF CONTENTS
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PAGE
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<S> <C>
Prospectus Summary................... 1
Risk Factors......................... 6
Forward-Looking Statements........... 17
Use of Proceeds...................... 18
Dividend Policy...................... 18
Capitalization....................... 19
Dilution............................. 20
Selected Financial Data.............. 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 23
</TABLE>
<TABLE>
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PAGE
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<S> <C>
Business............................. 29
Management........................... 40
Certain Transactions................. 49
Principal Stockholders............... 51
Description of Capital Stock......... 53
Shares Eligible for Future Sale...... 54
Underwriting......................... 56
Legal Matters........................ 58
Experts.............................. 59
Additional Information............... 59
Index to Financial Statements........ F-1
</TABLE>
-------------------------
IN MAKING A DECISION WHETHER TO BUY OUR COMMON STOCK, YOU SHOULD ONLY RELY
ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE
TO PROVIDE YOU WITH ANY INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF OUR
COMMON STOCK ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION
CONTAINED IN THIS PROSPECTUS MAY ONLY BE ACCURATE ON THE DATE OF THIS
PROSPECTUS.
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<PAGE> 5
PROSPECTUS SUMMARY
Because this is only a summary, it may not contain all the information that
may be important to you. For a more complete understanding of this offering, we
encourage you to read this entire prospectus and the documents we refer you to.
Before deciding whether to invest in our common stock, you should read the
following summary together with the more detailed information and consolidated
financial statements and the notes to those statements appearing elsewhere in
this prospectus. In this prospectus, references to "EDGAR Online," "we," "us"
and "our" refer to EDGAR Online, Inc. Except as otherwise noted, all information
in this prospectus (1) reflects a one-for-four stock split effected in May 1997
and (2) assumes no exercise of the underwriters' over-allotment option.
EDGAR ONLINE
OUR BUSINESS
EDGAR Online, Inc. is an Internet-based commercial provider of business,
financial and competitive information contained in corporate filings made by
public companies with the SEC. Our services are designed to satisfy the demands
of individuals and businesses for timely and cost-effective access to the
filings of the more than 15,000 U.S. public companies. These services include a
variety of search and navigation tools, personalization features and e-mail and
Web-based alerts. We obtain corporate filings from the SEC's EDGAR (Electronic
Data Gathering, Analysis and Retrieval) database on a non-exclusive, real-time
basis. With our proprietary software, we enhance these filings by organizing and
processing them into an easily accessible and searchable format. We then use
these enhanced EDGAR filings as the basis for our value-added services, which we
offer on our EDGAR Online Web site, located at http://www.edgar-online.com.
We offer several tiers of paid subscription services to individual users
and custom-tailored applications to businesses. A monthly subscription to our
Web site for an individual user starts at $9.95 and includes the following
services:
- TODAY'S SEC FILINGS provides users with real-time access to EDGAR
filings;
- FULL SEARCH allows users to combine multiple criteria to search all EDGAR
filings;
- EDGAR ONLINE PEOPLE allows users to search the EDGAR database for
information about individuals named in EDGAR filings;
- EDGAR ONLINE PERSONAL allows users to store their queries and sends
e-mail alerts immediately when new EDGAR filings match their search
criteria;
- EDGAR ONLINE IPO EXPRESS allows users to track initial public offerings
as they are filed, priced, postponed or withdrawn; and
- DOCUMENT DISPLAY options allow users to download information in multiple
formats.
For corporate customers, we offer customized services to meet their particular
needs in a real-time and cost-effective manner. We have entered into a number
of, and are pursuing additional, corporate contracts to supply EDGAR content for
use on corporate intranets, extranets and Web sites. We currently have over 100
corporate customers, including American Express, Merrill Lynch, Hoover's,
Quote.com, Multex.com, Advanced Micro Devices, Compaq, Intel, Mutual of New York
and MCI Worldcom.
<PAGE> 6
In order to build brand awareness, increase traffic and create a large pool
of potential subscribers, we promote our Web site and provide a portion of our
content for free. This basic free service includes access to filings on a
delayed basis and selected features of Full Search and EDGAR Online People, as
well as stock quotes, charts, research and news. Both traffic on our Web site
and the number of individual registered users nearly tripled in 1998. As of
March 31, 1999, we had over 115,000 registered users, of which over 7,500 were
paying subscribers. Approximately one million people visit our EDGAR Online Web
site monthly. For the past two years, Barron's has rated our EDGAR Online site
as one of the top 20 investment Web sites.
As an important part of our strategy to build brand awareness, increase
traffic to our site and sell our subscription services, we have established a
significant number of content distribution relationships. We currently have
contracts to supply EDGAR content to more than 60 widely used Web sites,
including Yahoo!, Infoseek's GO Network, MSNBC, TheStreet.com, CNET's SNAP,
Go2Net, PointCast, Infospace, CBS MarketWatch, SmartMoney.com, Business Wire,
Big Charts, Raging Bull and Track Data. Users can access our services either
directly as registered EDGAR Online subscribers or indirectly through those Web
sites with which we have established one of these content distribution
arrangements.
We believe our Web site draws users who represent an attractive demographic
group for companies that advertise or conduct business over the Internet. Since
introducing our EDGAR Online Web site in January 1996, we have steadily
increased the number of individual advertising banners appearing on our Web
pages. In March 1999, more than 240 advertisers purchased banners on our Web
site.
We are not affiliated with or approved by the SEC, which owns the rights to
the name "EDGAR". The SEC has granted us a non-exclusive license to use the name
EDGAR in our service marks and in our corporate name. We are also not affiliated
with the SEC's Web site, located at http://www.sec.gov, which provides free
access to EDGAR filings on a time-delayed basis. We are one of the 12 companies
that subscribe to the real-time EDGAR database feed from TRW, the SEC's data
vendor, which costs approximately $80,000 per year.
OUR MARKET OPPORTUNITY
Today's business environment is characterized by a rapidly growing demand
for fast and easy access to corporate and financial information. SEC filings,
such as prospectuses and annual and quarterly reports, are a primary source of
this information. Prior to the introduction of the EDGAR system, SEC filings
were only available on a delayed basis in costly paper or CD-ROM format from a
limited number of document providers or SEC public reference rooms. The
availability of SEC filings in an electronic format, together with the
distributive power of the Internet, has created a significant opportunity to
deliver this information in a real-time and cost-effective manner. At the same
time, individuals and businesses are increasingly using the Internet as a source
of valuable business intelligence. According to Simba Information, a media
industry research firm, revenues from the sale of business information delivered
online in the U.S. are projected to grow from approximately $27 billion in 1998
to approximately $40 billion in 2002. Growth in this market is expected to
continue as more people gain access to, and increasingly rely on, the Internet
as their primary source of business information.
We believe that easy access to EDGAR-based information is important to
professionals, businesses and the growing population of online investors. In
addition, newly evolving technologies make it possible to locate and retrieve
selected details from vast electronic databases, such as the EDGAR database,
more quickly and economically than historically had been possible. By helping
our
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customers access the EDGAR filings contained in our comprehensive database,
which we update on a real-time basis, we believe that we are well positioned to
exploit these market opportunities.
CORPORATE INFORMATION
We are a Delaware corporation and were formed in November 1995 under the
name Cybernet Data Systems, Inc. In January 1999, we changed our name to EDGAR
Online, Inc. Our executive offices are located at 50 Washington Street, Norwalk,
Connecticut 06854 and our telephone number is (203) 852-5666. Our Web site is
located at http://www.edgar-online.com. The information on our Web site is not
part of this prospectus.
THE OFFERING
Common stock offered by EDGAR Online........ 3,000,000 shares
Common stock to be outstanding after the
offering.................................... 10,937,957 shares(1)
Use of proceeds............................. Repayment of debt, expansion of
our sales and marketing efforts,
other general corporate purposes
and possible acquisitions. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol...... EDGR
- -------------------------
(1) Based on the number of shares currently outstanding and giving effect to (a)
the conversion of a $1 million convertible debenture into 670,000 shares of
common stock and (b) the exercise of warrants into an aggregate of 696,667
shares of common stock. Excludes (a) 800,000 shares issuable upon exercise
of outstanding options under our 1996 Stock Option Plan with a weighted
average exercise price of $2.36 per share, (b) 600,000 shares reserved for
future issuance under our 1999 Stock Option Plan, of which options to
purchase 41,000 shares have been granted at an exercise price equal to the
initial public offering price, (c) 100,000 shares reserved for future
issuance under our 1999 Outside Directors Stock Option Plan, (d) 90,000
shares issuable upon exercise of outstanding warrants with a weighted
average exercise price of $2.10 per share and (e) 250,000 shares issuable
upon exercise of warrants to be issued to the underwriters at an exercise
price equal to 110% of the initial public offering price.
3
<PAGE> 8
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------------- ----------------------------
1996 1997 1998 1998 1999
---------- ----------- ----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................. $ 169,822 $ 1,044,138 $ 2,003,117 $ 384,461 $ 641,457
Gross profit......................... $ (56,692) $ 160,935 $ 956,788 $ 173,329 $ 320,835
Loss from operations................. $ (763,056) $(1,199,088) $(2,088,933) $ (170,603) $ (548,177)
Net loss............................. $ (835,853) $(1,497,899) $(2,221,474) $ (188,263) $ (586,456)
Basic and diluted net loss per
share.............................. $ (0.19) $ (0.26) $ (0.36) $ (0.03) $ (0.09)
Basic and diluted weighted average
shares outstanding................. 4,302,466 5,655,151 6,129,116 6,074,000 6,367,290
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1999
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PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(1)(2)
----------- ------------ -----------------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 216,003 $1,746,003 $24,267,003
Working capital (deficit)................................ $ (419,920) $1,110,080 $23,701,080
Total assets............................................. $ 1,156,179 $2,616,613 $24,833,353
Total stockholders' equity (deficit)..................... $(2,240,790) $ 192,613 $24,052,613
</TABLE>
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(1) Gives pro forma effect to (a) the conversion of a $1 million debenture into
670,000 shares of common stock, (b) the exercise of warrants into an
aggregate of 696,667 shares of common stock and (c) collection of the stock
subscription receivable of $515,000. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and notes 8 and 13 of the notes to our December 31, 1998
financial statements contained elsewhere in this prospectus.
(2) As adjusted to give effect to the sale of 3,000,000 shares of common stock
in this offering at an assumed initial public offering price of $9.00 per
share, after deducting the underwriting discounts and the estimated offering
expenses payable by us, and the application of the estimated net proceeds
from this offering. See "Use of Proceeds" and "Capitalization."
4
<PAGE> 9
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the financial and other information contained in this prospectus, before
you decide whether to buy our common stock. Additional risks and uncertainties,
including those generally affecting the market in which we operate or that we
currently deem immaterial, may also impair our business. If any of these risks
actually occur, our business, financial condition and results of operations
would likely suffer. In such case, the trading price of our common stock could
decline, and you might lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
WE HAVE A LIMITED OPERATING HISTORY AND OUR FUTURE SUCCESS WILL DEPEND ON OUR
ABILITY TO INCREASE REVENUES.
As an early stage company in the new and rapidly evolving market for the
delivery of financial and business information over the Internet, we face
numerous risks and uncertainties in achieving increased revenues. We were
incorporated in November 1995 and launched our EDGAR Online Web site, located at
http://www.edgar-online.com, in January 1996. Accordingly, we have a limited
operating history on which you can evaluate our business and prospects. During
this period, we have invested heavily in our proprietary technologies to enable
us to carry out our business plan. These expenditures, in advance of revenues,
have resulted in operating losses in each of the last three years. In order to
be successful, we must increase our revenues from the sale of our services to
corporate customers, individual subscription fees and advertising sales. In
order to increase our revenues, we must successfully:
- create and successfully implement a marketing plan to (1) attract more
individual online users to our services, (2) convert visitors to paying
subscribers and (3) increase corporate sales;
- continue to improve our market position as an Internet-based commercial
provider of information services based on EDGAR filings;
- maintain our current, and develop new content, distribution relationships
with popular Web sites and providers of business and financial
information;
- maintain our current, and continue to increase, advertising revenues by
increasing traffic to our Web site and by increasing the number of
advertisers;
- respond effectively to competitive pressures from other Internet
providers of EDGAR content;
- continue to develop and upgrade our technology; and
- attract, retain and motivate qualified personnel with Internet experience
to serve in various capacities, including sales and marketing positions.
If we are not successful in addressing these uncertainties through the execution
of our business strategy, our business, results of operations and financial
condition will be materially adversely affected.
WE HAVE A HISTORY OF LOSSES AND ANTICIPATE THAT LOSSES WILL CONTINUE.
As of March 31, 1999, we had an accumulated deficit of $5,332,916. Although
our revenues have grown in each of the last two years, we may not ever generate
sufficient revenues to achieve profitability. We incurred net losses of $835,853
for the year ended December 31, 1996, $1,497,899 for the year ended December 31,
1997, $2,221,474 for the year ended December 31, 1998 and
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<PAGE> 10
$586,456 for the quarter ended March 31, 1999. We expect operating losses to
continue for the foreseeable future as we continue to incur significant
operating costs and capital expenditures. As a result, we will need to generate
significant additional revenues to achieve and maintain profitability. Even if
we do achieve profitability, we cannot assure you that we can sustain or
increase profitability on a quarterly or annual basis in the future. In
addition, if revenues grow slower than we anticipate, or if operating expenses
exceed our expectations or cannot be adjusted accordingly, our business, results
of operations and financial condition will be materially adversely affected.
FUTURE ENHANCEMENTS TO THE SEC'S EDGAR SYSTEM MAY ERODE DEMAND FOR OUR SERVICES.
Our future success will depend on our ability to continue to provide
value-added services that distinguish our Web site from the type of
EDGAR-information available from the SEC on its Web site. Through its Web site,
the SEC provides free access to EDGAR filings on a time-delayed basis of 24 to
72 hours. If the SEC, which has recently announced that it intends to modernize
the EDGAR system, were to make changes to its Web site such as providing (1)
free real-time access to EDGAR filings or (2) value-added services comparable to
those provided on our Web site, our business, results of operations and
financial condition would be materially adversely affected. See
"Business -- Competition."
WE FACE INTENSE COMPETITION FROM OTHER PROVIDERS OF BUSINESS AND FINANCIAL
INFORMATION.
We compete with many providers of business and financial information,
including other Internet companies, for consumers' and advertisers' attention
and spending. Because our market poses no substantial barriers to entry, we
expect this competition to continue to intensify. The types of companies with
which we compete for users and advertisers include:
- traditional vendors of financial information, such as Disclosure;
- proprietary information services and Web sites targeted to business,
finance and investing needs, including those providing EDGAR content,
such as Bloomberg and LIVEDGAR; and
- Web-based providers of free EDGAR information, such as FreeEDGAR.
Our future success will depend on our ability to maintain and enhance our market
position by: (1) using technology to add value to raw EDGAR information, (2)
keeping our pricing models below those of our competitors and (3) signing
high-traffic Web sites to distribution contracts.
Our potential commercial competitors include entities that currently
license our content, but which may elect to purchase a real-time EDGAR database
feed (called a Level I EDGAR feed) directly from the SEC and use it to create
value-added services, similar to services provided by us, for their own use or
for sale to others. This risk is particularly serious in light of the fact that
the SEC has, as part of the modernization of the EDGAR system, introduced a new
dissemination system effective November 1, 1998 that reduced the annual
subscription cost of a Level I feed by approximately 73%.
Many of our existing competitors, as well as a number of potential
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. This may enable them to respond more quickly to new or
emerging technologies and changes in the types of services sought by users of
EDGAR-based information, or to devote greater resources to the development,
promotion and sale of their services than we can. These competitors and
potential competitors may be able to undertake more extensive marketing
campaigns, adopt more aggressive pricing policies and make more attractive
offers to potential employees, subscribers and content distribution partners.
Our competitors may also develop services that are equal or superior to the
services offered by us or that achieve greater market
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<PAGE> 11
acceptance than our services. In addition, current and prospective competitors
may establish cooperative relationships among themselves or with third parties
to improve their ability to address the needs of our existing and prospective
customers. If these events occur, they could have a materially adverse effect on
our revenue. Increased competition could also result in price reductions,
reduced margins or loss of market share, any of which would adversely affect our
business, results of operations and financial condition. See
"Business -- Industry Background" and "-- Competition."
WE MAY NOT BE SUCCESSFUL IN INCREASING BRAND AWARENESS.
Our future success will depend, in part, on our ability to increase the
brand awareness of our EDGAR Online Web site. If our marketing efforts are
unsuccessful or if we cannot increase our brand awareness, our business,
financial condition and results of operations would be materially adversely
affected. In order to build our brand awareness, we must succeed in our
marketing efforts, provide high quality services and increase traffic to our Web
site. We intend to spend a significant portion of the proceeds of this offering
to expand our sales and marketing efforts as part of our brand-building efforts.
These efforts may not be successful.
WE MAY NOT BE SUCCESSFUL IN DEVELOPING NEW AND ENHANCED SERVICES AND FEATURES
FOR OUR WEB SITE.
Our market is characterized by rapidly changing technologies, evolving
industry standards, frequent new product and service introductions and changing
customer demands. To be successful, we must adapt to our rapidly changing market
by continually enhancing our existing services and adding new services to
address our customers' changing demands. We could incur substantial costs if we
need to modify our services or infrastructure to adapt to these changes. Our
business could be adversely affected if we were to incur significant costs
without generating related revenues or if we cannot adapt rapidly to these
changes.
Our business could also be adversely affected if we experience difficulties
in introducing new or enhanced services or if these services are not favorably
received by users. We may experience technical or other difficulties that could
delay or prevent us from introducing new or enhanced services. Furthermore,
after these services are introduced, we may discover errors in these services
which may require us to significantly modify our software or hardware
infrastructure to correct these errors.
WE ARE DEPENDENT ON THE CONTINUED GROWTH OF THE EMERGING MARKET FOR ONLINE
BUSINESS AND FINANCIAL INFORMATION.
The success of our business will depend on the growing use of the Internet
for the dissemination of business and financial information. The number of
individuals and institutions that use the Internet as a primary source of
business and financial information may not continue to grow. The market for the
distribution of business and financial information, including EDGAR-based
content, over the Internet has only recently begun to develop, is rapidly
evolving and is characterized by an increasing number of market entrants who
have introduced or developed electronic distribution services over the Internet
and private networks. As is typical of a rapidly evolving industry, demand and
market acceptance for new services are subject to a high level of uncertainty.
Because the market for our products and services is new and rapidly
evolving, it is difficult to predict with any certainty what the growth rate, if
any, and the ultimate size of this market will be. We cannot be certain that the
market for our services will continue to develop or that our services will ever
achieve a significant level of market acceptance. If the market fails to
continue to develop, develops more slowly than expected or becomes saturated
with competitors, or if our services do not achieve significant market
acceptance, or if pricing becomes subject to considerable competitive
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pressures, our business, results of operations and financial condition would be
materially adversely affected.
MAINTAINING EXISTING AND ESTABLISHING NEW CONTENT DISTRIBUTION RELATIONSHIPS
WITH HIGH-TRAFFIC WEB SITES IS CRUCIAL TO OUR FUTURE SUCCESS.
Because our advertising revenues, which form a significant component of our
total revenues, depend to a great extent on the traffic to our Web site, our
business could be adversely affected if we do not maintain our current, and
establish additional, content distribution relationships on commercially
reasonable terms or if a significant number of our content distribution
relationships do not result in increased use of our Web site. We rely on
establishing and maintaining content distribution relationships with
high-traffic Web sites for a significant portion of the traffic on our Web site.
For example, in the month of March 1999, approximately 25% of our traffic came
to us from the Web sites to which we have licensed our EDGAR-based content.
There is intense competition for placements on high-traffic Web sites, and we
may not be able to maintain our present contractual relationships or enter into
any additional relationships on commercially reasonable terms, if at all. Even
if we maintain our existing relationships or enter into new content distribution
relationships with other Web sites, they themselves may not continue to attract
significant numbers of users. Therefore, our Web site may not continue to
receive significant traffic or receive additional new users from these
relationships.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY A DOWNTURN IN THE FINANCIAL SERVICES
INDUSTRY.
We are dependent upon the continued demand for the distribution of business
and financial information over the Internet, making our business susceptible to
a downturn in the financial services industry. For example, a decrease in the
number of individuals investing their money in the equity markets could result
in a decrease in the number of subscribers utilizing our Web site for real-time
access to EDGAR filings. This downturn could have a material adverse effect on
our business, results of operations and financial condition.
WE DEPEND ON DOUBLECLICK FOR ADVERTISING REVENUES.
We anticipate that our results of operations in any given period will
continue to depend to a significant extent upon advertising revenues generated
through our relationship with DoubleClick, Inc., which has provided us with a
full range of advertising services for the last two years. DoubleClick's failure
to enter into a sufficient number of advertising contracts during a particular
period could have a material adverse effect on our business, financial condition
and results of operations. Historically, a limited number of customers, all
represented by DoubleClick, have accounted for a significant percentage of our
paid advertising revenues. For the twelve months ended December 31, 1998, our
DoubleClick-related paid advertising revenue was 24% of our total 1998 revenues.
For the three months ended March 31, 1999, our DoubleClick-related paid
advertising revenue was 13% of our total revenues for this period.
Our existing agreement with DoubleClick can be canceled by either party on
90 days notice. In addition, this agreement does not prohibit DoubleClick from
selling the same type of service that we currently receive from them to Web
sites that compete with our site. If DoubleClick is unable or unwilling to
provide these advertising services to us in the future, we would be required to
obtain them from another provider or perform them ourselves. We would likely
lose significant advertising revenues while we are in the process of replacing
DoubleClick's services.
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<PAGE> 13
WE FACE INTENSE COMPETITION FOR ADVERTISING REVENUES AND THE VIABILITY OF THE
INTERNET AS AN ADVERTISING MEDIUM IS UNCERTAIN.
We compete with both traditional advertising media, such as print, radio
and television, and other Web sites for a share of advertisers' total
advertising budgets. Paid advertising revenues represented 24% and 13% of our
total revenues for the year ended December 31, 1998 and the quarter ended March
31, 1999, respectively. If advertisers do not perceive the Internet to be an
effective advertising medium, companies like ours will be unable to compete
successfully with traditional media for advertising revenues. In addition, if we
are unable to generate sufficient traffic on our Web site, we could potentially
lose advertising revenues to other Web sites that generate higher user traffic.
Because advertising sales make up a significant component of our revenues,
either of these developments could have a significant adverse impact on our
business, results of operations or financial condition.
WE MAY NOT BE ABLE TO CREATE AND DEVELOP AN EFFECTIVE DIRECT SALES FORCE.
Because a significant component of our growth strategy relates to
increasing our revenues from sales of our corporate services, our business would
be adversely affected if we were unable to develop and maintain an effective
sales force to market our services to this customer group. Until recently, we
have not employed any sales executives to sell our corporate services. In March
1999, we hired Brian Fitzpatrick to serve as Vice President of Corporate Sales.
Mr. Fitzpatrick's job duties include hiring, training and managing a sales force
whose task will be to market and sell our services to the corporate market.
These efforts may not be successful.
WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR GROWTH.
We have experienced and are currently experiencing a period of significant
growth. If we are unable to manage our growth effectively, our business will be
adversely affected. This growth has placed, and our anticipated future growth
will continue to place, a significant strain on our technical, financial and
managerial resources. As part of this growth, we may have to implement new
operational and financial systems and procedures and controls to expand, train
and manage our employees, especially in the areas of sales and product
development.
OUR BUSINESS MAY BE ADVERSELY AFFECTED IF OUR NEWLY-HIRED EXECUTIVES CANNOT WORK
TOGETHER EFFECTIVELY.
Several members of our senior management joined us recently, including our
President and Chief Operating Officer in March 1998 and both our Vice President
of Corporate Sales and Chief Financial Officer in March 1999. These individuals,
who are becoming integrated as a management team, have not previously worked
together and may not be able to work together effectively to successfully manage
our growth.
WE DEPEND ON KEY PERSONNEL.
Our future success will depend to a significant extent on the continued
services of our senior management and other key personnel, particularly Susan
Strausberg, Chief Executive Officer, Marc Strausberg, Chairman and Chief
Information Officer, Tom Vos, President and Chief Operating Officer and Greg
Adams, Chief Financial Officer, each of whom are parties to written employment
agreements. The loss of the services of these, or certain other key employees,
would likely have a material adverse effect on our business. We do not maintain
"key person" life insurance for any of our personnel. Our future success will
also depend on our continuing to attract, retain and motivate other highly
skilled employees. Competition for personnel in our industry is intense. We may
not be
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<PAGE> 14
able to retain our key employees or attract, assimilate or retain other highly
qualified employees in the future. If we do not succeed in attracting new
personnel or retaining and motivating our current personnel, our business will
be adversely affected. In addition, the employment agreements with our key
employees contain restrictive covenants that restrict their ability to compete
against us or solicit our customers. These restrictive covenants, or some
portion of these restrictive covenants, may be deemed to be against public
policy and may not be fully enforceable. If these provisions are not
enforceable, these employees may be in a position to leave us and work for our
competitors or start their own competing businesses. See "Business" and
"Management" for detailed information on our key personnel.
WE DEPEND ON THIRD PARTIES FOR IMPORTANT ASPECTS OF OUR BUSINESS OPERATIONS.
We depend on third parties to develop and maintain the software and
hardware we use to operate our Web site. iXL Enterprises, Inc., an Internet
strategy consulting company, develops, maintains and upgrades our proprietary
software, which includes those features which enable users to locate and
retrieve data, as well as our database of EDGAR filings, Web-based customer
interfaces and customer support and billing systems. While our contract with iXL
is currently on a month-to-month basis, we are in negotiations with iXL to amend
our agreement to provide for a more definitive term. If iXL were unable or
unwilling to provide these services, we would need to find a suitable
replacement. The failure to find a suitable replacement or to come to an
agreement with an acceptable alternate provider on terms acceptable to us could
materially adversely affect our business, results of operations and financial
condition.
We also have a hosting contract with Globix Corporation, a provider of
Internet services, pursuant to which Globix operates and maintains the Web
servers owned by us in their New York City data center. Our hosting contract
with Globix expires in July 2003. If Globix were unable or unwilling to provide
these services, we would have to find a suitable replacement. Our operations
could be disrupted while we were in the process of finding a replacement for
Globix and the failure to find a suitable replacement or to reach an agreement
with an alternate provider on terms acceptable to us could materially adversely
affect our business, results of operations and financial condition. See
"Business -- Infrastructure, Operations and Technology."
WE FACE A RISK OF SYSTEM FAILURE.
Our ability to provide EDGAR content on a real-time basis 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 provided 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. 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 relations with advertisers.
Our operations depend on Globix's 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 Globix provides comprehensive facilities management services, including
human and technical monitoring of all production servers 24 hours-per-day, seven
days-per-week, Globix 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 Globix 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
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<PAGE> 15
interruptions in the delivery of our services. 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.
THERE ARE RISKS OF INCREASED USERS STRAINING OUR SYSTEMS AND OTHER SYSTEM
MALFUNCTIONS.
In the past, our Web site has experienced significant increases in traffic
when there have been important business or financial news stories and during the
seasonal periods of peak SEC filing activity. In addition, the number of our
users has continued to increase over time and we are seeking to further increase
the size of our user base and the frequency with which they use our services.
Therefore, our Web site must accommodate an increasingly high volume of traffic
and deliver frequently updated information. Our Web site has in the past, and
may in the future, experience slower response times or other problems for a
variety of reasons, including hardware capacity restraints and software
failures. These strains on our system could cause customer dissatisfaction and
could discourage visitors from becoming paying subscribers.
We also depend on the Level I EDGAR feed we purchase in order to provide
SEC filings on a real-time 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. These types of occurrences could cause users to
perceive our Web site as not functioning properly and cause them to use other
methods, including the SEC's Web site or those of our competitors, to obtain
EDGAR-based information.
WE LICENSE THE TERM EDGAR FROM THE SEC AND DEPEND ON OTHER INTELLECTUAL
PROPERTY.
Trademarks and other proprietary rights, principally our proprietary
database technology, are important to our success and our competitive position.
The SEC is the owner of a United States trademark registration covering the use
of the term EDGAR. We have obtained a non-exclusive, royalty-free license from
the SEC to use the term EDGAR in our trademarks, service marks and corporate
name. This license is due to expire in September 2008. Since we have built
significant brand recognition through the use of the term EDGAR in our service
offerings, company name and Web site, our business, results of operations and
financial condition could be adversely affected if we were to lose the right to
use the term EDGAR in the conduct of our business.
We seek to protect our trademarks and other proprietary rights by entering
into confidentiality agreements with our employees, consultants and content
distribution partners, and attempting to control access to and distribution of
our proprietary information. Despite our efforts to protect our proprietary
rights from unauthorized use or disclosure, third parties may attempt to
disclose, obtain or use our proprietary information. The precautions we take may
not prevent this type of misappropriation. In addition, our proprietary rights
may not be viable or of value in the future since the validity, enforceability
and scope of protection of proprietary rights in Internet-related industries is
uncertain and still evolving.
Finally, third parties could claim that our database technology infringes
their proprietary rights. Although we have not been subjected to litigation
relating to these types of claims, such claims and any resultant litigation,
should it occur, could subject us to significant liability for damages and could
result in the invalidation of our proprietary rights. Even if we prevail, such
litigation could be time-consuming and expensive, and could result in the
diversion of our time and attention, any of which could materially adversely
affect our business, results of operations and financial condition. Any claims
or litigation could also result in limitations on our ability to use our
trademarks and other intellectual property unless we enter into license or
royalty agreements, which agreements may not be available on commercially
reasonable terms, if at all.
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<PAGE> 16
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING.
We currently anticipate that our available cash resources combined with
cash generated from operations will be sufficient to meet our anticipated
working capital and capital expenditure requirements for at least the next 12
months. We may need to raise additional funds, however, to fund more rapid
expansion, to develop new or enhance existing services, or to respond to
competitive pressures. We cannot assure you that additional financing will be
available on terms favorable to us, or at all. If adequate funds are not
available or are not available on acceptable terms, our ability to fund our
expansion, take advantage of unanticipated opportunities, develop or enhance
services or products or otherwise respond to competitive pressures would be
significantly limited. Our business, results of operations and financial
condition could be materially adversely affected by these financing limitations.
See "Use of Proceeds" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" for a
discussion of our working capital and capital expenditures.
WE FACE YEAR 2000 RISKS.
Because our business is completely dependent on the ability of our
customers to access our services through their computer systems and the
Internet, any serious disruption of this computer infrastructure caused by the
Year 2000 problem could have a material adverse effect on our business,
financial condition and results of operations. A disruption of this type could
result from problems experienced by our information providers, our information
technology systems, such as our Web servers, or from external problems affecting
the Internet and the methods our customers use to gain access to our services,
such as Internet service providers and online service providers. Efforts to
comply with Year 2000 requirements may disrupt or delay our ability to continue
developing and marketing our services, or we may incur unexpected costs in
connection with our Year 2000 compliance efforts. Any such Year 2000 related
disruptions could have a material adverse effect on our business, operating
results and financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Impact of the Year 2000" for
information on our state of readiness, potential risks and contingency plans
regarding the Year 2000 issue.
RISKS RELATED TO OUR INDUSTRY
WE ARE DEPENDENT ON THE INTERNET INFRASTRUCTURE.
Our future success will depend, in significant part, upon the maintenance
of the various components of the Internet infrastructure, such as a reliable
backbone network with the necessary speed, data capacity and security, and the
timely development of enabling products, such as high-speed modems, which
provide reliable and timely Internet access and services. To the extent that the
Internet continues to experience increased numbers of users, frequency of use or
increased user bandwidth requirements, we cannot be sure that the Internet
infrastructure will continue to be able to support the demands placed on it or
that the performance or reliability of the Internet will not be adversely
affected. Furthermore, the Internet has experienced a variety of outages and
other delays as a result of damage to portions of its infrastructure or
otherwise, and such outages or delays could adversely affect our Web site and
the Web sites of our co-branded partners, as well as the Internet service
providers and online service providers our customers use to access our services.
In addition, the Internet could lose its viability as a commercial medium due to
delays in the development or adoption of new standards and protocols that can
handle increased levels of activity. We cannot predict whether the
infrastructure and complementary products and services necessary to maintain the
Internet as a viable commercial medium will be developed or maintained.
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<PAGE> 17
WE ARE SUBJECT TO UNCERTAIN GOVERNMENT REGULATION AND OTHER LEGAL UNCERTAINTIES
RELATING TO THE INTERNET.
There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. Any new laws or regulations relating
to the Internet could adversely affect our business. In addition, current laws
and regulations may be applied and new laws and regulations may be adopted in
the future that address issues such as user privacy, pricing, taxation and the
characteristics and quality of products and services offered over the Internet.
For example, several telecommunications companies have petitioned the Federal
Communications Commission to regulate Internet service providers and online
service providers in a manner similar to long distance telephone carriers and to
impose access fees on these companies. This could increase the cost of
transmitting data over the Internet, which could increase our expenses and
discourage people from using the Internet to obtain business and financial
information. Moreover, it may take years to determine the extent to which
existing laws relating to issues such as property ownership, libel and personal
privacy are applicable to the Internet.
WE FACE WEB SECURITY CONCERNS THAT COULD HINDER INTERNET COMMERCE.
Any well-publicized compromise of Internet security could deter more people
from using the Internet or from using it to conduct transactions that involve
transmitting confidential information, such as stock trades or purchases of
goods or services. Because a portion of our revenue is based on individuals
using credit cards to purchase subscriptions over the Internet and a portion
from advertisers who seek to encourage people to use the Internet to purchase
goods or services, our business could be adversely affected by this type of
development. We may also incur significant costs to protect against the threat
of security breaches or to alleviate problems, including potential private and
governmental legal actions, caused by such breaches.
WE COULD FACE LIABILITY AND OTHER COSTS RELATING TO OUR STORAGE AND USE OF
PERSONAL INFORMATION ABOUT OUR USERS.
Our policy is not to willfully disclose any individually identifiable
information about any user to a third party without the user's consent. This
policy statement is available to users of our subscription services when they
initially register. Despite this policy, however, if third persons were able to
penetrate our network security or otherwise misappropriate our users' personal
or credit card information, we could be subject to liability. These could
include claims for unauthorized purchases with credit card information,
impersonation or other similar fraud claims. They could also include claims for
other misuses of personal information such as for unauthorized marketing
purposes. These claims could result in litigation. In addition, the Federal
Trade Commission and several states have been investigating certain Internet
companies regarding their use of personal information. We could incur additional
expenses if new regulations regarding the use of personal information are
introduced or if these regulators chose to investigate our privacy practices.
WE MAY BE LIABLE FOR INFORMATION DISPLAYED ON OUR WEB SITE.
We may be subjected to claims for defamation, negligence, copyright or
trademark infringement, violation of the securities laws or other claims
relating to the information that we publish on our Web site, which may
materially adversely affect our business. 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 subjected to claims based upon the
content that is accessible from our Web site through links to other Web sites.
Our general liability insurance may not cover these claims and may not be
adequate to protect us against all liabilities that may be imposed.
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<PAGE> 18
RISKS RELATED TO THIS OFFERING
SALES OF SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY
AFFECT OUR STOCK PRICE.
Although substantially all our shareholders have agreed not to sell their
shares during the 12-month period following the date of this prospectus without
the consent of C.E. Unterberg, Towbin, sales of significant amounts of common
stock in the public market after this offering, or the perception that such
sales will occur, could materially adversely affect the market price of the
common stock or our ability to raise capital through future offerings of equity
securities. See "Shares Eligible for Future Sale."
THERE HAS BEEN NO PRIOR PUBLIC MARKET FOR OUR COMMON STOCK AND OUR SHARES MAY
EXPERIENCE EXTREME PRICE FLUCTUATIONS.
Prior to this offering, there has been no public market for our common
stock. We cannot predict the extent to which investor interest in our company
will lead to the development of a trading market in our common stock or how
liquid that market might become. The initial public offering price for the
shares was determined through 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 for securities of technology companies have been highly
volatile. The market prices of the securities of Internet-related companies in
particular have experienced extreme fluctuations that are not necessarily
related to the operating performance of the affected companies. Investors may
not be able to resell their shares at or above the initial public offering
price. Wide fluctuations in our trading price may also result from, among other
things:
- investor perception of our company and EDGAR content providers in
general;
- announcements or implementations by us, our competitors or the SEC of new
products or services; and
- financial estimates by securities analysts.
INVESTORS IN THIS OFFERING WILL INCUR SUBSTANTIAL IMMEDIATE DILUTION.
The initial public offering price of our common stock is substantially
higher than the net tangible book value per share of the common stock will be
immediately after this offering. Therefore, if you purchase our common stock in
this offering, you will incur immediate dilution of approximately $6.80 in the
net tangible book value per share of common stock from the price you paid for
such common stock (based upon an assumed initial public offering price of $9.00
per share). See "Dilution." The exercise of outstanding options and warrants may
result in further dilution.
THE INTERESTS OF OUR CONTROLLING STOCKHOLDERS COULD CONFLICT WITH THOSE OF OUR
OTHER STOCKHOLDERS.
The interests of our controlling stockholders could conflict with the
interests of other EDGAR Online stockholders, including purchasers in this
offering. Following completion of this offering, our directors and executive
officers, together with our other principal stockholders, will own or control
approximately 64.43% (60.43% if the underwriters' over-allotment option is
exercised in full) of our outstanding common stock. Accordingly, these
stockholders may be able to influence the outcome of stockholder votes,
including votes concerning the election of directors, amendments to our charter
and bylaws and the approval of significant corporate transactions such as a
merger or a sale of our assets.
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<PAGE> 19
In addition, such controlling influence could have the effect of delaying,
deferring or preventing a change in control of our company. See "Principal
Stockholders."
WE HAVE BROAD DISCRETION IN THE APPLICATION OF PROCEEDS, WHICH MAY INCREASE THE
RISK THAT THE PROCEEDS WILL NOT BE APPLIED EFFECTIVELY.
We currently have no specific uses for approximately 76% of the net
proceeds of this offering. Accordingly, investors in this offering will be
relying on management's judgment with only limited information about our
specific intentions regarding the use of proceeds. Our failure to apply such
funds effectively could have a material adverse effect on our business, results
of operations and financial condition. See "Use of Proceeds."
ANTI-TAKEOVER PROVISIONS AND OUR RIGHT TO ISSUE PREFERRED STOCK COULD MAKE A
THIRD-PARTY ACQUISITION OF US DIFFICULT.
The anti-takeover provisions contained in Section 203 of the Delaware
General Corporation Law, which apply to us, may delay, discourage or prevent a
change in control. This section may discourage bids for our common stock at a
premium over the market price and may adversely affect the market price and the
voting and other rights of the holders of our common stock. In addition, our
certificate of incorporation authorizes the issuance of up to one million shares
of preferred stock. Such preferred stock, which is issuable without stockholder
approval, could grant its holders rights and powers that would tend to
discourage changes in control.
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FORWARD-LOOKING STATEMENTS
Certain statements made or incorporated by reference in this prospectus are
"forward-looking statements," that are based on our current expectations,
assumptions, estimates and projections about EDGAR Online and our industry.
These forward-looking statements include statements about:
- the competitiveness of the online business and financial information
industry;
- our strategies;
- the future growth of the Internet as a communications and advertising
medium;
- the Year 2000 problem; and
- other statements that are not historical facts.
When used in this prospectus, the words "anticipate," "believe," "expect,"
"estimate" and similar expressions are generally intended to identify
forward-looking statements. Because these forward-looking statements involve
risks and uncertainties, there are important factors that could cause our actual
results to differ materially from those expressed or implied by these
forward-looking statements, including:
- changes in general economic and business conditions (including in the
online business and financial information industry);
- actions of our competitors;
- the extent to which we are able to develop new services and markets for
our services;
- the time and expense involved in such development activities;
- the level of demand and market acceptance of our services;
- changes in our business strategies; and
- other factors discussed above under "Risk Factors" as well as elsewhere
in this prospectus.
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USE OF PROCEEDS
We estimate that the net proceeds we will receive from the sale of the
3,000,000 shares of common stock offered by us will be approximately $23.9
million, after deducting underwriting discounts and the estimated offering
expenses payable by us (assuming a public offering price of $9.00 per share). We
will not receive any proceeds from the sale of shares by our stockholders if the
underwriters exercise their over-allotment option.
We currently estimate that the use of the net proceeds of this offering
will be as follows:
- repayment of certain outstanding indebtedness consisting of
approximately:
- $625,000 owed to Bowne & Co., Inc., which indebtedness matures
February 28, 2000 and has been accruing interest at the rate of 12%
per annum;
- $70,000 owed to Track Data Corporation, which has been accruing
interest at 2% over the prime rate established by a financial
institution (10.25% at December 31, 1998) per annum;
- $644,000 owed to Susan Strausberg and Marc Strausberg for net deferred
compensation; and
- approximately $4.5 million for expansion of our sales and marketing
efforts; and
- the balance of approximately $18.0 million, representing 76% of the net
proceeds, will be used for other general corporate purposes, including
working capital, and possible acquisitions.
We have no current plans, agreements or commitments with respect to any
such acquisitions or other investments, and we are not currently engaged in any
negotiations with respect to any such transaction. Pending these uses, the net
proceeds from this offering will be invested in short-term, investment grade
debt instruments, certificates of deposit or direct or guaranteed obligations of
the United States.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock and
do not anticipate paying any cash dividends on our capital stock in the
foreseeable future. We currently intend to retain future earnings, if any, to
fund the development and growth of our business. Future dividends, if any, will
be determined by our Board of Directors. In addition, we may incur indebtedness
in the future which may prohibit or effectively restrict the payment of
dividends, although we have no current plans to do so.
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<PAGE> 22
CAPITALIZATION
The following table sets forth the capitalization of EDGAR Online as of
March 31, 1999:
- on an actual basis;
- on a pro forma basis to reflect (a) the conversion of a $1 million
convertible debenture into 670,000 shares of common stock, (b) the
exercise of warrants into an aggregate of 696,667 shares of common stock,
(c) collection of the stock subscription receivable of $515,000 and (d)
the authorization of shares of preferred stock and the increase in the
number of authorized shares of common stock; and
- on a pro forma as adjusted basis to give effect to the sale of the
3,000,000 shares of common stock in this offering, at an assumed initial
public offering price of $9.00 per share and after deducting underwriting
discounts and the estimated offering expenses payable by us and the
application of the estimated net proceeds from this offering. See "Use of
Proceeds."
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
-----------------------------------------
(UNAUDITED)
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
Long-term debt, less current portion........... $ 1,422,969 $ 500,000 $ --
----------- ----------- -----------
Stockholders' equity (deficit):
Preferred stock, $0.01 par value; 1,000,000
authorized on a pro forma basis; no shares
issued and outstanding on an actual, pro
forma or pro forma as adjusted basis......... -- -- --
Common stock, $0.01 par value; 30,000,000
shares authorized; 6,571,290 shares issued
and outstanding on an actual basis; 7,937,957
shares issued and outstanding on a pro forma
basis; and 10,937,957 shares issued and
outstanding on a pro forma as adjusted
basis(1)..................................... 65,713 79,380 109,380
Additional paid-in capital..................... 3,541,413 5,465,715 29,295,715
Stock subscription receivable.................. (515,000) -- --
Accumulated deficit............................ (5,332,916) (5,352,482) (5,352,482)
----------- ----------- -----------
Total stockholders' equity
(deficit)......................... (2,240,790) 192,613 24,052,613
----------- ----------- -----------
Total capitalization................. $ (817,821) $ 692,613 $24,052,613
=========== =========== ===========
</TABLE>
- -------------------------
(1) Excludes (a) 800,000 shares issuable upon the exercise of outstanding
options under our 1996 Stock Option Plan with a weighted average exercise
price of $2.36 per share, (b) 600,000 shares reserved for future issuance
under our 1999 Stock Option Plan, of which options to purchase 41,000 shares
have been granted at an exercise price equal to the initial public offering
price, (c) 100,000 shares reserved for future issuance under our 1999
Outside Directors Stock Option Plan, (d) 90,000 shares issuable upon the
exercise of outstanding warrants with a weighted average exercise price of
$2.10 per share and (e) 250,000 shares issuable upon exercise of warrants to
be issued to the underwriters at an exercise price equal to 110% of the
initial public offering price.
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DILUTION
The pro forma net tangible book value of EDGAR Online as of March 31, 1999,
was approximately $192,613, or approximately $0.02 per share of common stock.
Pro forma net tangible book value per share represents the amount of EDGAR
Online's total tangible assets less total liabilities, divided by the pro forma
number of shares of common stock outstanding after giving effect to (a) the
conversion of a $1 million convertible debenture into 670,000 shares of common
stock, (b) the exercise of warrants into an aggregate of 696,667 shares of
common stock and (c) collection of the stock subscription receivable of
$515,000. After giving effect to the sale of the 3,000,000 shares of common
stock offered by this prospectus at an assumed initial public offering price of
$9.00 per share, and after deducting underwriting discounts and the estimated
offering expenses payable by us, the pro forma net tangible book value of EDGAR
Online, as of March 31, 1999, as adjusted, would have been approximately $24.1
million, or $2.20 per pro forma share of common stock. This represents an
immediate increase in net tangible book value of $2.18 per share to existing
stockholders and an immediate dilution in net tangible book value of $6.80 per
share to new investors purchasing shares of common stock in this offering. If
the initial public offering price is higher or lower, the dilution to the new
investors will be greater or less, respectively. The following table illustrates
this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $9.00
Pro forma net tangible book value per share at March 31,
1999................................................... $0.02
Increase in pro forma net tangible book value per share
attributable to new investors.......................... 2.18
-----
Pro forma net tangible book value per share after
offering.................................................. 2.20
-----
Dilution per share to new investors......................... $6.80
=====
</TABLE>
The following table summarizes, on a pro forma basis, as of March 31, 1999,
the differences between the number of shares of common stock purchased from
EDGAR Online, the aggregate cash consideration paid and the average price per
share paid by existing stockholders and by 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........... 7,937,957 72.6% $ 5,545,095 17.0% $0.70
New investors................... 3,000,000 27.4 27,000,000 83.0 $9.00
----------- ----- ----------- -----
Total........................... 10,937,957 100.0% $32,545,095 100.0% $2.98
=========== ===== =========== =====
</TABLE>
If the underwriters' over-allotment option is exercised in full, the number
of shares of common stock held by existing stockholders will be reduced to
7,487,957, or 68.5% of the total number of shares of common stock to be
outstanding immediately after this offering, and the number of shares of common
stock held by new investors will be increased to 3,450,000, or 31.5% of the
total number of shares of common stock to be outstanding immediately after this
offering. See "Principal Stockholders."
The foregoing discussion and tables assume no exercise of options
outstanding under our 1996 Stock Option Plan and 1999 Stock Option Plan, no
issuance of shares reserved for future issuance under our 1996 Stock Option
Plan, 1999 Stock Option Plan and 1999 Outside Directors Stock Option Plan and no
exercise of outstanding warrants, other than the exercise of warrants into an
aggregate of 696,667 shares of common stock as described above. As of March 31,
1999, on a pro forma basis,
20
<PAGE> 24
there were (a) 800,000 shares issuable upon the exercise of outstanding options
under our 1996 Stock Option Plan with a weighted average of $2.36 per share, (b)
600,000 shares reserved for future issuance under our 1999 Stock Option Plan, of
which options to purchase 41,000 shares have been granted at an exercise price
equal to the initial public offering price, (c) 100,000 shares reserved for
future issuance under our 1999 Outside Directors Stock Option Plan and (d)
90,000 shares issuable upon the exercise of outstanding warrants with a weighted
average of $2.10 per share. In connection with this offering, an additional
250,000 shares will be issuable upon exercise of warrants issued to the
underwriters at an exercise price equal to 110% of the initial public offering
price. See "Risk Factors -- Investors in this offering will incur substantial
immediate dilution," "Management -- Stock Option Plans" and note 8, note 9 and
note 13 of the notes to our December 31, 1998 financial statements contained
elsewhere in this prospectus.
21
<PAGE> 25
SELECTED FINANCIAL DATA
The selected data presented below under the captions "Statement of
Operations Data" and "Balance Sheet Data" for, and as of the end of, each of the
years in the three-year period ended December 31, 1998, and for the period from
November 3, 1995 (inception) to December 31, 1995 are derived from our audited
financial statements. The financial statements for, and as of the end of, each
of the years in the three-year period ended December 31, 1998 have been audited
by KPMG LLP, independent certified public accountants, and those financial
statements and the report thereon are included elsewhere in this prospectus. The
financial data as of March 31, 1999 and for the three-month periods ended March
31, 1998 and 1999 are derived from our unaudited financial statements. The
unaudited interim financial statements include all adjustments, consisting of
only normally recurring adjustments, which management considers necessary for a
fair presentation of the financial position and the results of operations for
these periods. Operating results for the three months ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the entire
year ending December 31, 1999. The data set forth below should be read in
connection with, and are qualified by reference to, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our financial
statements and the related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
PERIOD FROM THREE MONTHS ENDED
NOVEMBER 3, 1995 YEAR ENDED DECEMBER 31, MARCH 31,
(INCEPTION) TO ------------------------------------- -------------------------
DECEMBER 31, 1995 1996 1997 1998 1998 1999
----------------- --------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................ $ -- $ 169,822 $ 1,044,138 $ 2,003,117 $ 384,461 $ 641,457
Cost of revenues........................ -- 226,514 883,203 1,046,329 211,132 320,622
---------- --------- ----------- ----------- ----------- -----------
Gross profit............................ -- (56,692) 160,935 956,788 173,329 320,835
Operating expenses:
Selling, general and administrative..... 191,234 663,750 1,193,014 1,615,122 295,195 816,177
Advertising costs....................... -- 42,614 167,009 297,599 48,737 52,670
Stock compensation expense.............. -- -- -- 1,133,000 -- 165
---------- --------- ----------- ----------- ----------- -----------
Loss from operations.................... (191,234) (763,056) (1,199,088) (2,088,933) (170,603) (548,177)
Interest expense and other, net......... -- 72,547 298,561 132,291 17,610 38,029
---------- --------- ----------- ----------- ----------- -----------
Loss before income taxes................ (191,234) (835,603) (1,497,649) (2,221,224) (188,213) (586,206)
Income tax expense...................... -- 250 250 250 50 250
---------- --------- ----------- ----------- ----------- -----------
Net loss................................ $ (191,234) $(835,853) $(1,497,899) $(2,221,474) (188,263) (586,456)
========== ========= =========== =========== =========== ===========
Basic and diluted net loss per
share(1).............................. $ (0.05) $ (0.19) $ (0.26) $ (0.36) $ (0.03) $ (0.09)
========== ========= =========== =========== =========== ===========
Basic and diluted weighted average
shares outstanding(1)................. 4,000,000 4,302,466 5,655,151 6,129,116 6,074,000 6,367,290
========== ========= =========== =========== =========== ===========
Pro forma net loss per share............ $ (0.34) $ (0.08)
=========== ===========
Pro forma weighted average shares
outstanding........................... 6,408,283 7,037,290
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------- MARCH 31,
1995 1996 1997 1998 1999
-------- --------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ -- $ 17,086 $ 16,809 $ 148,380 $ 216,003
Working capital (deficit)......................... (8,735) (481,091) (1,339,280) (440,754) (419,920)
Total assets...................................... 41,751 200,368 366,254 784,943 1,156,179
Long-term debt.................................... -- -- -- 1,414,410 1,422,969
Stockholders' equity (deficit).................... (51,984) (356,837) (1,588,811) (2,220,946) (2,240,790)
</TABLE>
- ------------------------
(1) Diluted loss per share has not been presented separately, as the outstanding
stock options, warrants and convertible debenture are anti-dilutive for each
of the periods presented. Anti-dilutive potential common shares outstanding
were 0, 1,489,099, 829,545 and 653,400 for the period ended December 31,
1995, the years ended December 31, 1996, 1997 and 1998, respectively, and
399,286 and 1,545,264 for the three months ended March 31, 1998 and 1999,
respectively.
(2) The pro forma basic and diluted loss per share gives effect to the
conversion of a $1 million convertible debenture into 670,000 shares of
common stock in July 1998 and as of January 1, 1999 for the year ended
December 31, 1998 and the three months ended March 31, 1999, respectively.
22
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our financial
statements and the related notes that 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
EDGAR Online is an Internet-based commercial provider of business,
financial and competitive information contained in corporate filings made by
U.S. public companies with the SEC. We were founded in November 1995 as Cybernet
Data Systems, Inc. In January 1999, we changed our corporate name to EDGAR
Online, Inc.
We had no revenue in 1995. Our primary activities in 1995 related to
beginning development of our proprietary systems. In January 1996, we launched
our Web site and began selling our subscription services and establishing
contractual relationships with large Web portal and business and financial
information sites to supply EDGAR content for display on these sites. We started
selling advertising banners and sponsorships on our site in February 1997. We
have a limited operating history and are still in the early stages of
development.
We derive revenues from three primary sources: individual subscriptions,
corporate contracts and advertising. Revenue from individual subscriptions and
corporate contracts is deferred and recognized as income over the subscription
period. Revenue from advertising is recognized as the services are provided.
Individual subscriptions are typically billed in advance to subscribers' credit
cards and are collected, net of credit card transaction fees deducted by the
credit card processing institution, within one week of the sale. Services
related to corporate contracts are typically billed quarterly in advance.
Advertising revenue is paid to us by DoubleClick, net of advertising commission
fees, in the month following the month in which the revenue is earned.
In addition, a portion of our revenues is derived from barter transactions.
Barter advertising revenue is a non-cash item and relates to advertising placed
on our Web site by other Internet companies in exchange for our advertising
placed on their Web sites. Barter advertising revenue is recorded in the month
that banners are exchanged. The amount of barter advertising revenue and expense
is recorded at the lower of the estimated fair value of advertising provided or
received and is expected to become a smaller percentage of revenue in the
future. Other barter revenue is also non-cash and relates to corporate contract
sales for which we received computer equipment or other non-cash consideration
for services provided. The amount of such revenues are recorded at the fair
market value of the equipment or services received or services provided,
whichever is more objectively determinable. Barter expenses reflect the expense
offset to barter revenue.
We intend to increase our operating expenses to fund increased marketing
and advertising, to enhance our Web site and to continue to establish
relationships critical to our success.
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<PAGE> 27
RESULTS OF OPERATIONS
The following table sets forth selected statement of operations data as a
percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- ------------
1996 1997 1998 1998 1999
------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Revenues............................. 100% 100% 100% 100% 100%
Cost of revenues..................... 133 85 52 55 50
---- ---- ---- ---- ----
Gross profit......................... (33) 15 48 45 50
Operating expenses................... 416 130 152 89 135
---- ---- ---- ---- ----
Loss from operations................. (449)% (115)% (104)% (44)% (85)%
==== ==== ==== ==== ====
</TABLE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
Revenues. Revenues increased 67% to $641,457 in the three month period
ended March 31, 1999 from $384,461 for the comparable period in 1998. The growth
in revenues is primarily attributable to a $89,358, or 48%, increase in
individual subscription revenues, a $126,872, or 508%, increase in corporate
contract revenues and the addition of $37,150 in barter advertising revenues.
The increase in advertising revenues of $3,616, or 5%, is primarily due to the
increase in the number of advertisers and ads delivered, offset by a decrease in
advertising rates. These increases were primarily due to increased marketing
efforts, an expanded customer base and additional content distribution
agreements with other Web sites, which led to increased traffic on our Web site.
Cost of Revenues. Cost of revenues consist primarily of fees paid to
acquire the Level I EDGAR database feed from the SEC, Web site development and
maintenance charges and the costs associated with our computer equipment and
communications lines used in conjunction with our Web site. In addition, for
each period, a barter advertising expense is recorded equal to the barter
advertising revenue for that period. Total cost of revenues increased 52% to
$320,622 in the three-month period ended March 31, 1999 from $211,132 for the
comparable period in 1998. The increase in cost of revenues is primarily
attributable to increases in software development, Web site maintenance and
communications lines needed to handle increased traffic. Gross margins related
to the sale of our services were 50% in the three-month period ended March 31,
1999 and 45% for the comparable period in 1998.
Operating Expenses. Operating expenses consist primarily of personnel
expenses, advertising and public relations expenses, depreciation and
amortization and general corporate expenses. Operating expenses increased 153%
to $869,012 in the three-month period ended March 31, 1999 from $343,932 for the
comparable period in 1998. The increase in operating expenses is a function of
(1) addition of company personnel, (2) higher advertising commissions due to
increased advertising volume and (3) increased depreciation of infrastructure.
As a percentage of revenues, operating expenses increased to 135% for the
three-month period ended March 31, 1999 from 89% for the comparable three month
period in 1998.
FISCAL YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
Revenues. Revenues were $169,822 in 1996, with individual subscription
revenues representing $99,661, or 59%, of total revenues and corporate contract
revenues representing $70,161, or 41%, of total revenues. There were no
advertising or barter revenues in 1996. Revenues increased 515% to $1,044,138 in
1997, due to a $352,278, or 353%, increase in individual subscription revenues,
a $148,686, or 212%, increase in corporate contract revenues and the addition of
$166,671 in advertising revenues and $206,681 in barter advertising revenues.
The increase in revenue in 1997 was primarily
24
<PAGE> 28
attributable to increased visibility of our Web services and the addition of
advertising to our Web site. Revenues increased 92% in 1998 to $2,003,117. This
increase was attributable to a $442,912, or 98%, increase in individual
subscriptions, a $74,057, or 34%, increase in corporate contract revenues, a
$306,251, or 184%, increase in advertising revenues, a $56,759, or 27%, increase
in barter advertising revenues and the addition of $79,000 in other barter
revenues. These increases were primarily due to increased marketing efforts, an
expanded customer base and additional content syndication agreements with Web
portal and financial sites, which led to increased traffic on our Web site and
increased advertising revenues.
Cost of Revenues. Total cost of revenues was $226,514 in 1996, $883,203 in
1997 and $1,046,329 in 1998. The cost of revenue in 1996 was impacted by certain
start-up costs of developing the proprietary software used to operate our Web
site, all of which were expensed. Cost of revenues in 1997 increased as a result
of increased software development costs as compared to 1996. In 1998, cost of
revenues increased as a result of both increased purchases of computer and
communications services needed to handle increased traffic, and development of
Version 2.0 of the EDGAR Online Web site, which was introduced in the fall of
1998. Gross margins related to the sale of our services were (33%) in 1996, 15%
in 1997 and 48% in 1998.
Operating Expenses. Operating expenses increased $653,659, or 93%, from
$706,364 in 1996 to $1,360,023 in 1997 and increased $1,685,698, or 124%, to
$3,045,721 in 1998. As a percentage of revenues, operating expenses decreased
from 416% in 1996 to 130% in 1997 and increased to 152% in 1998 as a result of
non-cash stock compensation expense in 1998 of $1,133,000. Absent this charge,
operating expenses would have decreased to 95% of revenues for 1998. The dollar
increase in operating expenses is a function of (1) addition of company
personnel, (2) higher advertising commissions due to increased advertising
volume, (3) increased depreciation of infrastructure and (4) a non-cash charge
of $1,133,000 associated with the issuance of employee stock options.
SELECTED QUARTERLY REVENUE RESULTS
The following table sets forth unaudited revenue results for each of our
last eight fiscal quarters. In the opinion of our management, this unaudited
quarterly information has been prepared on a basis consistent with our audited
consolidated financial statements and includes all adjustments (consisting of
normal and recurring adjustments) that management considers necessary for a fair
presentation of the data. These quarterly revenue results are not necessarily
indicative of future quarterly patterns or revenue results. This information
should be read in conjunction with our financial statements and the related
notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1997 1997 1997 1997 1998 1998 1998 1998 1999
-------- -------- --------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE SOURCES:
Individual
subscriptions....... $ 68,219 $ 89,963 $142,691 $151,066 $184,245 $216,017 $245,963 $248,626 $273,603
Corporate contracts... 37,633 60,293 54,300 66,621 24,972 74,436 77,171 116,325 151,844
Advertising........... 26,360 43,003 33,421 63,887 80,118 122,133 118,932 151,739 83,734
Barter advertising.... 0 62,141 43,020 101,520 82,626 66,652 50,224 63,937 96,775
Other barter.......... 0 0 0 0 12,500 18,750 18,750 29,000 35,501
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total........ $132,212 $255,400 $273,432 $383,094 $384,461 $497,988 $511,040 $609,627 $641,457
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations with cash generated
from operations and by obtaining capital contributions from individual private
investors and corporations. We believe that our existing capital resources,
together with cash generated from operations and the proceeds from the
25
<PAGE> 29
private equity investment we received in March 1999, will enable us to fund our
operations through at least December 31, 1999. During 1995 and the first half of
1996, we received $125,250 worth of services from various vendors in exchange
for warrants to purchase shares of our common stock at an exercise price of
$0.05 per share. In the third quarter of 1996, Bowne & Co., Inc. invested
$462,500 by purchasing shares of our common stock. In 1997, we received $15,925
from the exercise of previously issued warrants.
Beginning in 1997, Bowne has made a series of loans to us totaling
$500,000. These loans carry an interest rate of 12% per annum. The proceeds of
the loans were used for working capital and general corporate purposes. We
intend to repay the principal and accrued interest on the loans with a portion
of the proceeds of this offering. In July 1998, we received $1,000,000 in gross
proceeds from the sale of a convertible debenture with detachable warrants to
Globix Corporation. In May 1999, Globix converted this debenture into 670,000
shares of our common stock and exercised its warrant to purchase an additional
666,667 shares of our common stock. See "Use of Proceeds," "Principal
Stockholders" and "Certain Transactions." In connection with the sale of the
debenture and warrants to, and the exercise of the warrants by, Globix, we paid,
or agreed to pay, VM Equity Partners a cash fee of $100,000 and issued to VM
Equity Partners warrants to purchase an aggregate of 66,833 shares of common
stock at an average exercise price of $1.50 per share.
In 1998, we received gross proceeds of $155,000 from the sale of our common
stock, for which we paid, or agreed to pay, VM Equity Partners a cash fee of
$7,750 and in January 1999, we issued VM Equity Partners warrants to purchase
5,167 shares of common stock at an exercise price of $1.50 per share. In 1998,
we also received $50,001 from the exercise of previously issued warrants. Also
in 1998, we satisfied $125,000 of accounts payable with the issuance of common
stock. In March 1999, we received $1,080,000 in gross proceeds from the sale of
240,000 shares of common stock. As compensation for the placement of 120,000 of
these shares, we agreed to pay VM Equity Partners a cash fee of $27,000 and
issued to VM Equity Partners warrants to purchase 6,000 shares of common stock
at an exercise price of $4.50 per share. As compensation for the placement of
the remaining 120,000 shares, we issued to C.E. Unterberg, Towbin warrants to
purchase 12,000 shares of common stock at an exercise price of $4.50 per share.
Under a separate financial advisory agreement, we have agreed to pay VM Equity
Partners a termination fee of $250,000 upon completion of this offering. See
"Use of Proceeds." In addition, we received an aggregate of $1,015,000 in gross
proceeds in connection with the exercise of warrants in May 1999.
Net cash provided by operating activities was $52,533 for the three months
ended March 31, 1998. Net cash used in operating activities was $460,271 for the
three months ended March 31, 1999, and was $341,035, $317,070 and $867,645 for
the years ended December 31, 1996, 1997 and 1998, respectively. We have financed
these activities through private debt placements and equity investments as
described above.
Capital expenditures, primarily for computers, office and communications
equipment, totaled $112,312, $224,132 and $78,127 for the years ended December
31, 1996, 1997 and 1998, respectively. The purchases were required to support
our expansion and increased infrastructure. There were no capital expenditures
for the three months ended March 31, 1998 and 1999.
At March 31, 1999, we had cash and cash equivalents on hand of $216,003 and
on April 3, 1999, we received the remaining proceeds from the sale of the
240,000 shares of our common stock in the March 1999 private placement discussed
above. Based on these cash balances, we anticipate to be able to fund our
operations through at least December 31, 1999.
In January 1996, we entered into five-year employment agreements with our
two founders to serve as Co-Chief Executive Officer and President, respectively.
In March 1999, Mr. Strausberg resigned as President and currently serves as the
Chairman of the Board of Directors and Chief Information Officer. The employment
contracts provide for our Chief Executive Officer and
26
<PAGE> 30
Chairman to each receive a base salary of $150,000 per year. During the years
1996 and 1997, both officers agreed to defer their entire salaries. In 1998,
both officers received partial salaries totaling $57,211 each. Such salaries
began to be paid on a current basis in January 1999. See "Use of Proceeds,"
"Management," "Certain Transactions" and note 7 of the notes to our financial
statements contained elsewhere in this prospectus.
IMPACT OF THE YEAR 2000
Many currently installed computer systems and software products are coded
to accept or recognize only two digit entries in the date code field. These
systems may recognize a date using "00" as the year 1900 rather than the year
2000. As a result, computer systems and/or software used by many companies and
governmental agencies may need to be upgraded to comply with such Year 2000
requirements or risk system failure or miscalculations causing disruptions of
normal business activities.
State of Readiness. We have begun to assess the Year 2000 readiness of our
information technology ("IT") systems, including the hardware and software that
we utilize in connection with managing our Web sites and providing our
value-added services to customers, and our non-IT systems. Our Year 2000
assessment plan consists of the following:
- quality assurance testing of our proprietary software developed by iXL;
- contacting third-party vendors and licensors of material hardware,
software and services that are both directly and indirectly related to
the delivery of our services over the Internet;
- contacting providers of material non-IT systems; and
- assessment of repair or replacement requirements.
iXL has advised us that our proprietary software has been designed to be
Year 2000 compliant and iXL is in the process of performing on our behalf Year
2000 compliance simulations on our proprietary software to test system
readiness. This testing is scheduled to be completed by June 1, 1999. Based on
the results of these Year 2000 simulation tests, we intend to revise the code of
our proprietary software as necessary to improve its Year 2000 compliance. We
have been informed by many of the vendors of material hardware and software
components of our IT systems, including Globix and TRW (which acts under
contract as the SEC's dissemination agent for the EDGAR system and from which we
purchase our Level I EDGAR feed), and by our advertising services provider,
DoubleClick, that the products used by them to provide services to us are
currently Year 2000 compliant. We are in the process of attempting to obtain
from other vendors of our material hardware and software components of our IT
systems assurances of their Year 2000 compliance. We plan to complete this
vendor process during the summer of 1999. We are currently assessing the
materiality of our non-IT systems and will seek assurances of Year 2000
compliance from providers of material non-IT systems. Until such testing is
complete and such vendors and providers are contacted and have responded, we
will not be able to completely evaluate whether our IT systems or non-IT systems
will need to be revised or replaced.
Costs. To date, we have not incurred any material costs in identifying or
evaluating Year 2000 compliance issues. Most of our expenses have related to,
and are expected to continue to relate to, the operating costs associated with
time spent by employees in the evaluation process and Year 2000 compliance
matters generally. At this time, we do not possess the information necessary to
estimate the potential costs of revisions to our proprietary software, should
such revisions be required, or the replacement of third-party software, hardware
or services that are determined not to be Year 2000 compliant. Although we do
not anticipate that such expenses will be material, such expenses, if
27
<PAGE> 31
higher than anticipated, could have a material adverse effect on our business,
results of operations and financial condition.
Risks. We are not currently aware of any Year 2000 compliance problems
relating to our proprietary software or our IT or non-IT systems that would have
a material adverse effect on our business, results of operations and financial
condition, notwithstanding our efforts to detect and correct such problems.
There can be no assurance that we will not discover Year 2000 compliance
problems in our proprietary software that will require substantial revisions or
replacements. In addition, there can be no assurance that third-party software,
hardware or services incorporated into our material IT and material non-IT
systems will not need to be revised or replaced, which could be time consuming
and expensive. Our failure to fix, if necessary, our proprietary software or to
fix or replace, if necessary, third-party software, hardware or services on a
timely basis could result in lost revenues, increased operating costs and other
business interruptions, any of which could have a material adverse effect on our
business, results of operations and financial condition. Moreover, the failure
to adequately address Year 2000 compliance issues in our proprietary software
and our IT and non-IT systems could result in claims of mismanagement,
misrepresentation or breach of contract and related litigation, which could be
costly and time-consuming to defend.
In addition, there can be no assurance that governmental agencies, utility
companies, Internet access companies, third-party service providers and others
outside our control will be Year 2000 compliant. The failure by such entities to
be Year 2000 compliant could result in a systemic failure beyond our control,
such as a prolonged Internet, telecommunications or electrical failure, which
could prevent us from operating our Web site.
Contingency Plan. While, as discussed above, we are engaged in an ongoing
Year 2000 assessment, we have not developed any contingency plans. The results
of our Year 2000 simulation testing and the responses received from third-party
vendors and service providers will be taken into account in determining the need
for and nature and extent of any contingency plans.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" (SOP 98-1). SOP 98-1 provides
guidance for determining whether computer software is internal-use software and
on accounting for the proceeds of computer software originally developed or
obtained for internal use and then subsequently sold to the public. It also
provides guidance on capitalization of the costs incurred for computer software
developed or obtained for internal use. We do not believe that the adoption of
SOP 98-1 will have a material impact on our results of operations or financial
position.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," (SFAS 133) which establishes accounting and
reporting standards for derivative instruments, including derivative instruments
embedded in other contracts, and for hedging activities. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
This statement is not expected to affect us as we currently do not have any
significant derivative instruments or hedging activities.
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BUSINESS
THE COMPANY
EDGAR Online, Inc. is an Internet-based commercial provider of business,
financial and competitive information contained in corporate filings made by
public companies with the SEC. Our services are designed to satisfy the demands
of individuals and businesses for timely and cost-effective access to the
filings of the more than 15,000 U.S. public companies. These services include a
variety of search and navigation tools, personalization features and e-mail and
Web-based alerts. We obtain corporate filings from the SEC's EDGAR (Electronic
Data Gathering, Analysis and Retrieval) database on a non-exclusive, real-time
basis. With our proprietary software, we enhance these filings by organizing and
processing them into an easily accessible and searchable format. We then use
these enhanced SEC filings as the basis for our value-added services, which we
offer on our EDGAR Online Web site, located at http://www.edgar-online.com.
We derive revenues from the following three primary sources:
- monthly fees from individual subscribers to our Web site;
- fees generated from corporate customers for (1) group subscriptions to
our Web site, (2) information customized for their particular needs and
(3) delivery of their SEC filings for display on their corporate Web
sites; and
- advertising revenues derived from sales of banners and sponsorship
buttons on our site.
In order to build brand awareness, increase traffic and create a large pool
of potential subscribers, we promote our site and provide a portion of our
content for free. We have also established a significant number of content
distribution relationships. We currently have contracts to supply EDGAR content
to more than 60 widely used Web sites including Yahoo!, Infoseek's GO Network,
MSNBC, TheStreet.com, CNET's SNAP, Go2Net, PointCast, Infospace, CBS
MarketWatch, SmartMoney.com, Business Wire, Big Charts, Raging Bull and Track
Data.
INDUSTRY BACKGROUND AND OPPORTUNITY
Today's business environment is characterized by a rapidly growing demand
for fast and easy access to corporate and financial information. SEC filings,
such as prospectuses and annual and quarterly reports, are a primary source of
this information. The SEC began to require electronic filings in 1994 and, since
May 1996, all reporting U.S. public companies have been required to make their
SEC filings in an electronic format through the EDGAR system. The SEC
established this system to perform automated collection and acceptance of
submissions by companies and others who are required to file disclosure
documents with the SEC. Prior to the introduction of the EDGAR system, SEC
filings were only available on a delayed basis in costly paper or CD-ROM format
from a limited number of document providers or SEC public reference rooms.
As a result of the rapid growth of the Internet, corporate and financial
information can now be delivered in a more efficient and less expensive manner.
Individuals and institutions are increasingly using the Internet as a source of
valuable business intelligence. According to Simba Information, revenues from
the sale of business information delivered online in the U.S. are projected to
grow from approximately $27 billion in 1998 to approximately $40 billion in
2002. Industry sources report that paid online subscriptions for business and
professional information grew almost 27% in 1997 to 3.3 million subscribers and
increased in the first three quarters of 1998 to an estimated 5.0 million
subscribers. Growth in this market is expected to continue as more people gain
access to and
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increasingly rely on the Internet as their primary source of business
information. In addition, the growth of online investing has created a
population of individuals who are making their own investment decisions rather
than relying on traditional brokers and delayed sources of information.
According to International Data Corporation, a provider of information
technology data, the number of online brokerage accounts in the United States is
expected to grow from 6.4 million at the end of 1998 to 24 million at the end of
2002. We believe these trends indicate that an increasing number of people will
use the Internet as a tool to obtain the information contained in SEC filings.
The Internet has also emerged as an attractive medium for advertisers.
Forrester Research, an independent technology research firm, estimates that
total Internet advertising expenditures will grow from an estimated $1 billion
in 1998 to over $8 billion by 2002. Internet advertising is expanding to include
not only technology and Internet-related companies, but also traditional
advertisers, such as consumer product companies, airlines, financial services
companies and automobile manufacturers.
The availability of SEC filings in an electronic format, together with the
distributive power of the Internet, has created a significant opportunity to
deliver this information in ways that previously had not been possible. In
addition, newly evolving technologies make it possible to locate and retrieve
selected information from electronic databases, such as the EDGAR database, in a
real-time and cost-effective manner. As the demand for U.S. corporate and
financial information grows, we will continue to seek to improve our market
position as an Internet distributor of business and financial information based
on EDGAR filings.
THE EDGAR ONLINE SOLUTION
Having recognized the possibility of combining EDGAR data, the Internet and
new data-mining technologies to serve the market for real-time information about
U.S. public companies, in 1996 we launched the first commercial Web site that
made information derived from EDGAR filings available on a real-time basis. Our
Web site provides EDGAR filings and real-time business news, e-mail and
Web-based alerts based upon these filings. Our proprietary software enhances
EDGAR filings by organizing and processing them into user-friendly formats. We
also provide users with multiple navigation and search features that allow them
to efficiently retrieve the specific information they seek. For the last three
years, we have been at the forefront in integrating EDGAR-based information into
high traffic business and financial information Web sites. We believe that
EDGAR-based information is now an integral part of the mix of business and
financial information available on these types of Web sites.
We seek to capture the fast-growing market of individual users of business
and financial information by offering low cost, value-added services to our
paying subscribers. We also offer basic free content that encourages repetitive
usage by visitors to our Web site and customize our services to meet the
particular needs of our corporate and institutional customers.
STRATEGY
Our goal is to create the preeminent brand for EDGAR-based business and
financial information on the Internet. We aim to meet the increasing market
demand for real-time, value-added business, financial and competitive
information by providing our users with sophisticated methods of mining data
contained in EDGAR filings. Our objective is to establish EDGAR Online as the
most reliable and trusted source of company information for individual investors
and businesses. We are seeking to increase the number of our corporate
customers. We also aim to further develop a community of loyal individual users
in order to build our subscription base and attract advertisers. Key elements of
our strategy are described below.
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STRENGTHEN BRAND RECOGNITION
We believe that strengthening brand recognition of our EDGAR Online Web
site helps us to attract additional traffic, subscribers, content distribution
partners and advertisers. Our EDGAR Online name and logo, the advertising and
promotion we receive from our co-branded partners and our plans for
significantly increased marketing activities will continue to raise visibility
and cultivate our brand identity. We intend to continue to pursue content
distribution relationships with high-traffic Web sites to expose our brand name
and drive additional traffic to our Web site. We will also seek to increase
traffic to our Web site with a national brand building campaign in traditional
and online media.
INCREASE SUBSCRIBER BASE AND SUBSCRIPTION REVENUES
We will use a portion of the proceeds of this offering to develop a sales
and marketing campaign to increase the number of individual subscribers to our
site. This campaign will use direct mail and trial offers to market our
value-added premium services to our existing base of more than 115,000
registered users. We will also promote our services to the more than 900,000
individuals who access our Web site each month through our content distribution
network. In addition, our marketing efforts will focus on increasing the number
of group subscriptions we sell to businesses and on further developing our
custom-tailored business applications.
INCREASE ADVERTISING REVENUES
We believe our Web site attracts users who, as a group, are more affluent
and better educated than those of many other Web sites and therefore represents
an attractive medium for companies that advertise over the Internet. We have an
agreement with DoubleClick, an online advertising company, under which
DoubleClick acts as our exclusive advertising representative for the placement
of advertising banners and other advertising on our Web site. In March 1999,
more than 240 separate advertisers placed banners on our site as part of the
DoubleClick network. In order to attract new users and retain a loyal audience
that appeals to a broad range of advertisers and business partners, we are
investing in content, improving and expanding the functionality of our Web site
and engaging in increased advertising and promotional programs. We believe that
this strategy will attract new subscribers and advertisers to our Web site.
Advertising sales are also directly tied to the number of pages viewed by users
of our site on a monthly basis. In the twelve month period from January to
December 1998, the advertising pages viewed by our users doubled to
approximately 8 million per month. In March 1999, our customers viewed
approximately 9 million advertising pages.
PURSUE ADDITIONAL REVENUE STREAMS BY INTRODUCING NEW SERVICES
We intend to introduce new value-added services to increase revenues from
our existing customer base and to attract new customers. We have sophisticated
search technology under development to further mine the data in EDGAR filings
and plan to market tailored products to specific niche users. We are also
developing product offerings designed to help businesses and individuals use the
Internet to make selected SEC filings, such as Schedules 13D and 13G which are
used to report beneficial ownership interests in public companies.
EDGAR ONLINE WEB SITE
We believe that our Web site, located at http://www.edgar-online.com, is
one of the most heavily trafficked commercial sources of EDGAR information on
the Internet. For the past two years, Barron's has rated our EDGAR Online site
as one of the top 20 investment Web sites.
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All filings made through the EDGAR system since 1994 may be obtained
through our Web site. Individual users who wish to access our full range of
services pay a monthly fee starting at $9.95. Individual subscribers who access
more than 25 real-time filings per month are charged additional fees. Our
highest standard subscription rate of $99.95 per month entitles a user to
unlimited access to real-time filings. Selected services are also available to
non-paying registered users of our Web site.
Our EDGAR Online Web site, which is password protected and requires
registration for access, is displayed through a graphical interface that
provides easy navigation for the user. Our Web site is regularly updated from a
functionality standpoint to meet the specific needs of our users. The main areas
into which the content is organized are described below. Our paying subscribers
have access to all of these services and to EDGAR filings on a real-time basis.
Today's SEC Filings is an up-to-the-minute list of new EDGAR filings
received by the SEC. This information can be sorted by company name, form type
or time filed. Each entry also provides a brief description of the filing. The
Today's SEC Filings list can be accessed by non-paying visitors as well as by
paying subscribers, but the filings themselves cannot be downloaded by
non-paying visitors until one full business day after they are submitted to the
SEC. The Today's SEC Filings page also displays a list of Form 144 filings,
which is a non-EDGAR form that sellers of restricted securities are required to
file with the SEC to give notice of a proposed sale of these types of
securities. These filings are provided for subscribers as an additional
value-added service at a premium cost.
Full Search allows users to combine multiple criteria to search EDGAR
filings on a very general basis or an extremely detailed basis. Users can search
by company name, ticker symbol, central index key (CIK) code, industry or
sector, city, state, SEC form type and filing date or filing date range. We also
offer pre-packaged search protocols that allow searching for annual reports
(Form 10-K), latest quarterly reports (Form 10-Q), latest proxy filings
(Schedule 14A), insider transactions (Schedules 13D, 13G, Forms 3, 4 and 5) and
Form 144 (Notice of Proposed Sale of Securities Pursuant to Rule 144) filings.
Document Display: Users are provided the option of viewing filings in the
following formats:
- HTML (Hypertext Markup Language): This format treats the document as
one page. It downloads quickly, but is not the optimal format for
output or printing. The document is displayed with the table of
contents appearing on the left side of a user's computer screen with
navigation links to the relevant sections including financial tables.
- RTF (Rich Text Format): Paying subscribers can select RTF to download
the document into Word(R) or WordPerfect(R). Enhanced formatting
allows the user to output specific pages, search for keywords and
print filings suitable for presentation.
- XLS (Excel(R) Spreadsheet Format): Users have the option of extracting
balance sheet, income statement and cash flow statements directly into
spreadsheet applications and financial models. This extraction feature
allows the user to quickly compare financial statement data across
multiple companies or industries.
EDGAR Online People allows users to search the EDGAR database for
information about individuals named in SEC filings. A user can either look for
occurrences of a specific person across all filings or can retrieve a table
listing all people appearing in the filings for a specific company. To obtain
more information about an individual, such as compensation, stock option grants
or employment agreements, the user clicks on the filing and is brought directly
to the relevant sections of the filing, where each occurrence of the
individual's name is highlighted.
EDGAR Online Personal allows users to store their queries and sends alerts
immediately when new filings come in that match the user's search criteria. With
EDGAR Online Personal, a customized portfolio of companies, industries and
regions may be created. A portfolio can include
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specific companies, form types or combinations such as "All Form S-1 filings by
technology sector companies in California."
EDGAR Online IPO Express displays new public offerings as they are filed,
priced, postponed or withdrawn and provides daily and weekly summaries of all
companies filing IPO prospectuses with the SEC. Users can quickly and easily
access key sections of the prospectus, including competition, risk factors,
management and financial data, as well as key details such as underwriters and
ticker symbols.
Special Extracted Information: Our services also allow subscribers to
directly extract popular sections of filings:
- Glimpse extracts and retrieves the Management's Discussion and
Analysis section of Forms 10-K and 10-Q. Many of our co-branded
partners choose to display this extracted information with the other
financial information appearing on their Web sites.
- FDS (Financial Data Schedule) extracts the financial data schedule
from filings and formats it into table or spreadsheet form.
Supporting company data is also available on our Web site, including:
- Stock Quotes: 20 minute delayed stock quotes from PC Quote;
- Charts: including interactive charts, quotes, reports and indicators
on over 50,000 stocks, mutual funds and market indexes from Big
Charts; and
- News and Research Resources: from sources such as Hoover's, Zacks,
Multex.com and News Alert.
CORPORATE SERVICES
We have entered into a number of, and are pursuing additional, corporate
contracts to supply data for use on corporate intranets, extranets and Web
sites.
CORPORATE INTRANETS AND EXTRANETS
We provide EDGAR content to corporate customers such as American Express,
Bowne & Co., Inc. and Merrill Lynch for their internal use, including on their
intranets and extranets. Each of these customers receives a tailored application
for their internal use at a price based on content, degree of customization and
the number of users. These corporate customers are willing to pay a premium for
having the content of SEC filings processed and delivered to them in ways that
best meet their internal needs. These services include real-time delivery of
selected types of filings or specific elements of filings that contain
information such as changes in shareholders' ownership used in targeting
investors or company information used as sales leads. In addition, we offer bulk
sales of subscriptions to our Web site services to firms for use by their
employees.
SUBSCRIPTION WEB SITES
We deliver EDGAR content to other subscription Web sites, such as
Hoovers.com, Quote.com and Multex.com, that bundle our content into their
service offerings to the business and investment community. These Web sites
either integrate our services into their comprehensive offerings, or they offer
our services as higher cost options.
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CORPORATE WEB SITES
Many public companies maintain Web sites that contain information about
their businesses, management, press releases and other public information. For a
monthly fee, we supply companies such as Advanced Micro Devices, Compaq, Globix,
Intel, Mutual of New York and MCI Worldcom with their company-specific EDGAR
filings for display on their Web sites. This content is typically part of the
investor relations section of these companies' Web sites. For example, many of
these Web sites provide links to these companies' Form 10-K and Form 10-Q
filings, which we provide from our database of EDGAR filings. By contracting
with us, these companies are assured that their Web sites contain an up-to-date
list of their EDGAR filings.
FUTURE SERVICE OFFERINGS
Given the proliferation of business information, we believe that our
customers need greater functionality in searching for the specific business
information that is important to them. Recognizing this need, we intend to
introduce later this year a new service offering to our paying subscribers that
will involve the use of a key word search engine. By entering a single word or a
series of words into a query box, users will be able to search through a
database of the last two years of EDGAR filings. For example, entering the words
"advertising" and "Yahoo" would bring the user to the sections of Yahoo!'s SEC
filings which discuss Yahoo!'s advertising revenues.
We also intend to introduce later this year a new service offering that
will enable users to use natural language to search IPO filings for concepts,
rather than searching for specific key words. This new service offering would
utilize the DR-LINK(R) natural language search engine which we currently license
on a non-exclusive basis from Manning & Napier Information Services. A user
would enter a complex natural language description of his search, such as "I am
looking for an Internet business incorporated in Delaware that generates
subscription revenues." The program will then search the full text of over 4,000
IPO registration statements filed through the EDGAR system since 1996. The
search results will be ranked by relevance and keyed to the section of the
document that contains the relevant information. Users will have the option of
receiving e-mail alerts when future occurrences of the same criteria appear in
subsequent IPO filings. We anticipate that this premium priced service will be
attractive to venture capital and investment firms, business plan writers,
securities analysts, attorneys, accountants and others needing an efficient
method of performing comparative company analyses.
KEY CONTENT DISTRIBUTION RELATIONSHIPS
We have entered into a number of, and are pursuing additional, content
distribution contracts to enhance our brand recognition and audience reach. We
provide EDGAR content to these partners in order to build traffic to our Web
site. Currently, approximately 44% of our traffic stems from these
relationships. We have more than 60 of these content distribution contracts.
These contracts are typically for a one-year term, with automatic renewal for
one-year periods, unless either party cancels the agreement prior to the end of
the then current term.
PORTAL OR SEARCH ENGINE WEB SITES
We provide selected EDGAR content to so-called portal and search engine
sites, which are popular Web sites through which users can access a broad array
of content resources, including Yahoo!, Infoseek's GO Network, CNET's SNAP,
Go2Net and Infospace. For example, we provide the Yahoo! Finance Web site with
headline information about SEC filings and the extracted Management's Discussion
and Analysis section of Forms 10-K and 10-Q on a real-time basis. We
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deliver selected free information for display on other Web sites, such as
Infoseek's GO Network and Infospace. We also support co-branded pages, which
provide links to our Web site where we have the opportunity to sell
subscriptions. Our agreements with these entities provide us with the right to
sell advertising on these co-branded pages. While we typically retain 100% of
these advertising revenues, under some of these arrangements we share up to 20%
with our co-branded partners.
NEWS, FINANCIAL INFORMATION AND INVESTMENT SITES
We provide selected EDGAR content to news, financial information and
investing sites such as CBS MarketWatch, SmartMoney.com, Multex.com, PointCast,
MSNBC, TheStreet.com, Hoover's, Quote.com, Track Data, Business Wire, Big Charts
and Raging Bull. We provide Multex.com, Hoover's, Quote.com and Track Data with
a digital feed of real-time header information from all EDGAR filings. These Web
sites offer this information to their paying subscribers who can download
real-time and historical full-text filings from our Web site. We support
co-branded links to CBS MarketWatch, Hoover's, SmartMoney.com, Business Wire and
Raging Bull.
LINKS FROM THOUSANDS OF WEB SITES WORLDWIDE
The open architecture of the Internet allows Web sites to link without
permission to Web pages they believe will benefit their users. We estimate that
more than 2,000 different Web sites provide links to our Web site, thereby
generating extensive traffic to our site and increasing our brand awareness.
CUSTOMERS AND ADVERTISERS
We have a diversified base of individual subscribers, corporate customers
and advertisers. We believe that this customer and advertiser base will grow
significantly and become further diversified as we implement our sales and
marketing plan and increase the range of our service offerings.
INDIVIDUAL SUBSCRIBERS
As of March 31, 1999, EDGAR Online had over 115,000 registered users, of
which over 7,500 were paying subscribers. Based on information from @plan.,
Inc., an Internet-focused market research provider, we believe our individual
users represent a demographic group characterized by levels of education and
personal income that are well above the average profile of an Internet user.
According to the registration data we collect, these individuals are typically
executives, research analysts, bankers, journalists, attorneys, accountants,
sales representatives, recruiters, business development and marketing
professionals. We provide them with cost-effective and flexible tools to obtain
information about companies' financial performance, competitive position,
strategic plans, products and industries, expenditure plans, management changes,
shareholder changes, capital raising and other information reported in SEC
filings.
CORPORATE CUSTOMERS
As of March 31, 1999, we had 100 corporate customers representing a broad
range of industry sectors. We believe that our corporate contract services are
attractive to professional firms and large corporations who can benefit from
using our services to generate valuable business, financial and competitive
information that can help them conduct their businesses more effectively.
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ADVERTISERS
In March 1999, we sold advertising through DoubleClick, an Internet
advertising services provider, to over 240 companies. Our advertisers represent
a broad cross section of industries that are attracted by the subject matter of
our Web site and by the demographics of the users of our Web site. These
advertisers include companies such as Datek Online Brokerage Services, Fidelity
Investments, Korn Ferry, GTE, Nortel Power and IBM.
MARKETING AND SALES
Historically, we have focused our business on building content distribution
relationships with major search engine, financially-oriented and general
information Web sites to build our brand recognition. These co-branded
relationships and our well-known presence on the Internet have allowed us to
attract individual subscribers and corporate customers. We plan to use a portion
of the proceeds of this offering to expand our sales and marketing efforts.
We seek to:
- attract more individual online users to our services and convert visitors
into paying subscribers;
- increase corporate sales;
- strengthen brand awareness through a variety of advertising, marketing
and promotional programs;
- expand marketing efforts to public companies that display SEC filings on
their Web sites; and
- increase our advertising revenues by increasing traffic to our Web site
and continuing to provide our advertisers with a growing, demographically
desirable audience.
We believe that corporate customers will represent an important source of
revenue growth in the next few years as we continue to introduce value-added
search and extraction products and customized fee-based services to corporate
purchasers of sophisticated financial information. We intend to assign several
of our new sales professionals to market our services exclusively to corporate
accounts.
INFRASTRUCTURE, OPERATIONS AND TECHNOLOGY
Our development programming is performed by iXL Enterprises, Inc. from its
office in Norwalk, Connecticut on our computers. iXL also manages our Web site.
iXL, formerly Pequot Systems, has been our software developer since our
inception. We own all the programs that run our Web site, including those
developed by iXL. Our Web site is hosted at facilities located at Globix
Corporation in New York City. Globix maintains multiple Web servers owned by us
which run Microsoft NT operating systems and use Microsoft Internet Information
Server. The system is maintained on a 24 hours-a-day, 7 days-a-week basis
remotely by iXL technicians with the exception of our networking communications
which are managed by Globix. See "Certain Transactions."
All our systems, including our accounting system, user database and
database of EDGAR filings, and all proprietary software are backed up on a daily
basis to our data center in our Norwalk, Connecticut offices and also backed up
to tape. The tape backup is held offsite. Our software and database are
replicated across multiple servers, using the clustering facilities of Microsoft
Windows NT Server, Enterprise edition. This provides us with both resilience
against hardware failure and with scalability to handle our increasing traffic
loads.
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The flow of information in and out of our site operates as follows:
- the live feed of EDGAR filings comes from the SEC's dissemination agent,
TRW, which sends this feed to Globix via a private high speed T-1
connection; and
- the raw EDGAR filings are processed by our proprietary software and
posted to our site or distributed to third parties with which we have
distribution contracts via production servers located at Globix's
facilities.
Our services are available to users 24 hours-a-day, 7 days-a-week. Customer
service is available weekdays 9:00 AM to 7:30 PM (ET). Inquiries come in through
our Web site and via e-mail and telephone. At March 29, 1999, we had 6 employees
engaged in customer service and network support.
COMPETITION
The market for Internet information services and products is relatively
new, has no substantial barriers to entry and is intensely competitive and
rapidly changing. The number of Web sites competing for consumers' and
advertisers' attention and spending has proliferated and we expect that
competition will continue to intensify. We currently compete, directly and
indirectly, for subscribers, viewers and advertisers with the following
categories of companies:
- traditional vendors of financial information such as Disclosure;
- proprietary information services and Web sites targeted to business,
finance and investing needs, including those providing EDGAR content,
such as Bloomberg and LIVEDGAR; and
- Web-based providers of free EDGAR information, such as FreeEDGAR.
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 EDGAR content for free) and make more attractive
offers to existing and potential employees, content distribution partners and
advertisers. Our competitors may offer EDGAR content 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 subscribers, 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. See "Risk Factors -- We face intense competition from
other providers of business and financial information."
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 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 Internet advertising or to advertising on our Web
site. See "Risk Factors -- We face intense competition for advertising revenues
and the viability of the Internet as an advertising medium is uncertain."
INTELLECTUAL PROPERTY
Our success depends significantly upon our proprietary technology. We
currently rely on a combination of copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect our proprietary
rights. All of our employees have executed confidentiality and
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non-use agreements which provide that any rights they may have in copyrightable
works or patentable technologies belong to us. In addition, prior to entering
into discussions with third parties regarding our proprietary technologies, we
require that such parties enter into a confidentiality agreement. If these
discussions result in a license or other business relationship, we also require
that the agreement setting forth the parties' respective rights and obligations
include provisions for the protection of our intellectual property rights.
The SEC has granted us a non-exclusive, royalty-free license to use the
name EDGAR in our logo and corporate name initially through 2008, and we have
received notification from the U.S. Patent and Trademark Office that our
application to register our EDGAR Online trademark has proceeded to the
publication stage.
We use database technology designed for us by iXL. This proprietary
technology integrates software that was developed exclusively for us by iXL with
software systems obtained commercially. The software developed for us by iXL
includes our database of EDGAR filings, Web-based customer interfaces, data
mining capabilities and customer support and billing systems. The software
systems obtained commercially include the Great Plains Accounting System and
NetOwl Extractor. The nature of our proprietary system allows us to enhance our
service offerings by rapidly integrating new technology developed for us by
third parties. See "Certain Transactions."
We also have non-exclusive rights to the DR-LINK natural language search
engine pursuant to an agreement with Manning & Napier Information Services,
which we plan to include in our service offerings later this year. See
"-- Future Service Offerings."
GOVERNMENT REGULATION
We are subject, both directly and indirectly, to various laws and
governmental regulations relating to our business. There are currently few laws
or regulations directly applicable to online services of the Internet. However,
due to the increasing popularity and use of commercial online services and the
Internet, it is possible that a number of laws and regulations relating to
commercial online services and the Internet may be adopted. Such laws and
regulations may cover issues such as user privacy, pricing and characteristics
and quality of products and services. Moreover, the applicability to commercial
online services and the Internet of existing laws governing issues such as
property ownership, libel and personal privacy is uncertain and could expose us
to substantial liability. Any such new legislation or regulation or the
application of existing laws and regulations to the Internet could have a
material adverse effect on our business, results of operations and financial
condition.
Tax authorities in a number of states are currently reviewing the
appropriate tax treatment of companies engaged in Internet commerce. New state
tax regulations may subject us to additional state sales and income taxes. As
our service is available over the Internet anywhere in the world, multiple
jurisdictions may claim that we are required to qualify to do business as a
foreign corporation in each such jurisdiction. The failure by us to qualify as a
foreign corporation in a jurisdiction where we are required to do so could
subject us to taxes and penalties for the failure to qualify. It is also
possible that state and foreign governments might attempt to regulate our
transmissions of content on our Web site.
FACILITIES
Our executive offices are located in Norwalk, Connecticut, where, together
with iXL, we lease 6,600 square feet of office space. See "Certain
Transactions -- Pequot Systems (iXL)." The term of this lease expires April
2000. We are seeking additional office space which we believe will be available
on commercially reasonable terms.
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EMPLOYEES
As of May 1, 1999, we had 16 full-time employees. We believe that we have
good relations with our employees.
LEGAL PROCEEDINGS
On May 3, 1999, we were informed of a potential claim by a former candidate
for our Chief Financial Officer position alleging that we entered into an
employment agreement and granted stock options to the candidate. We believe that
these allegations are without merit and intend to contest them if any lawsuit is
filed against us.
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<PAGE> 43
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth the names, ages and positions of our
executive officers and directors as of the date of this prospectus:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Susan Strausberg(1).................. 60 Chief Executive Officer, Secretary and Director
Marc Strausberg(1)................... 64 Chairman of the Board, Chief Information Officer
and Director
Tom Vos(1)........................... 51 President, Chief Operating Officer and Director
Greg D. Adams........................ 38 Chief Financial Officer
Brian Fitzpatrick.................... 42 Vice President of Corporate Sales
Jay Sears............................ 32 Vice President of Marketing and Business
Development
David Trenck......................... 25 Vice President of Operations
Marc H. Bell(2)(3)................... 31 Director
Bruce Bezpa(3)....................... 43 Director
Stefan Chopin(2)..................... 40 Director and Chief Technology Consultant
Mark Maged(2)........................ 65 Director
</TABLE>
- -------------------------
(1) Member of the Outside Directors Compensation Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Susan Strausberg, a co-founder of EDGAR Online, has served as Chief
Executive Officer and Secretary since EDGAR Online was formed in November 1995.
From December 1994 until the formation of EDGAR Online, Ms. Strausberg was a
consultant to Internet Financial Network. In her capacity as Chief Executive
Officer, Ms. Strausberg oversees strategic planning and development and is
responsible for the production of the EDGAR Online Web site. Ms. Strausberg has
served on the Board of Directors of RKO Pictures since December 1998. Ms.
Strausberg, the wife of Mr. Strausberg, EDGAR Online's Chairman, has a B.A.
degree from Sarah Lawrence College.
Marc Strausberg, a co-founder of EDGAR Online, has served as Chairman of
the Board of Directors and President since EDGAR Online was formed in November
1995. Mr. Strausberg resigned as President upon the election of Tom Vos to this
position in March 1999. In December 1994, Mr. Strausberg co-founded Internet
Financial Network, a financial information vendor and served as IFN's
co-chairman until founding EDGAR Online. From 1992 to 1994, Mr. Strausberg was
the publisher of the Livermore Report, a newsletter that focused on the
valuation of initial public offerings. From August 1987 to December 1994, Mr.
Strausberg served as Chairman and President of Sindex Inc., which provided
computer-based trading operations to individuals, hedge funds and brokerage
firms. Mr. Strausberg oversees product development for EDGAR Online. Mr.
Strausberg, the husband of Ms. Strausberg, EDGAR Online's Chief Executive
Officer, has a B.A. degree from Muhlenberg College.
Tom Vos joined EDGAR Online as a Director in August 1996 and was elected
Chief Operating Officer in March 1998. Mr. Vos was elected President in March
1999. Mr. Vos is responsible for EDGAR Online's day-to-day operations. From 1986
until April 1998, Mr. Vos was Vice President of Marketing at Bowne & Co., Inc.
In that capacity, Mr. Vos was responsible for strategic planning, acquisitions
and new product development. While at Bowne, Mr. Vos was also responsible for
advertising and public relations and for the development of both Bowne's Web
site and its EDGAR services department. Mr. Vos has a B.S. degree in Physics
from Notre Dame University, an M.S.
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<PAGE> 44
degree in Electrical Engineering from Ohio State University and an M.B.A. degree
from Pace Greg D. Adams joined EDGAR Online as Chief Financial Officer in March
1999. Mr. Adams is a Certified Public Accountant with diversified business
experience in both the public and private sectors. From May 1996 to March 1999,
Mr. Adams was Senior Vice President Finance and Chief Financial Officer of PRT
Group Inc., a technology solutions and services company. From June 1994 to May
1996, Mr. Adams was the Chief Financial Officer of the Blenheim Group Inc., a
publicly held UK information technology exposition and conference management
company. From August 1983 to May 1994, Mr. Adams served as Senior Manager in the
areas of audit and business advisory services with KPMG Peat Marwick. He is a
member of the New York State Society of Certified Public Accountants and the
American Institute of Certified Public Accountants. Mr. Adams has a B.B.A.
degree in Accounting from the College of William & Mary.
Brian Fitzpatrick joined EDGAR Online as Vice President of Corporate Sales
in March 1999. From August 1998 to March 1999, he was Regional Vice President,
Sales and Marketing for Iverson Financial Systems, Inc., a business information
provider, and from May 1993 to August 1998, he was Vice President, Sales and
Marketing of Newsware, Inc, a financial news service. From August 1991 to May
1993 he was the National Accounts Manager of Desktop Data, a real-time news and
information filtering business. From 1986 to 1991, he was Key Accounts Manager
of Walsh Greenwood Information Systems, a provider of PC-based intelligent
market data systems for the financial services industry. Mr. Fitzpatrick has a
B.A. degree from Boston University.
Jay Sears joined EDGAR Online as Vice President of Marketing and Business
Development in May 1997. Mr. Sears is responsible for strategic alliances,
content syndication, content sales, advertising sales, membership and direct
marketing, public relations and general marketing for EDGAR Online. From
September 1995 to April 1997, Mr. Sears was Vice President of Marketing for
Wolff New Media, a publisher of Internet and printed guides to the Internet.
From July 1991 to August 1995, Mr. Sears was a Senior Account Supervisor at
Creamer Dickson Basford, an international marketing, communications and public
relations firm. Mr. Sears has a B.A. degree from Kenyon College.
David Trenck joined EDGAR Online in December 1995 as its first employee and
was responsible for data entry and customer support. In May 1998, he became Vice
President of Operations. Mr. Trenck is in charge of product implementation and
liaison with iXL, EDGAR Online's primary service offering developer.
Marc H. Bell joined EDGAR Online as a member of the Board of Directors in
August 1998. Mr. Bell has been the President and Chief Executive Officer of
Globix Corporation since its inception in 1989. Mr. Bell has a B.S. degree from
Babson College and an M.S. degree from New York University.
Bruce Bezpa joined EDGAR Online as a member of the Board of Directors in
March 1999. He has worked for Bowne & Co., Inc., a leading financial printer and
provider of Internet, localization and outsourcing services, for 15 years in
various capacities including as Vice President-Strategic Development (since July
1996), Director-Mutual Funds Services from August 1994 to June 1996 and
Director-Marketing from April 1989 to July 1994. Mr. Bezpa holds B.A. and M.B.A.
degrees from Rutgers University.
Stefan Chopin joined EDGAR Online as a member of the Board of Directors in
1996. As the Chief Technology Consultant to EDGAR Online, Mr. Chopin is
responsible for software interface development and systems integration and
maintenance. Mr. Chopin is the founder and President of Pequot Systems, a
software development and consulting firm. In October 1998, Pequot was acquired
by iXL Enterprises, Inc. and began operating as iXL Financial Services. Prior to
founding Pequot Systems in November 1995, Mr. Chopin served as the Vice
President of Engineering for Micrognosis, Inc., a leading provider of trading
room systems.
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<PAGE> 45
Mark Maged joined EDGAR Online as a member of the Board of Directors in
March 1999. He has been Chairman since 1995 and Chief Executive Officer since
January 1997, of Internet Tradeline, Inc., an operator of electronic shopping
malls on the Internet. During the eight years prior to becoming Chief Executive
Officer of Internet Tradeline, Mr. Maged, either individually or as Chairman of
MJM Associates, LLC, engaged in various private investment banking activities in
the United States and internationally. From 1975 through 1983, he served as
President and Chief Executive Officer of Schroder's Incorporated, which operated
banking, investment banking and investment management businesses as the United
States arm of Schroders PLC, an international merchant bank. He is currently a
member of the Board of Directors of Commodore Holdings Limited. He holds a
bachelor's degree from the City College of New York and both a master's degree
and a law degree from Harvard University.
The members of the Board are elected at each annual meeting of shareholders
and serve until their successors are duly elected and qualified or until their
earlier resignation or removal.
BOARD COMMITTEES
EDGAR Online's Board of Directors has established an Audit Committee and
appointed Marc Bell and Bruce Bezpa to be its members. The Audit Committee has
the responsibility to review audited financial statements and accounting
practices of EDGAR Online and to consider and recommend the employment of, and
approve the fee arrangements with, independent accountants for both audit
functions and for advisory and other consulting services.
The Board has also established a Compensation Committee and appointed Marc
Bell, Stephan Chopin and Mark Maged to be its members. The Compensation
Committee has the responsibility to review and recommend to the Board the
compensation plans and levels for the officers of EDGAR Online, administers our
employee stock option plans and establishes and reviews general policies
relating to compensation and benefits of employees of EDGAR Online.
The Board has also established the Outside Directors Compensation Committee
and appointed Marc Strausberg, Susan Strausberg and Tom Vos to be its members.
The Outside Directors Compensation Committee has the responsibility to
administer our 1999 Outside Directors Stock Option Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationships exist between any members of EDGAR Online's
Board of Directors or Compensation Committee and the board of directors or
compensation committee of any other company, nor has any such interlocking
relationship existed in the past. The Company has business and financial
relationships with Globix Corporation and iXL Enterprises, Inc. Marc Bell is the
President and Chief Executive Officer of Globix Corporation. Stefan Chopin is a
Vice President of iXL Enterprises, Inc. Our relationships with Globix and iXL
are described below.
Globix
In July 1998, we issued a 10% convertible debenture in the principal amount
of $1,000,000 to Globix Corporation along with warrants to purchase 666,667
shares of common stock at an exercise price of $1.50 per share. The terms of the
transaction were determined as the result of arm's length bargaining between the
parties. As part of this transaction, our agreement with Bowne was amended to
modify certain of Bowne's rights and to include Globix as a party, thereby
providing Globix with the same anti-dilution rights, tag-along rights and Board
participation rights as Bowne. In May 1999, Globix converted its debenture and
exercised its warrants, thereby acquiring 1,336,667 shares of our common stock.
In July 1998, we also entered into a five-year hosting contract with Globix that
requires us to co-locate our Internet servers at the Globix facility in New York
City. During 1998, we paid Globix a total of $6,513 under this contract. We
believe that the terms of our agreements with
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<PAGE> 46
Globix are beneficial to EDGAR Online and no less favorable to EDGAR Online than
terms which might be available to us from unaffiliated third parties.
Pequot Systems (iXL)
EDGAR Online and Pequot Systems ("Pequot") share equally the costs of a
single lease on 6,600 square feet of space. We occupy half of this space and are
jointly obligated with Pequot on the lease, which expires in April 2000. Since
our inception, we have outsourced our technology development to Pequot. During
1995, in partial payment for services rendered, Pequot received warrants to
purchase shares of common stock at an exercise price of $.05 per share. The
warrants were exercised in May 1997. In March 1998, Pequot agreed to accept
shares of our common stock valued at $1.25 per share in partial payment for
services rendered. As a result of these two transactions, Pequot received
359,384 shares of common stock. In 1998, we paid Pequot a total of $610,073 for
services provided. As a result of the acquisition of Pequot by iXL, an unrelated
company, in 1998, the shares owned by Pequot were transferred to Pequot's
founders, including Stefan Chopin, the founder and President of Pequot. Mr.
Chopin has been a member of our Board of Directors since 1996. We believe that
the terms of our agreements with Pequot are beneficial to EDGAR Online and no
less favorable to EDGAR Online than terms which might be available to us from
unaffiliated third parties.
DIRECTOR COMPENSATION
No cash compensation has ever been paid to any of the directors of EDGAR
Online for service in such capacity. However, directors are currently eligible
to receive stock options every three years under EDGAR Online's 1996 Stock
Option Plan. In March 1999, each of our non-employee directors was granted
options to purchase 10,000 shares of common stock at an exercise price of $4.50
per share. Non-employee directors of EDGAR Online will be eligible to receive
non-discretionary, automatic grants of options to purchase common stock as part
of our 1999 Outside Directors Stock Option Plan. See "-- Stock Option Plans."
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued for
the year ended December 31, 1998 by our Chief Executive Officer and certain
other executive officers whose annual salaries and bonus were in excess of
$100,000 in 1998 (the "Named Executive Officers").
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<PAGE> 47
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION(1) SECURITIES
------------------ UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS(#)
- --------------------------- -------- ------ ------------
<S> <C> <C> <C>
Susan Strausberg.......................................... $150,000(2) -- --
Chief Executive Officer
Marc Strausberg........................................... $150,000(2) -- --
Chairman and Chief Information Officer(3)
Tom Vos................................................... $ 93,750(4) -- 200,000
President and Chief Operating Officer
Jay Sears................................................. $ 97,400 10,000 65,000
Vice President of Marketing and Business Development
</TABLE>
- -------------------------
(1) The column for "Other Annual Compensation" has been omitted because there is
no compensation required to be reported in such column. The aggregate amount
of perquisites and other personal benefits provided to each Named Executive
Officer is less than 10% of the total annual salary and bonus of such
officer.
(2) In 1998, $92,788 of this amount was deferred and not paid. See "Certain
Transactions" and "Use of Proceeds."
(3) Mr. Strausberg served as President during 1998.
(4) Mr. Vos joined EDGAR Online as Chief Operating Officer on March 31, 1998 and
earns salary at the rate of $125,000 per annum. He was elected by the Board
of Directors to the additional position of President in March 1999.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
granted to the Named Executive Officers during 1998. We have never granted any
stock appreciation rights.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
-------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
NAME GRANTED 1998(2) SHARE($) DATE 5% 10%
- ---- ---------- ------------- --------- -------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Susan Strausberg........... -- -- -- -- -- --
Marc Strausberg............ -- -- -- -- -- --
Tom Vos.................... 200,000 50% $0.25 March 31, 2008 $936,711 $1,477,340
Jay Sears.................. 65,000 16% $0.25 May 31, 2007 $289,120 $ 434,892
</TABLE>
- -------------------------
(1) Each option represents the right to purchase one share of common stock. The
options shown in this table were all granted under our 1996 Stock Option
Plan.
(2) In the year ended December 31, 1998, we granted options to employees to
purchase an aggregate of 400,000 shares of common stock.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 5% and
10% assumed annual rates of compounded stock price appreciation are mandated
by the rules of the SEC and do not represent our estimate or projection of
future common stock price growth. These amounts represent certain assumed
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<PAGE> 48
rates of appreciation in the value of our common stock from the fair market
value on the date of grant. Actual gains, if any, on stock option exercises
are dependent on the future performance of the common stock and overall
stock market conditions. The amounts reflected in the table may not
necessarily be achieved.
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 each of the Named
Executive Officers and the fiscal year-end value of unexercised options. No
options were exercised by any of the Named Executive Officers during this
period.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Susan Strausberg....................... -- -- -- --
Marc Strausberg........................ -- -- -- --
Tom Vos................................ 200,000 -- $664,000 --
Jay Sears.............................. 65,000 -- $215,800 --
</TABLE>
- -------------------------
(1) There was no public market for the common stock on December 31, 1998. The
fair market value of the common stock as of December 31, 1998 was determined
by our Board of Directors to be $3.57 per share.
EMPLOYMENT AGREEMENTS
We entered into a five year amended and restated employment agreement dated
as of May 6, 1999 with Susan Strausberg. The agreement extends automatically for
an additional year at the end of the initial term and each anniversary
thereafter unless 30-day prior notice of termination is provided by either Ms.
Strausberg or EDGAR Online. The agreement provides for an annual salary of
$150,000, and an annual bonus at the discretion of the Board. In the event there
is a change of control (as defined in the agreement) and Ms. Strausberg's
employment is terminated (either by her or the employer) within one year
thereafter, Ms. Strausberg will receive a severance benefit equal to the product
of 2.99 times the sum of (1) her then applicable annual base salary and (2) the
average of her last two annual cash bonuses. Additionally, the agreement
contains non-compete and non-solicitation provisions effective during the term
of her employment and for one year thereafter.
We entered into a five year amended and restated employment agreement dated
as of May 6, 1999 with Marc Strausberg. The agreement extends automatically for
an additional year at the end of the initial term and each anniversary
thereafter unless 30-day prior notice of termination is provided by either Mr.
Strausberg or EDGAR Online. The agreement provides for an annual salary of
$150,000, and an annual bonus at the discretion of the Board. In the event there
is a change of control (as defined in the agreement) and Mr. Strausberg's
employment is terminated (either by him or the employer) within one year
thereafter, Mr. Strausberg will receive a severance benefit equal to the product
of 2.99 times the sum of (1) his then applicable annual base salary and (2) the
average of his last two annual cash bonuses. Additionally, the agreement
contains non-compete and non-solicitation provisions effective during the term
of his employment and for one year thereafter.
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<PAGE> 49
We have entered into a two year employment agreement dated April 23, 1999
with Tom Vos to serve as President and Chief Operating Officer. The agreement
extends automatically for an additional year at the end of the initial term and
each anniversary thereafter unless 30-day prior notice of termination is
provided by either Mr. Vos or EDGAR Online. The agreement provides Mr. Vos with
an annual salary of $125,000 and an annual bonus at the discretion of the Board.
In addition, if Mr. Vos remains employed by us at the end of the initial term,
he will be entitled to receive a retention bonus equal to two years of his then
applicable base salary, plus the average of his last two annual cash bonuses.
Mr. Vos will also receive a severance payment identical to the retention bonus
described above in the event there is a change of control (as defined in the
agreement) and Mr. Vos' employment is terminated (either by him or the employer)
within one year thereafter. Additionally, the agreement contains a non-compete
and non-solicitation provision effective during the term of his employment and
for one year thereafter.
We have entered into a three year amended and restated employment agreement
dated May 3, 1999 with Greg Adams to serve as Chief Financial Officer. The
agreement extends automatically for an additional year at the end of the initial
term and each anniversary thereafter unless 30-day prior notice of termination
is provided by either Mr. Adams or EDGAR Online. The agreement provides Mr.
Adams with (1) an annual salary of $125,000, (2) an annual bonus at the
discretion of the Board, provided that Mr. Adams will be entitled to a minimum
bonus of $62,500 for the first year of his employment and (3) a $500 monthly car
allowance. Mr. Adams will also receive options to purchase (a) 109,000 shares of
common stock at an exercise price of $4.50 per share, which will vest 25% in
year one and 75% in year two and (b) 16,000 shares of common stock at the
initial public offering price per share, which will vest equally over a
three-year period. In addition, the agreement contains a severance arrangement
whereby Mr. Adams is entitled to receive a payment determined as follows in the
event he is terminated without cause: (a) six months salary if the termination
occurs within the first six months of his employment, (b) twelve months salary
if the termination occurs between the seventh and eighteenth month of his
employment and (c) eighteen months salary if the termination occurs at anytime
following the eighteenth month of his employment. Additionally, the agreement
contains a non-compete and non-solicitation provision effective during the term
of his employment and for one year thereafter.
We have entered into a three year employment agreement dated March 11, 1999
with Brian Fitzpatrick to serve as Vice President of Corporate Sales. The
agreement provides Mr. Fitzpatrick with (1) an annual salary of $125,000 and (2)
an annual bonus at the discretion of the Board, provided that Mr. Fitzpatrick
will be entitled to a minimum annual bonuses of (a) $100,000 for 1999, (b)
$125,000 for 2000 and (c) $150,000 for 2001. Mr. Fitzpatrick received a signing
bonus of $85,000 when he joined us. Mr. Fitzpatrick will also receive options to
purchase 60,000 shares of common stock at an exercise price of $4.00 per share,
which will vest equally over a three-year period. Additionally, the agreement
contains a non-compete and non-solicitation provision effective during the term
of his employment and for nine months thereafter in the case of the non-compete
provision and one year thereafter in the case of the non solicitation provision.
We have entered into an employment agreement dated May 19, 1997 with Jay
Sears, which may be terminated by either party upon 30-days prior notice. The
agreement provides Mr. Sears with an annual salary of $80,000 and an annual
bonus at the discretion of the Board. Mr. Sears' annual salary was increased to
$100,000 effective August 1998. If Mr. Sears' employment is terminated without
cause, we will pay him six months of his total annual compensation.
Additionally, the agreement contains non-compete and non-solicitation provisions
effective during the term of his employment and for six months thereafter in the
case of the non-compete provision and one year thereafter in the case of the
non-solicitation provision.
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<PAGE> 50
STOCK OPTION PLANS
EDGAR Online's currently active stock option plans include our 1996 Stock
Option Plan, 1999 Stock Option Plan and 1999 Outside Directors Stock Option
Plan. Each of the plans, except for the 1999 Outside Directors Stock Option
Plan, provide for:
- the grant of incentive stock options and non-qualified stock options and
- the current administration of the plans by the Compensation Committee.
The exercise price of options granted under each plan are determined by the
Compensation Committee, except that the exercise price of incentive stock
options must be at least as equal to the fair market value of EDGAR Online's
common stock on the date of grant. Each of the plans authorizes the Board to
provide for option vesting to accelerate and become fully vested in the event of
certain significant corporate transactions if the options are not assumed or
substituted by a successor corporation.
The 1996 Stock Option Plan (the "1996 Plan"), which provides for the
granting of options to purchase up to an aggregate of 800,000 shares of our
authorized but unissued common stock (subject to adjustment in certain cases,
including stock splits, recapitalization and reorganizations) to our officers,
directors, employees and consultants, was ratified and confirmed in November
1998. The 1999 Stock Option Plan (the "1999 Plan"), which provides for the
granting of options to purchase up to an aggregate of 600,000 shares of our
authorized but unissued common stock (subject to adjustment in certain cases,
including stock splits, recapitalization and reorganizations) to our officers,
directors, employees and consultants, was adopted in March 1999. The 1996 and
1999 Stock Option Plans are intended as an incentive to encourage stock
ownership by officers and certain of our other employees in order to increase
their proprietary interest in our continued growth and success and to encourage
such employees to remain in the employ of EDGAR Online.
No incentive stock option may be granted to an individual who, at the time
the option is granted, owns, directly or indirectly, stock possessing more than
10% of the total combined voting power of all classes of our common stock,
unless (1) such option has an exercise price of at least 110% of the fair market
value of the common stock on the date of the grant of such option and (2) such
option cannot be exercised more than five years after the date it is granted.
Under the 1999 Outside Directors Stock Option Plan, each new non-employee
director will be granted, at the time of his or her appointment and on each
third anniversary thereafter, a nonstatutory option to purchase 7,500 shares of
common stock. The exercise price of each of these options will be equal to the
fair market value of our common stock on the date of grant. These options will
vest equally over a three-year period. Under the 1999 Outside Directors Stock
Option Plan, our existing non-employee directors will not be eligible for
options grants until the date of our annual stockholders' meeting to be held in
2002.
As of May 6, 1999, 800,000 options were authorized under the 1996 Plan and
options to purchase all 800,000 shares had been granted. As of May 6, 1999,
600,000 options were authorized under the 1999 Plan, options to purchase 41,000
shares had been granted and 559,000 options were available for future grants. As
of May 6, 1999, 100,000 options were authorized under the 1999 Outside Directors
Stock Option Plan, no options to purchase shares had been granted and 100,000
options were available for future grants.
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<PAGE> 51
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY
Our amended and restated certificate of incorporation includes a provision
that eliminates the personal liability of our 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 EDGAR Online or its
stockholders;
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- under 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, subject to certain very limited exceptions;
- we may indemnify our other employees and agents to the same extent that
we indemnify our officers and directors, unless otherwise required by
law, our certificate of incorporation, our bylaws or agreements; and
- we must advance expenses, as incurred, to our directors and executive
officers in connection with legal proceedings to the fullest extent
permitted by Delaware law, subject to certain very limited exceptions.
Prior to the completion of this offering, we intend to enter into indemnity
agreements with each of our directors and executive officers to give them
additional contractual assurances regarding the scope of the indemnification
described above and to provide additional procedural protections. In addition,
we intend to obtain directors' and officers' insurance providing indemnification
for our directors, officers and certain employees for certain liabilities. We
believe that these indemnification provisions and agreements are necessary to
attract and retain qualified directors and officers.
The limitation of liability and indemnification provisions in our amended
and restated certificate of incorporation and our amended and restated bylaws
may discourage stockholders from bringing a lawsuit against directors for breach
of their fiduciary duty. They may also have the effect of reducing the
likelihood of derivative litigation against directors and officers, even though
such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder's investment may be adversely affected to the extent
we pay the costs of settlement and damage awards against directors and officers
pursuant to these indemnification provisions.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
BOWNE & CO., INC.
In May and July 1996, Bowne & Co., Inc. loaned us an aggregate of $75,000
pursuant to non-interest bearing notes. The terms of these notes provided that,
if Bowne were to invest in our common stock within 180 days after delivery of
the notes, the notes would not have to be repaid but would be convertible into
an aggregate credit of $112,500 applicable towards the purchase of our common
stock. In August 1996, EDGAR Online, Bowne and Marc Strausberg, Susan Strausberg
and Michael Horowitz entered into an Equity Purchase Agreement pursuant to which
Bowne purchased 400,000 shares of common stock from us and 200,000 shares from
each of the Strausbergs and Mr. Horowitz for an aggregate purchase price of
$875,000. The purchase price was determined as the result of arm's length
bargaining among the parties. From this transaction, EDGAR Online received
$387,500 in cash and the notes evidencing the $75,000 Bowne loaned to us were
converted into shares of common stock valued at $112,500 (the amount of "credit"
referred above). Each of the Strausbergs and Mr. Horowitz received $125,000. Our
agreement with Bowne provided Bowne with certain anti-dilution rights, a right
of first refusal and tag-along rights with regard to future sales of shares
owned by the Strausbergs or Mr. Horowitz and certain issuances of shares by
EDGAR Online, as well as Board participation rights. Bowne's designee to our
Board of Directors is Bruce Bezpa, its Vice President.
In 1997, we borrowed $500,000 pursuant to a line-of-credit extended to us
by Bowne. These loans are evidenced by promissory notes which were originally
due on December 30, 1997, each at an interest rate of 12% prior to the maturity
date and 18% thereafter. EDGAR Online and Bowne have subsequently agreed to two
extensions on the repayment of these notes, which are now due on February 28,
2000. These loans are guaranteed by Marc Strausberg. We intend to repay the
principal and accrued interest on the loans with a portion of the proceeds of
this offering. See "Use of Proceeds" and "Principal Stockholders."
EDGAR Online sells certain EDGAR content to Bowne and provides Bowne with
EDGAR Online services in its offices. Bowne also pays EDGAR Online for
advertising it places on the EDGAR Online site. In 1998, EDGAR Online charged
Bowne a total of $52,350 for these services. We believe that the terms of our
agreements with Bowne are beneficial to EDGAR Online and no less favorable to
EDGAR Online than terms which might be available to us from unaffiliated third
parties.
GLOBIX CORPORATION
For information regarding our relationship with Globix, see
"Management -- Compensation Committee Interlocks and Insider Participation."
TRACK DATA CORPORATION
In conjunction with our formation, Track Data Corporation, a business
information company and one of our principal stockholders, extended a $100,000
loan to EDGAR Online at an interest rate of prime plus 2% and received and
subsequently exercised warrants to purchase 810,572 shares of common stock.
Track Data purchases EDGAR content which it uses in conjunction with the
services that it offers. These sevices are paid for through reductions in the
principal amount of this loan. During 1998, the loan was reduced by $17,250 in
this fashion. At March 31, 1999, the loan principal was $40,698 plus accrued
interest due of $29,289. We intend to repay any remaining principal and interest
with a portion of the proceeds from this offering. We believe that our
agreements with Track
49
<PAGE> 53
Data are beneficial to EDGAR Online and no less favorable to EDGAR Online than
terms which may be available to us from unaffiliated third parties.
PEQUOT SYSTEMS (IXL)
For information regarding our relationship with iXL, see
"Management -- Compensation Committee Interlocks and Insider Participation".
SUSAN STRAUSBERG AND MARC STRAUSBERG
From time to time, we have received cash loans from and have made cash
advances to Susan Strausberg and Marc Strausberg, our founders. These loans bear
interest at the prime rate applied to the net outstanding balance. The net
amounts owed to EDGAR Online at December 31, 1996, 1997, 1998 were $17,432,
$51,114, $141,554, respectively. During this same period, Susan Strausberg and
Marc Strausberg agreed to defer all or most of their annual salaries of $150,000
each. The aggregate amount of deferred compensation for the two of them combined
at December 31, 1996, 1997 and 1998 was $300,000, $600,000 and $785,577,
respectively. These deferred salaries, net of the loans outstanding to them,
will be paid to Susan and Marc Strausberg upon consummation of this offering.
See "Use of Proceeds." Susan and Marc Strausberg may be deemed to be "promoters"
of the Company. Susan Strausberg and Marc Strausberg each received 2,000,000
shares of common stock upon the Company's incorporation for $69,625, or $0.035
per share.
50
<PAGE> 54
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of May 1, 1999 and as adjusted to
reflect the sale of the shares of common stock offered hereby by (1) each of our
directors, including our Chief Executive Officer, (2) our three most highly
compensated executive officers, other than our Chief Executive Officer, who were
serving as executive officers at the end of 1998, (3) all our executive officers
and directors as a group and (4) each person who we know owns beneficially more
than 5% of our common stock. The table also provides information with respect to
the number of shares of common stock that certain of our stockholders are
obligated to sell if the underwriters exercise their over-allotment option and
the impact that this will have on those stockholders' post-offering common stock
holdings. Unless otherwise indicated, the address of each beneficial owner
listed below is c/o EDGAR Online, Inc., 50 Washington Street, Norwalk, CT 06854.
<TABLE>
<CAPTION>
ASSUMING THE OVER-ALLOTMENT
OPTION IS EXERCISED BY THE
UNDERWRITERS
PERCENTAGE -----------------------------------
BENEFICIALLY OWNED SHARES TO BE PERCENT
NUMBER ---------------------- OFFERED BY THE BENEFICIALLY
OF BEFORE AFTER OVER-ALLOTMENT OWNED AFTER
NAME OF BENEFICIAL OWNER SHARES(1) OFFERING OFFERING(2) SELLING STOCKHOLDERS OFFERING
- ------------------------ ---------- -------- ----------- -------------------- ------------
<S> <C> <C> <C> <C> <C>
Executive Officers and Directors:
Susan Strausberg(3)................. 3,392,000 42.73% 31.01% 133,200 28.58%
Marc Strausberg(4).................. 3,392,000 42.73% 31.01% 133,200 28.58%
Tom Vos(5).......................... 240,000 2.95% 2.15% -- 2.15%
Jay Sears(6)........................ 65,000 * * -- *
Stefan Chopin(7).................... 339,384 4.28% 3.10% -- 3.10%
c/o iXL Enterprises, Inc.
50 Washington Street
Norwalk, CT 06854
Bruce Bezpa......................... 0 * * -- *
c/o Bowne & Co., Inc.
345 Hudson Street
New York, NY 10014
Marc Bell........................... 1,336,667 16.84% 12.22% -- 11.26%(9)
c/o Globix Corporation
295 Lafayette Street
New York, NY 10012(8)
Mark Maged.......................... 0 * * -- *
c/o Internet Tradeline, Inc.
111 West 40th Street
New York, NY 10018
All executive officers and directors
as a group (11 persons).......... 5,433,051 65.91% 48.32% 266,400 45.02%
</TABLE>
51
<PAGE> 55
<TABLE>
<CAPTION>
ASSUMING THE OVER-ALLOTMENT
OPTION IS EXERCISED BY THE
UNDERWRITERS
PERCENTAGE -----------------------------------
BENEFICIALLY OWNED SHARES TO BE PERCENT
NUMBER ---------------------- OFFERED BY THE BENEFICIALLY
OF BEFORE AFTER OVER-ALLOTMENT OWNED AFTER
NAME OF BENEFICIAL OWNER SHARES(1) OFFERING OFFERING(2) SELLING STOCKHOLDERS OFFERING
- ------------------------ ---------- -------- ----------- -------------------- ------------
<S> <C> <C> <C> <C> <C>
Other 5% Stockholders:
Globix Corporation.................. 1,336,667 16.84% 12.22% 105,000 11.26%
295 Lafayette Street
New York, NY 10012
Bowne & Co., Inc.................... 1,000,000 12.60% 9.14% 78,600 8.42%
345 Hudson Street
New York, NY 10014
Track Data Corporation.............. 810,572 10.21% 7.41% -- 7.41%
56 Pine Street
New York, NY 10005
</TABLE>
- -------------------------
* Represents beneficial ownership of less than 1%.
(1) Percentage ownership is based on shares outstanding as of May 1, 1999, after
giving pro forma effect to the conversion of a $1 million debenture into
670,000 shares of common stock and the exercise of warrants into 696,667
shares of common stock. Shares of common stock subject to options currently
exercisable or exercisable within 60 days of May 1, 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 this table have sole voting and sole
investment power with respect to all shares beneficially owned, subject to
community property laws where applicable.
(2) Assumes no exercise of the underwriters' over-allotment option.
(3) Includes 196,000 shares owned by Ms. Strausberg's husband, Marc Strausberg,
EDGAR Online's Chairman of the Board and 3,000,000 shares owned by
Strausberg LLC. Ms. Strausberg is a managing member of Strausberg LLC and as
such she may be deemed to be the beneficial owner of all the shares held by
Strausberg LLC. Ms. Strausberg disclaims beneficial ownership of the shares
owned by her husband.
(4) Includes 196,000 owned by Mr. Strausberg's wife, Susan Strausberg, EDGAR
Online's Chief Executive Officer and 3,000,000 shares owned by Strausberg
LLC. Mr. Strausberg is a managing member of Strausberg LLC and as such he
may be deemed to be the beneficial owner of all the shares held by
Strausberg LLC. Mr. Strausberg disclaims beneficial ownership of the shares
owned by his wife.
(5) Includes 200,000 shares issuable upon exercise of options exercisable within
60 days of May 1, 1999.
(6) Includes 65,000 shares issuable upon exercise of options exercisable within
60 days of May 1, 1999.
(7) Includes shares owned jointly with Barbara Chopin, his wife.
(8) Includes 1,336,667 shares owned by Globix Corporation. Mr. Bell is the
President and Chief Executive Officer of Globix Corporation. In such
capacities, Mr. Bell may be deemed to be the beneficial owner of such
shares, although he disclaims beneficial ownership except to the extent of
his pecuniary interest, if any.
(9) Gives effect to the sale of 105,000 shares of common stock by Globix
Corporation assuming the underwriters' over-allotment option is exercised in
full.
52
<PAGE> 56
DESCRIPTION OF CAPITAL STOCK
Immediately following the closing of this offering, our authorized capital
stock will consist of 30,000,000 shares of common stock, par value $0.01 per
share, and 1,000,000 shares of preferred stock, par value $0.01 per share. The
following summary of the terms and provisions of EDGAR Online's capital stock
are not complete, and you should read our amended and restated certificate of
incorporation and bylaws, which have been filed as exhibits to the registration
statement of which this prospectus forms a part.
COMMON STOCK
Subject to preferences that may be applicable to any preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefor at such
times and in such amounts as our Board of Directors from time to time may
determine. Holders of common stock are entitled to one vote for each share held
on all matters submitted to a vote of shareholders. Cumulative voting for the
election of directors is not authorized by Edgar Online's 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 liquidation, dissolution or winding-up of EDGAR Online, the
holders of shares of common stock would be entitled to share ratably in the
distribution of all of EDGAR Online's assets remaining available for
distribution after satisfaction of all our 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 upon payment therefor, duly and validly
issued, fully paid and nonassessable.
PREFERRED STOCK
Our Board of Directors is authorized, subject to any limitations prescribed
by Delaware law, to issue preferred stock in one or more series. The Board can
fix the rights, preferences and privileges of the shares of each series and any
qualifications, limitations or restrictions thereon.
The Board may authorize the issuance of preferred stock with voting or
conversion rights that could adversely affect the voting power or other rights
of the holders of common stock. The issuance of preferred stock, while providing
flexibility in connection with possible acquisitions and other corporate
purposes could, under certain circumstances, have the effect of delaying,
deferring or preventing a change in control of Edgar Online. We have no current
plan to issue any shares of preferred stock.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, which regulates corporate takeovers. This section prevents
Delaware corporations that are subject to it from engaging, under certain
circumstances, in a "business combination," which includes a merger or sale of
more than 10% of the corporation's assets, with any "interested stockholder," or
a stockholder who owns 15% or more of the corporation's outstanding voting
stock, as well as affiliates and associates of any such persons, for three years
following the date that such stockholder became an "interested stockholder"
unless:
- the transaction in which such stockholder became an "interested
stockholder" is approved by the board of directors of the corporation
prior to the date the "interested stockholder" attained such status;
53
<PAGE> 57
- upon consummation of the transaction that resulted in the stockholder's
becoming an "interested stockholder," the "interested stockholder" owned
at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding for purposes of this
calculation those shares owned by persons who are directors and also
officers; or
- on or subsequent to such date, the "business combination" is approved by
the board of directors of the corporation and authorized at an annual or
special meeting of stockholders by the affirmative vote of at least
two-thirds of the outstanding voting stock that is not owned by the
"interested stockholder."
Our bylaws provide that stockholders may act only at an annual or special
meeting of stockholders and may not act by written consent. Our certificate of
incorporation and the bylaws provide that special meetings of the stockholders
may only be called by the Chairman of the Board, the Chief Executive Officer,
the Board or by any stockholder holding at least 25% of the outstanding common
stock. Such provisions may have the effect of delaying or preventing a
change-in-control.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is American Stock
Transfer Corporation. Its address is 40 Wall Street, New York, New York 10005,
and its telephone number at this location is (212) 936-5100.
LISTING
We have applied to list our common stock on the Nasdaq National Market
under the trading symbol "EDGR."
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been any public market for our common
stock. Sales of substantial amounts of our common stock in the public market, or
the perception that such sales could occur, could adversely affect prevailing
market prices of our common stock and could impair our future ability to raise
capital through the sale of equity securities.
Upon completion of this offering, there will be an aggregate of 10,937,957
shares of our common stock outstanding, assuming no exercise of outstanding
options or warrants. Of the outstanding shares, all 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 our "affiliates,"
as that term is defined in Rule 144 under the Securities Act. Those 7,937,957
shares of common stock held by our existing stockholders are "restricted
securities" as that term is defined in Rule 144 under the Securities Act and are
subject to certain lock-up agreements described below. Even after the lock-ups
expire, restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rules 144
or 701 under the Securities Act, which rules are summarized below. As described
below, certain of our shareholders have registration rights in respect of their
shares of common stock. The registration of any of these shares would result in
those shares becoming freely tradeable without restriction under the Securities
Act immediately upon effectiveness of the applicable registration statement.
LOCK-UP AGREEMENTS
All our officers, directors and all our existing stockholders, other than
one stockholder holding 6,000 shares of common stock whom we have been unable to
contact, have signed "lock-up" agreements under which they have 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
54
<PAGE> 58
common stock, for a period of 12 months after the date of this prospectus
without the prior written consent of C.E. Unterberg, Towbin. See
"Underwriting -- Lock-up Agreements."
RULE 144
In general, under Rule 144, as currently in effect, a person who owns
shares that were acquired from us or an affiliate of us at least one year prior
to the proposed sale is entitled to sell, within any three-month period
beginning 90 days after the date of this prospectus, a number of shares that
does not exceed the greater of:
- 1% of the number of shares of common stock then outstanding, which will
equal approximately 109,380 shares immediately after this offering or
- 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 for purposes of the Securities Act 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 of us, 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.
RULE 701
In general, under Rule 701 of the Securities Act as currently in effect,
any of our employees, consultants or advisors who purchases shares from us in
connection with a compensatory stock or option plan or other written agreement
is eligible to resell such shares 90 days after the effective date of this
offering in reliance on Rule 144, but without compliance with certain
restrictions, including the holding period, contained in Rule 144.
REGISTRATION RIGHTS
Pursuant to the terms of registration rights agreements entered into
between us and certain of our stockholders, the holders of 2,770,000 share of
common stock are entitled to "piggyback" registration rights concerning the
registration of shares of common stock under the Securities Act. In the event
that we propose to register any shares of common stock under the Securities Act,
either for our own account or for the account of other security holders, the
stockholders having piggyback rights are entitled to receive notice of that
registration and are entitled to include their shares in the registration.
However, the managing underwriter, if any, of such offering has certain rights
to limit the number of shares proposed to be included in such registration. The
above registration rights are subject to customary conditions and limitations,
including the right of the underwriters of an offering to limit the number of
shares of common stock held by security holders with registration rights to be
included in that registration. We are generally required to bear all of the
expenses of all these registrations, except underwriting discounts and
commissions. The registration of any of the shares of common stock held by
stockholders with registration rights would result in these shares becoming
freely tradable without restriction under the Securities Act immediately upon
effectiveness of that registration statement.
55
<PAGE> 59
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
among us and the underwriters, each of the underwriters named below, for whom
C.E. Unterberg, Towbin and Fahnestock & Co. Inc. are acting as representatives,
has severally agreed to purchase from us the number of shares of common stock
set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
C.E. Unterberg, Towbin......................................
Fahnestock & Co. Inc........................................
---------
Total.................................................. 3,000,000
=========
</TABLE>
The underwriting agreement provides that the obligations of the
underwriters are subject to certain conditions. The nature of the underwriters'
obligations is that they are committed to purchase and pay for all of the above
shares of common stock if any are purchased.
PUBLIC OFFERING PRICE AND DEALERS CONCESSION
The underwriters propose initially to offer the shares of common stock
offered by this prospectus to the public at the public offering price per share
set forth on the cover page of this prospectus and to certain dealers at that
price less a concession not in excess of $ per share. The underwriters may
allow, and these dealers may reallow, a discount not in excess of $ per
share on sales to certain other dealers. After commencement of this offering,
the offering price, discount price and reallowance may be changed by the
underwriters. No such change will alter the amount of proceeds to be received by
us as set forth on the cover page of this prospectus.
INTERNET FACILITATION
DLJdirect Inc., a member of the selling group, is facilitating the
distribution of the shares sold in the offering over the Internet. The
underwriters have agreed to allocate a limited number of shares to DLJdirect
Inc. for sale to brokerage account holders. An electronic version of this
prospectus is available on the Web site maintained by DLJdirect Inc.
OVER-ALLOTMENT OPTION
Certain existing shareholders have granted the underwriters an option,
which may be exercised within 30 days after the date of this prospectus, to
purchase up to 450,000 additional shares of common stock to cover
over-allotments, if any, at the initial public offering price, less the
underwriting discount set forth on the cover page of this prospectus. If the
underwriters exercise their over-allotment option to purchase any of these
additional 450,000 shares of common stock, these additional shares will be sold
by the underwriters on the same terms as those on which the shares offered by
this prospectus are being sold. The existing shareholders will be obligated,
pursuant to the over-allotment option, to sell shares to the underwriters if the
underwriters exercise their over-allotment option. The underwriters may exercise
their over-allotment option only to cover over-allotments made in connection
with the sale of the shares of common stock offered by this prospectus. The
names of the existing shareholders, and the amounts they are respectively
obligated to sell if the underwriters exercise their over-allotment option, are
set forth under the heading "Principal Stockholders."
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<PAGE> 60
UNDERWRITING COMPENSATION
The following table summarizes the compensation to be paid to the
underwriters by us and the selling shareholders who have granted the
underwriters the over-allotment option:
<TABLE>
<CAPTION>
TOTAL
--------------------------------
PER WITHOUT WITH
SHARE OVER-ALLOTMENT OVER-ALLOTMENT
-------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts paid by us..............
Underwriting discounts paid by the selling
shareholders.................................
</TABLE>
INDEMNIFICATION OF UNDERWRITERS
We have agreed to indemnify the underwriters against certain civil
liabilities, including liabilities under the Securities Act, or to contribute to
payments the underwriters may be required to make in connection with these
liabilities.
UNDERWRITERS' WARRANTS
Upon completion of this offering, we will sell to the underwriters, for
their own accounts, warrants covering an aggregate of up to 250,000 shares of
common stock exercisable at a price equal to 110% of the initial public offering
price set forth on the cover page of this prospectus. The underwriters will pay
a price of $0.01 per warrant. The underwriters may exercise these warrants as to
all or any lesser number of the underlying shares of common stock commencing on
the first anniversary of the date of this offering until the fifth anniversary
of the date of this offering. The terms of these warrants require us to register
the common stock for which these warrants are exercisable within one year from
the date of the prospectus. These underwriters' warrants are not transferable by
the warrant holders other than to officers and partners of the underwriters. The
exercise price of these underwriters' warrants and the number of shares of
common stock for which these warrants are exercisable are subject to adjustment
to protect the warrant holders against dilution in certain events. In addition,
as compensation for the placement of 120,000 shares of common stock in a March
1999 private placement, we issued C.E. Unterberg, Towbin warrants to purchase
12,000 shares of common stock at an exercise price of $4.50 per share.
LOCK-UP AGREEMENTS
We, and all of our directors, officers, and all of our existing
stockholders, option holders and warrant holders, other than one stockholder
holding 6,000 shares of common stock whom we have been unable to contact, have
agreed to a "lock-up" arrangement under which we and they may not offer, sell,
contract to sell, pledge or otherwise dispose of, or file a registration
statement with the SEC in respect of, or establish or increase a put position
within the meaning of Section 16 of the Exchange Act with respect to any shares
of capital stock of EDGAR Online or any securities convertible into or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, in each case without the prior written
consent of C.E. Unterberg, Towbin for a period of one year after the date of
this prospectus, subject to certain exceptions. Certain selling stockholders
have, however, granted the underwriters an option to purchase up to 450,000
additional shares of common stock to cover over-allotments, if any, at the
initial public offering price less the underwriting discount. The terms of the
lock-up agreement entered into with these selling stockholders will permit them
to sell those shares that they are obligated to sell if the underwriters
exercise their over-allotment option. See "-- Over-allotment Option."
57
<PAGE> 61
STABILIZATION AND OTHER TRANSACTIONS
In connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the common stock. These transactions may include stabilization transactions
effected in accordance with Rule 104 of Regulation M under the Exchange Act,
pursuant to which the underwriters may bid for, or purchase, common stock for
the purpose of stabilizing the market price. The underwriters also may create a
short position by selling more common stock in connection with this offering
than they are committed to purchase from us, and in such case may purchase
common stock in the open market following completion of this offering to cover
all or a portion of such short position. In addition, the underwriters may
impose "penalty bids" whereby they may reclaim from a dealer participating in
this offering, the selling concession with respect to the common stock that it
distributed in this offering, but which was subsequently purchased for the
accounts of the underwriters in the open market. Any of the transactions
described in this paragraph may result in the maintenance of the price of the
common stock at a level above that which might otherwise prevail in the open
market. None of the transactions described in the paragraph is required, and, if
they are undertaken, they may be discontinued at any time.
DISCRETIONARY ACCOUNTS
The underwriters have informed us that they do not intend to confirm sales
to any account over which they exercise discretionary authority.
DIRECTED SHARE PROGRAM
At our request, the underwriters have reserved up to 75,000 shares of
common stock for sale at the initial public offering price through a directed
share program to 7,500 U.S. residents who have been randomly selected from a
pool of our subscribers as of March 30, 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.
DETERMINATION OF OFFERING PRICE
Prior to this offering, there has been no market for our common stock.
Accordingly, the initial public offering price for the common stock was
determined by negotiation between us and the underwriters. Among the factors
considered in determining the initial public offering price were our record of
operations, our current financial condition, our future prospects, the state of
the markets for our services, the experience of our management, the economics of
the online information industry in general, the general condition of the equity
securities market and the demand for similar securities of companies considered
comparable to us.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Littman Krooks Roth & Ball P.C., New York, New York. Certain
members of Littman Krooks Roth & Ball P.C. own in the aggregate 7,500 shares of
common stock of EDGAR Online. Certain legal matters in connection with this
offering will be passed upon for the underwriters by Cravath, Swaine & Moore,
New York, New York.
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<PAGE> 62
EXPERTS
The financial statements and schedule of EDGAR Online, Inc. as of December
31, 1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998, have been included herein and in the registration statement
in reliance upon the report of KPMG LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
EDGAR Online has filed a registration statement on Form S-1 with the SEC
with respect to the shares of common stock to be sold in this offering. This
prospectus, which forms a part of that registration statement, does not contain
all of the information included in the registration statement. Certain
information is omitted and you should refer to the registration statement and
its exhibits. With respect to references made in this prospectus to any contract
or other document of EDGAR Online, such references are not necessarily complete
and you should refer to the exhibits attached to the registration statement for
copies of the actual contract or document. You may review a copy of the
registration statement at the SEC's public reference room in Washington, D.C.,
and at the SEC's regional offices in Chicago, Illinois and New York, New York.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of its public reference rooms. The registration statement can also be reviewed
by accessing the SEC's Web site at http://www.sec.gov.
As a result of this offering, EDGAR Online will become subject to the
information and reporting requirements of the Securities Exchange Act of 1934
and will file periodic reports, proxy statements and other information with the
SEC. Upon approval of the common stock for quotation on the Nasdaq National
Market, these reports, proxy statements and other information may also be
inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington,
D.C. 20006.
EDGAR Online intends to furnish its stockholders with annual reports
containing audited financial statements and with quarterly reports for the first
three quarters of each year containing unaudited interim financial information.
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<PAGE> 63
EDGAR ONLINE, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditor's Report................................ F-2
Balance Sheets as of December 31, 1997 and 1998............. F-3
Statements of Operations for the Years Ended December 31,
1996, 1997, and 1998...................................... F-4
Statements of Changes in Stockholders' Equity (Deficit) for
the Years Ended December 31, 1996, 1997, and 1998......... F-5
Statements of Cash Flows for the Years Ended December 31,
1996, 1997, and 1998...................................... F-6
Notes to Financial Statements............................... F-7
Balance Sheet as of March 31, 1999 (Unaudited).............. F-19
Statements of Operations for the Three Months Ended March
31, 1998 and 1999 (Unaudited)............................. F-20
Statement of Changes in Shareholders' Equity (Deficit) for
the Three Months Ended March 31, 1999 (Unaudited)......... F-21
Statements of Cash Flows for the Three Months Ended March
31, 1998 and 1999 (Unaudited)............................. F-22
Notes to Financial Statements (Unaudited)................... F-23
</TABLE>
F-1
<PAGE> 64
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
EDGAR Online, Inc.:
We have audited the accompanying balance sheets of EDGAR Online, Inc. as of
December 31, 1997 and 1998 and the related statements of operations, changes in
stockholders' equity (deficit), and cash flows for each of the years in the
three-year period 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 EDGAR Online, Inc. as of
December 31, 1997 and 1998 and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1998, in
conformity with generally accepted accounting principles.
KPMG LLP
Stamford, CT
February 12, 1999, except for note 13a,
which is as of March 25, 1999, and notes 12 and 13b
and c, which are as of March 30, 1999
F-2
<PAGE> 65
EDGAR ONLINE, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1997 1998
----------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 16,809 148,380
Accounts receivable, less allowance for doubtful accounts
of $22,500 and $31,542, respectively................... 49,090 134,815
Other..................................................... 1,000 6,710
----------- ----------
Total current assets.............................. 66,899 289,905
Property and equipment, net................................. 286,672 411,720
Deferred financing costs.................................... -- 77,018
Other assets................................................ 12,683 6,300
----------- ----------
Total assets...................................... $ 366,254 784,943
=========== ==========
Current liabilities:
Current portion of notes payable.......................... $ 601,697 59,448
Accounts payable and accrued expenses..................... 726,127 395,708
Deferred revenues......................................... 78,355 208,451
Due to employee........................................... -- 14,575
Capital lease payable, current portion.................... -- 52,477
----------- ----------
Total current liabilities......................... 1,406,179 730,659
Notes payable, long-term.................................... -- 1,414,410
Capital lease obligation, long-term......................... -- 82,993
Accrued interest payable.................................... -- 133,804
Due to officers, net........................................ 548,886 644,023
----------- ----------
Total liabilities................................. 1,955,065 3,005,889
Stockholders' equity (deficit):
Common stock, $.01 par value, 8,000,000 shares authorized,
6,074,000 and 6,331,290 shares issued and outstanding
at December 31, 1997 and 1998, respectively............ 60,740 63,313
Additional paid-in capital................................ 875,435 2,462,201
Accumulated deficit....................................... (2,524,986) (4,746,460)
----------- ----------
Total stockholders' deficit....................... (1,588,811) (2,220,946)
----------- ----------
Total liabilities and stockholders' deficit....... $ 366,254 784,943
=========== ==========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 66
EDGAR ONLINE, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1996 1997 1998
--------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Individual subscription revenue................ $ 99,661 451,939 894,851
Corporate contract revenue..................... 70,161 218,847 292,904
Advertising revenue............................ -- 166,671 472,922
Barter advertising revenue..................... -- 206,681 263,440
Other barter revenue........................... -- -- 79,000
--------- ----------- -----------
169,822 1,044,138 2,003,117
--------- ----------- -----------
Cost of revenues:
Software and Web site development.............. 226,514 676,522 782,889
Barter advertising expense..................... -- 206,681 263,440
--------- ----------- -----------
226,514 883,203 1,046,329
--------- ----------- -----------
Gross profit........................... (56,692) 160,935 956,788
Operating expenses:
Selling, general and administrative............ 663,750 1,193,014 1,615,122
Advertising costs.............................. 42,614 167,009 297,599
Stock compensation expense..................... -- -- 1,133,000
--------- ----------- -----------
706,364 1,360,023 3,045,721
--------- ----------- -----------
Loss from operations................... (763,056) (1,199,088) (2,088,933)
Interest expense and other, net.................. 72,547 298,561 132,291
--------- ----------- -----------
Loss before income taxes............... (835,603) (1,497,649) (2,221,224)
Income tax expense............................... 250 250 250
--------- ----------- -----------
Net loss............................... $(835,853) $(1,497,899) $(2,221,474)
========= =========== ===========
Basic and diluted net loss per share............. $ (0.19) (0.26) (0.36)
========= =========== ===========
Basic and diluted weighted average shares
outstanding.................................... 4,302,466 5,655,151 6,129,116
========= =========== ===========
Pro forma basic and diluted loss per share....... -- -- $ (0.34)
===========
Number of shares used in computing pro forma
basic and diluted loss per share............... -- -- 6,408,283
===========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 67
EDGAR ONLINE, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
<TABLE>
<CAPTION>
COMMON STOCK
------------------- PAID-IN- ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- ------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995......... 4,000,000 $40,000 99,250 (191,234) (51,984)
Exercise of warrants................. 400,000 4,000 1,000 -- 5,000
Debt issued with beneficial
conversion feature................. -- -- 37,500 -- 37,500
Issuance of common stock............. 400,000 4,000 458,500 -- 462,500
Issuance of warrants for services
provided........................... -- -- 26,000 -- 26,000
Net loss............................. -- -- -- (835,853) (835,853)
--------- ------- --------- ---------- ----------
Balance at December 31, 1996......... 4,800,000 48,000 622,250 (1,027,087) (356,837)
Exercise of warrants................. 1,274,000 12,740 3,185 -- 15,925
Debt issuance with beneficial
conversion feature................. -- -- 250,000 -- 250,000
Net loss............................. -- -- -- (1,497,899) (1,497,899)
--------- ------- --------- ---------- ----------
Balance at December 31, 1997......... 6,074,000 60,740 875,435 (2,524,986) (1,588,811)
Exercise of warrants................. 53,957 540 49,461 -- 50,001
Issuance of common stock in
satisfaction of trade payables..... 100,000 1,000 124,000 -- 125,000
Issuance of common stock............. 103,333 1,033 143,967 -- 145,000
Stock compensation................... -- -- 1,133,000 -- 1,133,000
Issuance of warrants for services
provided and debt financing........ -- -- 136,338 -- 136,338
Net loss............................. -- -- -- (2,221,474) (2,221,474)
--------- ------- --------- ---------- ----------
Balance at December 31, 1998......... 6,331,290 $63,313 2,462,201 (4,746,460) (2,220,946)
========= ======= ========= ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 68
EDGAR ONLINE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1996 1997 1998
--------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................. $(835,853) (1,497,899) (2,221,474)
--------- ---------- ----------
Adjustments to reconcile net loss to net cash used in
operating activities:
Stock compensation expense......................... -- -- 1,133,000
Depreciation and amortization...................... 17,688 55,334 116,767
Accretion and amortization of debt discount........ 37,500 250,000 17,118
Provisions for bad debts........................... -- 22,500 62,207
Noncash service expenses........................... 26,000 -- 33,630
Noncash service revenue............................ -- (12,000) (42,250)
Changes in assets and liabilities:
Accounts receivable.............................. (34,168) (37,422) (147,932)
Other assets..................................... (10,975) (875) 13,096
Accounts payable and accrued expenses............ 127,583 589,809 (205,419)
Accrued interest................................. -- -- 133,804
Due to employee.................................. -- -- 14,575
Due to officers, net............................. 300,000 266,318 95,137
Deferred revenues................................ 31,190 47,165 130,096
--------- ---------- ----------
Total adjustments............................. 494,818 1,180,829 1,353,829
--------- ---------- ----------
Net cash used in operating activities......... (341,035) (317,070) (867,645)
--------- ---------- ----------
Cash flows from investing activities:
Capital expenditures.................................. (112,312) (224,132) (78,127)
Other................................................. (1,764) -- --
--------- ---------- ----------
Net cash used in investing activities......... (114,076) (224,132) (78,127)
--------- ---------- ----------
Cash flows from financing activities:
Proceeds from issuance of notes payable and
warrants........................................... 91,500 545,000 1,000,000
Proceeds from issuance of common stock................ 387,500 15,925 155,000
Costs incurred in connection with the sale of common
stock.............................................. -- -- (10,000)
Costs incurred in connection with debt financing...... -- -- (89,440)
Proceeds upon exercise of warrants.................... 5,000 -- 50,001
Principal payments on notes payable................... (11,083) (20,000) --
Payments on capital lease obligations................. -- -- (28,218)
--------- ---------- ----------
Net cash provided by financing activities..... 472,917 540,925 1,077,343
--------- ---------- ----------
Net increase (decrease) in cash............... 17,806 (277) 131,571
Cash at beginning of year............................... -- 17,086 16,809
--------- ---------- ----------
Cash at end of year..................................... $ 17,806 16,809 148,380
========= ========== ==========
Supplemental disclosure of cash flow information:
Cash paid for:
Taxes.............................................. $ -- 250 250
Interest........................................... $ 167 -- 7,751
Accounts payable settled upon issuance of common
stock................................................. $ -- -- 125,000
Notes payable settled in exchange for services
provided.............................................. $ -- 12,000 42,250
Stock warrants issued in exchange for services
provided.............................................. $ 26,000 -- 33,630
Equipment acquired under capital leases................. $ -- -- 163,688
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 69
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998
(1) DESCRIPTION OF BUSINESS
EDGAR Online, Inc. (the Company), formerly Cybernet Data Systems, Inc., was
incorporated in the State of Delaware in November 1995 and launched its "EDGAR
Online" Internet Web site in January 1996. The Company is a Web-based provider
of business, financial, and competitive information derived from the EDGAR
(Electronic Data Gathering, Analysis, and Retrieval) document filing system
maintained by the U.S. Securities and Exchange Commission (SEC). The Company has
entered into several arrangements with other Internet service providers to
market financial information services.
Inherent in the Company's mission are various risks and uncertainties,
including its limited operating history, unproven business model and the limited
history of commerce on the Internet. The Company's success may depend in part
upon the emergence and acceptance of the Internet as a communication and
information medium, prospective project development efforts and the acceptance
by the market place of the Company's products and services.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) REVENUE RECOGNITION
Revenue from subscriptions and corporate contracts are recognized over the
subscription period, which is typically three, six or twelve months. Revenue
from advertising is recognized as the services are provided.
(b) BARTER TRANSACTIONS
Barter advertising revenue is non-cash and relates to advertising placed on
the Company's Web site by other Internet service providers. Barter advertising
expense is non-cash and relates to Company advertising placed on the Web sites
of other Internet service providers. The amount of barter advertising revenue
and expense is recorded at the fair market value of the services received or the
services provided, whichever is more objectively determinable.
During 1998, the Company also received computer equipment and publication
advertisements in exchange for use of the Company's Web site services. The
Company accounts for such barter transactions at the fair value of goods or
services received or services provided, whichever is more objectively
determinable. Barter revenues related to the computer equipment barter
transaction and the publication advertisements are recognized ratably over the
term of the contract. Barter expense related to the publications advertisements
transaction is recognized ratably over the year, which approximates the timing
of the publications printing. Barter expense for the computer equipment exchange
is recognized as depreciation expense over the useful lives of the assets.
The Company expects that barter transactions will represent a significantly
smaller percentage of total activity in the future.
(c) WEB SITE DEVELOPMENT COSTS
The costs incurred to develop the Company's "EDGAR Online" Internet Web
site are principally performed under contract with an Internet Web site
developer. Software development costs are required to be capitalized when a
product's technological feasibility has been established by completion of a
working model of the product and ending when a product is available for general
F-7
<PAGE> 70
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
release to customers. To date, completion of a working model of the Company's
products and general release have substantially coincided. As a result, the
Company has not capitalized any software development costs.
(d) CASH AND CASH EQUIVALENTS
The Company considers cash and all highly liquid investments with original
maturities of ninety days or less to be cash and cash equivalents.
(e) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost or at estimated fair value if
part of a barter transaction. Depreciation is computed using the straight-line
method over the estimated useful lives of the related assets, generally three to
seven years. Leasehold improvements are amortized using the straight-line method
over the estimated useful lives of the assets or the term of the leases,
whichever is shorter.
(f) LONG-LIVED ASSETS
The Company accounts for long-lived assets in accordance with the
provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
(g) ADVERTISING EXPENSES
The Company expenses advertising costs as incurred.
(h) INCOME TAXES
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 respective tax
bases, and for operating loss and tax credit carryforwards. 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 and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized.
(i) DEFERRED FINANCING COSTS
Deferred financing costs relate to the issuance of the Convertible
Debenture (see note 5) and are being amortized over the term of the related
debt, using the effective interest method. Amortization expense was $12,422 in
1998.
F-8
<PAGE> 71
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(j) STOCK-BASED TRANSACTIONS
The Company accounts for stock-based transactions in accordance with
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123). In accordance with SFAS 123, the Company
has elected to measure stock-based employee compensation arrangements in
accordance with the provisions of APB No. 25, "Accounting for Stock Issued to
Employees," (APB 25) and comply with the disclosure provisions of SFAS No. 123.
Under APB 25, compensation cost is recognized based on the difference, if any,
on the date of grant between the fair value of the Company's common stock and
the exercise price.
The Company accounts for the issuance of equity instruments to
non-employees in exchange for services at either the fair value of the equity
instrument given or the fair value of the services rendered, whichever is more
reliably measurable.
(k) CONCENTRATION OF RISK AND FINANCIAL INSTRUMENTS
Financial instruments that potentially subject the Company to significant
concentration of credit risk consist of accounts receivable.
The Company's customers are geographically dispersed throughout the United
States with no one customer accounting for more than 10% of sales during 1996,
1997 or 1998 or of accounts receivable at December 31, 1997 or 1998. In
addition, the Company has not experienced any significant credit losses to date
from any one customer.
The fair value of the Company's cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities at December 31, 1997 and
1998, approximate their financial statement carrying value because of the
short-term maturity of these instruments. The fair values of the Company's
long-term obligations, as discussed in note 5, are determined based on the
amount of future cash flows associated with the instrument, discounted at an
appropriate discount rate.
(l) LOSS PER SHARE
Loss per share is presented in accordance with the provisions of SFAS No.
128, "Earnings Per Share", (SFAS 128) and the Securities and Exchange Commission
(SEC) Staff Accounting Bulletin No 98. Under SFAS 128, basic EPS excludes
dilution for common stock equivalents and is computed by dividing income or loss
available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted and resulted in the issuance of common stock.
Basic earnings per share are computed using the weighted average number of
common shares outstanding during the period. Pursuant to SEC Staff Accounting
Bulletin No. 98, common stock and convertible preferred stock issued for nominal
consideration, prior to the anticipated effective date of an IPO, are required
to be included in the calculation of basic and diluted earnings per share, as if
they were outstanding for all periods presented. To date, the Company has not
had any issuances or grants for nominal consideration.
Diluted loss per share has not been presented separately, as the
outstanding stock options, warrants and convertible debentures are anti-dilutive
for each of the periods presented.
F-9
<PAGE> 72
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Anti-dilutive potential common shares outstanding were 1,489,099, 829,545,
and 653,400 for the years ended December 31, 1996, 1997, and 1998, respectively.
(m) BUSINESS SEGMENTS
In June 1997, the Financial Accounting Standard Board (FASB) issued SFAS
No. 131, "Disclosure about Segments of an Enterprise and Related Information"
(SFAS 131). SFAS 131 establishes standards for the way that public business
enterprises report information about operating segments. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers. SFAS 131 is effective for fiscal years beginning after
December 15, 1997. The Company has determined that it does not have any
separately reportable business segments.
(n) COMPREHENSIVE INCOME
The Company adopted the provisions of SFAS No. 130, "Reporting
Comprehensive Income" (SFAS 130) during 1998. SFAS 130 requires the Company to
report in its financial statements, in addition to its net income (loss),
comprehensive income (loss), which includes all changes in equity during a
period from non-owner sources including, as applicable, foreign currency items,
minimum pension liability adjustments and unrealized gains and losses on certain
investments in debt and equity securities. There were no differences between the
Company's comprehensive loss and its net loss as reported.
(o) USE OF ESTIMATES IN FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(p) RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" (SOP 98-1). SOP 98-1 provides
guidance for determining whether computer software is internal-use software and
on accounting for the proceeds of computer software originally developed or
obtained for internal use and then subsequently sold to the public. It also
provides guidance on capitalization of the costs incurred for computer software
developed or obtained for internal use. The Company does not believe that the
adoption of SOP 98-1 will have a material impact on its results of operations or
financial position.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," (SFAS 133) which establishes accounting and
reporting standards for derivative instruments, including derivative instruments
embedded in other contracts, and for hedging activities. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
This statement is not expected to have a material impact on the Company's
results of operation or financial position.
F-10
<PAGE> 73
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(3) PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1997 and 1998 is summarized as
follows:
<TABLE>
<CAPTION>
1997 1998
-------- ---------
<S> <C> <C>
Purchased software............................... $105,910 $ 109,849
Equipment, and furniture and fixtures............ 244,562 482,438
Leasehold improvements........................... 7,673 7,673
-------- ---------
Subtotal.................................... 358,145 599,960
Less accumulated depreciation.................... (71,473) (188,240)
-------- ---------
$286,672 $ 411,720
======== =========
</TABLE>
Depreciation and amortization expense for the years ended December 31,
1996, 1997 and 1998 was $17,688, $55,334 and $116,767, respectively.
(4) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following at December
31, 1997 and 1998.
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Accounts payable.......................................... $614,417 $328,764
Compensation and related benefits......................... 8,771 17,240
Interest.................................................. 57,463 27,304
Other..................................................... 45,476 22,400
-------- --------
$726,127 $395,708
======== ========
</TABLE>
(5) NOTES PAYABLE
Notes payable consist of the following at December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
--------- ----------
<S> <C> <C>
Convertible Debenture(a)................................ $ -- $ 914,410
Promissory notes -- related party(b).................... 500,000 500,000
Promissory notes(c)..................................... 101,697 59,448
--------- ----------
Total notes payable........................... 601,697 1,473,858
Less:
Current portion....................................... (601,697) (59,448)
--------- ----------
Notes payable, long-term................................ $ -- $1,414,410
========= ==========
</TABLE>
- -------------------------
(a) In July 1998, the Company received $1,000,000 in exchange for a $1,000,000
Convertible Debenture due July 2001 with interest accruing at 10% in years
two and three. The terms of this financing enable the lender to convert the
debenture into 670,000 shares of the Company's
F-11
<PAGE> 74
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
common stock. The lender also received a warrant, expiring July 23, 1999, to
purchase an additional 666,667 shares of the Company's common stock at $1.50
per share.
The Company has estimated the fair value of the warrant at the date of issue
and recorded $102,708 of the consideration received as a credit to
additional paid-in capital. Interest expense for 1998 includes $17,118 of
accretion of the debt discount resulting from the fair value of the warrants
and $33,333 relating to the year one interest holiday.
As part of the agreement, the Company has agreed to obtain hosting and other
Internet services at market prices for a period of five years from the
investor.
The fair value of the Convertible Debenture is estimated to approximate its
carrying value at December 31, 1998 as the debt was recorded at fair value
in July 1998 and there has been no significant change in the underlying
market rate or credit worthiness of the Company since that date.
(b) In January 1997, the Company entered into an agreement with a stockholder
for a $500,000 line of credit which was originally due on December 31, 1997,
but has been extended to February 28, 2000. Interest accrues at 12% of the
face amount annually. All borrowings are guaranteed by a principal
stockholder of the Company.
The agreement originally provided that the outstanding borrowings could be
converted at the sole discretion of the lending stockholder into common
stock at a conversion rate of $1.50 worth of common stock for each $1.00 of
borrowings converted. The favorable conversion rate represented a beneficial
conversion feature and, accordingly, $250,000 has been recorded as a credit
to additional paid-in capital at the issue date. Additional interest expense
of $250,000 has been included in 1997, as the original maturity of the
borrowing was December 31, 1997. In July 1998, the conversion feature was
deleted in connection with the issuance of the Convertible Debenture.
The fair value of the note at December 31, 1998 is estimated at
approximately $452,000 based on the amount of future cash flows associated
with the investment, discounted using an appropriate interest rate.
(c) In connection with a $100,000 loan under a line of credit established in
December 1995 in 1996, the Company has arranged with the lender to apply a
portion of the proceeds of credit card payments processed by the lender for
the Company to the loan balance. The loan is further reduced by the
offsetting of balances due from the lender for its monthly subscription
charge for use of the Company's Internet service. Interest accrues at 2%
over the prime rate established by a financial institution (10.25% at
December 31, 1998).
The loan is guaranteed by one of the principal stockholders and certain
Company common stock owned by the stockholder are pledged as collateral.
Outstanding amounts at December 31, 1997 and 1998 were $76,697 and $59,448,
respectively.
In 1997, the Company issued a noninterest bearing note and 40,001 warrants
exercisable at $1.25 per share in exchange for $25,000. The note was repaid
with services during the year ended December 31, 1998. The estimated value
of the warrants at the date of issuance is deemed insignificant.
At December 31, 1997 and 1998, the fair value of these notes payable
approximates their carrying value based on the amount of future cash flows
associated with the instrument, discounted using an appropriate interest
rate.
F-12
<PAGE> 75
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Interest expense and other financing charges for the years ended December
31, 1996, 1997, and 1998 totaled $72,547, $298,561, and $137,909, respectively.
(6) INCOME TAXES
Since its inception, the Company has incurred net operating losses and has
incurred no federal or state income tax expense. The provision for income taxes
for the years ended December 31, 1996, 1997 and 1998 consists entirely of the
State of Connecticut minimum tax. At December 31, 1998, the Company has
approximately $2,500,000 in federal and state operating loss carryforwards,
which are available to offset future taxable income, through 2012.
The Company's tax provision differed from the amount computed using the
federal statutory rate of 34% as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Expected federal income tax benefit at 34%...... $(284,105) $(509,201) $(765,650)
State taxes, net of federal expense............. (58,367) (73,749) (134,280)
Non-deductible interest expense................. 12,750 85,000 --
Other permanent differences..................... 4,226 5,610 3,882
Valuation allowance............................. 325,746 492,590 896,298
--------- --------- ---------
$ 250 $ 250 $ 250
========= ========= =========
</TABLE>
The Company's deferred tax assets and liabilities and related valuation
allowance as December 31, 1997 and 1998 are as follows:
<TABLE>
<CAPTION>
1997 1998
--------- -----------
<S> <C> <C>
Deferred tax assets (liabilities):
Net operating loss carryforwards....................... $ 644,652 $ 1,003,915
Deferred compensation.................................. 240,000 314,231
Accruals and other, net................................ (1,680) 7,924
Stock compensation expense............................. -- 453,200
Valuation allowance...................................... (882,972) (1,779,270)
--------- -----------
$ -- $ --
========= ===========
</TABLE>
Realization of the net operating loss carryforward benefit is dependent on
the Company being able to generate sufficient taxable income prior to the
expiration of the operating loss carryforwards. Due to the Company's short
operating history, a valuation allowance has been recorded for the entire amount
of the net deferred tax asset as the Company has concluded that it is not more
likely than not that there will be future taxable income sufficient to realize
the future taxable temporary differences and operating loss carryforwards prior
to their expiration.
F-13
<PAGE> 76
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(7) DUE TO OFFICERS
The Company has entered into compensation agreements with its two founding
stockholders that provide for combined annual compensation of $300,000
commencing in January 1996, payment of which is dependent upon the availability
of cash and other factors. Compensation expense of $300,000 has been recorded in
each of the years ended December 31, 1996, 1997 and 1998.
Due to officers represents deferred compensation of $300,000 for 1996,
$300,000 for 1997 and $185,577 for 1998 offset by other amounts due from the
officers of $51,114 and $141,554 at December 31, 1997 and 1998, respectively.
The entire liability is classified as long-term as the founding stockholders
have waived payment of these amounts until after January 1, 2000.
(8) STOCKHOLDERS' EQUITY
COMMON STOCK
On March 24, 1997, the Board of Directors of the Company declared and
approved a 4 for 1 stock split on its common shares. All share and per share
data has been retroactively adjusted to reflect this common stock split.
Upon the formation of the Company, the founders were issued 4,000,000
shares of the Company's common stock. In 1996, the Company sold 400,000 shares
of its common stock to an investor for $462,500. In 1998, the Company sold an
additional 103,333 shares of common stock for $145,000 in cash, net of related
offering expenses and issued 100,000 shares of common stock in satisfaction of
$125,000 of indebtedness.
STOCK WARRANTS
Since its inception, the Company has occasionally issued warrants to
purchase Company common stock in return for various services rendered or in
connection with certain debt financings.
Warrants issued in exchange for services totaled 104,000 and 63,333 for the
years ended December 31, 1996 and 1998, respectively. Based on estimated fair
values at the respective dates of issuance the Company has recorded professional
services expense and additional paid-in capital of $26,000 in 1996 and $33,630
in 1998.
Warrants issued in connection with debt financings totalled 666,667 in 1998
and have also been fair valued at their date of issuance. Additional interest
expense has been recorded for the year ended December 31, 1998 of $17,118. The
credit to additional paid-in-capital relating to the fair value of warrants
issued in connection with the debt financing during 1998 was $102,708.
F-14
<PAGE> 77
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Warrant activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
WARRANTS WEIGHTED AVERAGE
GRANTED EXERCISE PRICE
---------- ----------------
<S> <C> <C>
Outstanding at December 31, 1995......................... 1,570,000 $0.01
Granted.................................................. 117,956 0.01
Exercised................................................ (400,000) 0.01
Canceled................................................. -- --
----------
Outstanding at December 31, 1996......................... 1,287,956 0.01
Granted.................................................. -- --
Exercised................................................ (1,274,000) 0.01
Canceled................................................. -- --
----------
Outstanding at December 31, 1997......................... 13,956 0.00
Granted.................................................. 770,001 1.45
Exercised................................................ (53,957) 0.93
Canceled................................................. -- --
----------
Outstanding at December 31, 1998......................... 730,000 $1.46
==========
</TABLE>
Included in the above table are 13,956 warrants outstanding at December 31,
1996 and 1997 that were granted pursuant to certain anti-dilution provisions of
the original warrant grant and accordingly have a $0.00 exercise price.
The weighted average contractual life of warrants outstanding at December
31, 1998 was .81 years. The warrants outstanding at December 31, 1997 have no
expiration.
(9) 1996 STOCK OPTION PLAN
In November, 1998, the Company adopted the 1996 Stock Option Plan (the 1996
Plan) whereby the Company's Board of Directors may grant stock options to
officers, employees, directors and consultants. The 1996 Plan authorizes the
issuance of options to purchase up to 800,000 shares of the Company's common
stock. Options granted may be either Incentive Stock Options (ISOs) or
Non-Qualified Stock Options. The exercise price and vesting schedule of the
options will be established on the grant date. However, the established exercise
price for ISOs may not be less than the fair market value of the Company's
common stock on the grant date. The 1996 Plan also provides that no options will
have a term of longer than ten years.
In November 1998, the Company formally granted 385,000 and 15,000
fully-vested options to purchase common stock to employees at exercise prices of
$0.25 and $1.25 per share, respectively, with a weighted average exercise price
of $0.29. The Company has recorded $1,133,000 of compensation expense in 1998
calculated as the difference between the exercise price and $3.12 per share, the
estimated fair market value of the Company's common stock at the grant date, as
determined by independent valuation. All of the options are exercisable at
December 31, 1998. There was no other option activity in 1998. At December 31,
1998, 800,000 shares of Company common stock were reserved for issuance under
the Plan.
As discussed in note 2, the Company has elected to continue to use APB 25
to measure compensation expense related to employee stock options and has
recorded compensation expense where the exercise price of the option was less
than the fair value of the stock on the date of grant.
F-15
<PAGE> 78
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Had the Company determined compensation expense based on the fair value of the
option on the grant date under SFAS 123, the Company's results of operations
would have been as follows:
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
Net loss -- as reported..................................... $(2,221,474)
Net loss -- pro forma....................................... $(3,004,873)
Basic and diluted net loss per share -- as reported......... $ (0.36)
Basic and diluted net loss per share -- pro forma........... $ (0.49)
</TABLE>
The fair value of the options granted to employees in 1998, as calculated
under SFAS 123, ranged from $1.57 to $2.45 with a weighted average fair value of
$1.96 using the modified Black Scholes option pricing model, excluding
volatility assumption, using the following weighted average assumptions:
<TABLE>
<S> <C>
Risk free interest.......................................... 6.5%
Expected life............................................... 10 years
Expected dividend yield..................................... 0.0%
</TABLE>
(10) COMMITMENTS AND CONTINGENCIES
The Company leases space in Norwalk, Connecticut for its primary offices.
The cost of the office space which is shared by a co-tenant which is also a
stockholder of the Company is $6,600 per month. The Company also has rent
expense related to space leased from the Company's founding stockholders. Rent
expense totaled $17,775, $44,086 and $57,983 for the years ended December 31,
1996, 1997 and 1998, respectively of which $17,775, $24,286 and $18,383,
respectively, related to space leased from the Company's founding stockholder.
Future minimum lease payments under noncancelable operating leases and
capital leases (with initial or remaining lease terms in excess of one year) as
of December 31, 1998 are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
--------- --------
<S> <C> <C>
Year ending December 31,:
1999....................................................... $50,525 $ 63,195
2000....................................................... 15,805 63,195
2001....................................................... -- 26,076
------- --------
Total................................................. $66,330 $152,466
=======
Amount representing interest.......................... (16,996)
--------
Net capital leases obligation....................... $135,470
========
</TABLE>
The amount currently payable under the capital lease at December 31, 1998
is $52,477.
(11) RELATED PARTY TRANSACTIONS
The Company provides services to two shareholders. Revenues from these
related parties totaled $6,000, $38,000 and $69,600 in 1996, 1997 and 1998,
respectively. Of the revenues received, $6,000,
F-16
<PAGE> 79
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
$12,000, and $17,250 were used to satisfy a note payable to one shareholder. The
Company also purchased services from a shareholder, which totaled $209,463,
$423,836, and $610,073 in 1996, 1997 and 1998, respectively.
(12) LIQUIDITY
As shown in the accompanying financial statements, the Company incurred a
loss of $835,853, $1,497,899 and $2,221,474, for the years ended December 31,
1996, 1997 and 1998 and had negative shareholders' equity of $2,220,946 at
December 31, 1998.
Subsequent to December 31, 1998, the Company successfully raised $1,055,250
in equity capital (see note 13) and the Company expects to be able to raise
additional capital either through private placement of debt or equity securities
or through an Initial Public Offering (IPO) of its common stock. While there can
be no assurances that the Company will be successful in securing such additional
private or public capital, the Company believes it has sufficient working
capital to satisfy its obligations through at least December 31, 1999.
(13) SUBSEQUENT EVENTS (UNAUDITED)
(a) On March 25, 1999, the Board of Directors of the Company declared and
approved an increase in the number of authorized shares of common stock to
30,000,000, par value $0.01 per share, and authorized 1,000,000 shares of
preferred stock, par value $0.01 per share.
On March 25, 1999, the Company adopted the 1999 Stock Option Plan (the 1999
Plan) and the 1999 Outside Directors Stock Option Plan (the 1999 Directors
Plan). The 1999 Plan authorizes the issuance of options to purchase up to
600,000 shares of the Company's common stock under the same provisions as the
1996 Plan. The 1999 Directors Plan authorizes the issuance of options to
purchase up to 100,000 shares of the Company's common stock. No grants have been
made under the 1999 Plan or the 1999 Directors Plan.
On March 25, 1999, the Company granted 340,000 and 60,000 options at $4.50
and $4.00, respectively under the 1996 Plan. The Company will recognize $30,000
in compensation expense over the three year vesting period for options granted
with exercise prices less than fair market value at the grant date.
(b) On March 30, 1999, the Company completed the sale of an aggregate of
240,000 shares to three investors at $4.50 per share resulting in net proceeds
of $1,055,250. In addition to the shares, the investors also received 240,000
warrants which are exercisable at $1.50 per warrant if the Company does not
complete an IPO by December 31, 1999. These warrants will be automatically
cancelled following the closing of an IPO.
(c) On March 30, 1999, the Company filed a registration statement on Form
S-1 for the sale of its common stock to the public. In connection with this
filing the Company, its underwriters and the holder of the Convertible Debenture
agreed to convert the Convertible Debenture into 670,000 shares of the Company's
common stock upon the close of an IPO. In addition, certain holders of warrants
to purchase Company common stock also agreed to exercise the warrants into
696,667 shares upon the close of an IPO.
F-17
<PAGE> 80
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(14) PRO FORMA BASIC AND DILUTED LOSS PER SHARE
The pro forma basic and diluted loss per share gives effect to the
conversion of the Convertible Debenture into 670,000 shares of Company common
stock as if the conversion took place in July 1998.
F-18
<PAGE> 81
EDGAR ONLINE, INC
BALANCE SHEET
<TABLE>
<CAPTION>
PRO FORMA
MARCH 31, MARCH 31,
1999 1999
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Current assets:
Cash...................................................... $ 216,003 216,003
Accounts receivable, less allowance for doubtful accounts
of $48,572............................................. 153,554 153,554
Deferred offering costs................................... 304,260 304,260
Other..................................................... 1,000 1,000
----------- ----------
Total current assets.............................. 674,817 674,817
Property and equipment, net............................... 380,036 380,036
Deferred financing costs.................................. 69,566 0
Other assets.............................................. 31,760 31,760
----------- ----------
Total assets...................................... $ 1,156,179 1,086,613
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of notes payable.......................... $ 40,698 40,698
Accounts payable and accrued expenses..................... 772,231 772,231
Deferred revenues......................................... 208,740 208,740
Due to employee........................................... 19,575 19,575
Capital lease payable, current portion.................... 53,493 53,493
----------- ----------
Total current liabilities......................... 1,094,737 1,094,737
Notes payable, long-term.................................... 1,422,969 500,000
Capital lease obligation, long-term......................... 69,621 69,621
Accrued interest payable.................................... 165,619 115,619
Due to officers, net........................................ 644,023 644,023
----------- ----------
Total liabilities................................. 3,396,969 2,424,000
Stockholders' equity (deficit):
Common stock, $.01 par value, 30,000,000 shares
authorized, 6,571,290 shares issued and outstanding
(7,241,290, pro forma)................................. 65,713 72,413
Preferred stock, $.01 par value, 1,000,000 shares
authorized, no shares issued or outstanding............ 0 0
Additional paid-in capital................................ 3,541,413 4,457,682
Stock subscription receivable............................. (515,000) (515,000)
Accumulated deficit....................................... (5,332,916) (5,352,482)
----------- ----------
Total stockholders' deficit....................... (2,240,790) (1,337,387)
----------- ----------
Total liabilities and stockholders' deficit....... $ 1,156,179 1,086,613
=========== ==========
</TABLE>
See accompanying notes to financial statements.
F-19
<PAGE> 82
EDGAR ONLINE, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1999
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenues:
Individual subscription revenue........................... $ 184,245 273,603
Corporate contract revenue................................ 24,972 151,844
Advertising revenue....................................... 80,118 83,734
Barter advertising revenue................................ 82,626 96,775
Other barter revenue...................................... 12,500 35,501
---------- ----------
384,461 641,457
---------- ----------
Cost of revenues:
Software and Web site development......................... 128,506 223,847
Barter advertising expense................................ 82,626 96,775
---------- ----------
211,132 320,622
---------- ----------
Gross profit...................................... 173,329 320,835
Operating expenses:
Selling, general and administrative....................... 295,195 816,177
Advertising costs......................................... 48,737 52,670
Stock compensation expense................................ -- 165
---------- ----------
343,932 869,012
---------- ----------
Loss from operations.............................. (170,603) (548,177)
Interest expense and other, net............................. 17,610 38,029
---------- ----------
Loss before income taxes.......................... (188,213) (586,206)
Income tax expense.......................................... 50 250
---------- ----------
Net loss.......................................... $ (188,263) (586,456)
========== ==========
Basic and diluted net loss per share........................ $ (0.03) (0.09)
========== ==========
Basic and diluted weighted average shares outstanding....... 6,074,000 6,367,290
========== ==========
Pro forma basic and diluted loss per share.................. -- $ (0.08)
==========
Number of shares used in computing pro forma basic and
diluted loss per share.................................... -- 7,037,290
==========
</TABLE>
See accompanying notes to financial statements.
F-20
<PAGE> 83
EDGAR ONLINE, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK STOCK
------------------- PAID-IN- ACCUMULATED SUBSCRIPTION
SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE TOTAL
--------- ------- --------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998....... 6,331,290 $63,313 2,462,201 (4,746,460) -- (2,220,946)
Issuance of common stock
(Unaudited)...................... 240,000 2,400 1,052,850 -- (515,000) 540,250
Stock compensation (Unaudited)..... -- -- 165 -- -- 165
Issuance of warrants for services
provided (Unaudited)............. -- -- 26,197 -- -- 26,197
Net loss (Unaudited)............... -- -- -- (586,456) -- (586,456)
--------- ------- --------- ---------- -------- ----------
Balance at March 31, 1999
(Unaudited)...................... 6,571,290 $65,713 3,541,413 (5,332,916) (515,000) (2,240,790)
========= ======= ========= ========== ======== ==========
</TABLE>
See accompanying notes to financial statements.
F-21
<PAGE> 84
EDGAR ONLINE, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1998 1999
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(188,263) (586,456)
--------- --------
Adjustments to reconcile net loss to net cash used in
operating activities:
Stock compensation expense............................. -- 165
Depreciation and amortization.......................... 24,683 31,684
Accretion and amortization of debt discount............ -- 8,559
Provisions for bad debts............................... -- 17,030
Noncash service expenses............................... -- 26,197
Noncash service revenue................................ -- (18,750)
Changes in assets and liabilities:
Accounts receivable.................................. (39,462) (35,769)
Deferred offering costs.............................. -- (304,260)
Deferred financing costs............................. -- 7,452
Other assets......................................... 249 (19,750)
Accounts payable and accrued expenses................ 71,126 376,523
Accrued interest..................................... -- 31,815
Due to employee...................................... -- 5,000
Due to officers, net................................. 51,529 0
Deferred revenues.................................... 132,671 289
--------- --------
Total adjustments................................. 240,796 126,185
--------- --------
Net cash provided by (used in) operating
activities..................................... 52,533 (460,271)
--------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock.................... -- 565,000
Costs incurred in connection with the sale of common
stock.................................................. -- (24,750)
Principal payments on notes payable....................... (28,000) 0
Payments on capital lease obligations..................... -- (12,356)
--------- --------
Net cash (used in) provided by financing
activities..................................... (28,000) 527,894
--------- --------
Net increase in cash.............................. 24,533 67,623
Cash at beginning of period................................. 16,809 148,380
--------- --------
Cash at end of period....................................... $ 41,342 216,003
========= ========
Supplemental disclosure of cash flow information:
Notes payable settled in exchange for services provided..... $ -- 18,750
Stock warrants issued in exchange for services provided..... $ -- 19,065
</TABLE>
See accompanying notes to financial statements.
F-22
<PAGE> 85
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(1) INTERIM FINANCIAL STATEMENTS
The interim financial statements contained herein are unaudited, but in the
opinion of management, include all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the financial position,
results of operations and cash flows for the periods presented. Results of
operations for the periods presented herein are not necessarily indicative of
results of operations for the entire year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission's (SEC) rules and regulations. Reference is made to the Company's
audited financial statements as of and for the year ended December 31, 1998,
included elsewhere herein.
Inherent in the Company's mission are various risks and uncertainties,
including its limited operating history, unproven business model and the limited
history of commerce on the Internet. The Company's success may depend in part
upon the emergence and acceptance of the Internet as a communication and
information medium, prospective project development efforts and the acceptance
by the market place of the Company's products and services.
(2) LOSS PER SHARE
Loss per share is presented in accordance with the provisions of SFAS No.
128, "Earnings Per Share" (SFAS 128) and SEC Staff Accounting Bulletin No 98.
Under SFAS 128, Basic EPS excludes dilution for common stock equivalents and is
computed by dividing income or loss available to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted and resulted in the
issuance of common stock.
Basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Pursuant to SEC Staff Accounting
Bulletin No. 98, common stock and convertible preferred stock issued for nominal
consideration, prior to the anticipated effective date of an IPO, are required
to be included in the calculation of basic and diluted earnings per share, as if
they were outstanding for all periods presented. To date, the Company has not
had any issuances or grants for nominal consideration.
Diluted loss per share has not been presented separately, as the
outstanding stock options, warrants and convertible debentures are anti-dilutive
for each of the periods presented.
Anti-dilutive potential common shares outstanding were 399,286 and
1,545,264 for the quarters ended March 31, 1998 and 1999, respectively.
F-23
<PAGE> 86
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(3) PROPERTY AND EQUIPMENT
Property and equipment at March 31, 1999 is summarized as follows:
<TABLE>
<S> <C>
Purchased software......................................... $ 109,849
Equipment, and furniture and fixtures...................... 482,438
Leasehold improvements..................................... 7,673
---------
Subtotal.............................................. 599,960
Less accumulated depreciation.............................. (219,924)
---------
$ 380,036
=========
</TABLE>
Depreciation and amortization expense for the three months ended March 31,
1998 and 1999 was $24,683 and $31,684, respectively.
(4) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following at March 31,
1999.
<TABLE>
<S> <C>
Accounts payable........................................... $ 608,347
Compensation and related benefits.......................... 130,000
Interest................................................... 29,289
Other...................................................... 4,595
---------
$ 772,231
=========
</TABLE>
(5) NOTES PAYABLE
Notes payable consist of the following at March 31, 1999.
<TABLE>
<S> <C>
Convertible Debenture..................................... $ 922,969
Promissory notes -- related party......................... 500,000
Promissory notes.......................................... 40,698
----------
Total notes payable.................................. 1,463,667
Less: Current portion..................................... (40,698)
----------
Notes payable, long-term.................................. $1,422,969
==========
</TABLE>
(6) STOCKHOLDERS' EQUITY
COMMON AND PREFERRED STOCK
On March 25, 1999, the Board of Directors of the Company declared and
approved an increase in the number of authorized shares of common stock to
30,000,000, par value $0.01 per share, and authorized 1,000,000 shares of
preferred stock, par value $0.01 per share. There were no preferred shares
outstanding at March 31, 1999.
On March 30, 1999, the Company completed the sale of an aggregate of
240,000 shares to three investors at $4.50 per share resulting in net proceeds
of $1,055,250. Of the total, $515,000 was
F-24
<PAGE> 87
EDGAR ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
included in stock subscriptions receivable at March 31, 1999 and was
subsequently collected on April 3, 1999. In addition to the shares, the
investors also received 240,000 warrants which are exercisable at $1.50 per
warrant if the Company does not complete an IPO by December 31, 1999. These
warrants will be automatically cancelled following the closing of an IPO.
STOCK WARRANTS
Warrants issued in exchange for services totaled 5,167 for the three months
ended March 31, 1999. Based on estimated fair values at the date of issuance,
the Company has recorded professional services expense and additional paid-in
capital of $26,197.
In addition, The Company issued 12,000 warrants with an exercise price of
$4.50 per warrant in consideration for services rendered in connection with the
sale of the 240,000 shares of common stock discussed in note 6. The value of
these warrants has been netted against the proceeds.
Warrant activity during the three months ended March 31, 1999 is as
follows:
<TABLE>
<CAPTION>
WARRANTS WEIGHTED AVERAGE
GRANTED EXERCISE PRICE
-------- ----------------
<S> <C> <C>
Outstanding at December 31, 1998...................... 730,000 $1.46
Granted............................................... 257,167 1.64
-------
Outstanding at March 31, 1999......................... 987,167 $1.51
=======
</TABLE>
(7) STOCK OPTION PLANS
On March 25, 1999, the Company granted 340,000 and 60,000 options at $4.50
and $4.00, respectively under the 1996 Plan and recorded $30,000 in deferred
compensation for options granted with exercise prices less than fair market
value at the grant date, to be recognized as expense over the three year vesting
period. Compensation expense related to these options was $165 for the three
months ended March 31, 1999. Deferred compensation of $29,835 is included within
additional paid-in-capital at March 31, 1999.
(8) INITIAL PUBLIC OFFERING (IPO)
On March 30, 1999, the Company filed a registration statement on Form S-1
for the sale of its common stock to the public. In connection with this filing,
the Company, its underwriters and the holder of the Convertible Debenture agreed
to convert the Convertible Debenture into 670,000 shares of the Company's common
stock upon the close of an IPO. In addition, certain holders of warrants to
purchase Company common stock also agreed to exercise the warrants into 696,667
shares upon the close of an IPO.
At March 31, 1999, the Company had incurred approximately $304,260 of costs
in connection with its IPO. These costs are recorded as deferred offering costs
in the accompanying balance sheet.
(9) PRO FORMA FINANCIAL INFORMATION
The pro forma balance sheet at March 31, 1999 gives effect to the
conversion of the Convertible Debenture into 670,000 shares of Company common
stock. The pro forma Basic and Diluted loss per share gives effect to the
conversion as if the conversion took place on January 1, 1999.
F-25
<PAGE> 88
[DESCRIPTION OF ARTWORK]
<PAGE> 89
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY EDGAR
ONLINE, INC. OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF EDGAR ONLINE, INC. SINCE THE
DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 6
Forward-Looking Statements............ 17
Use of Proceeds....................... 18
Dividend Policy....................... 18
Capitalization........................ 19
Dilution.............................. 20
Selected Financial Data............... 22
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 23
Business.............................. 29
Management............................ 40
Certain Transactions.................. 49
Principal Stockholders................ 51
Description of the Capital Stock...... 53
Shares Eligible for Future Sale....... 54
Underwriting.......................... 56
Legal Matters......................... 58
Experts............................... 59
Additional Information................ 59
Index to Financial Statements......... F-1
</TABLE>
------------------------
UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
3,000,000 SHARES
[EDGAR ONLINE LOGO]
COMMON STOCK
------------------------
PROSPECTUS
------------------------
C.E. UNTERBERG, TOWBIN
FAHNESTOCK & CO. INC.
------------------------
DLJdirect INC.
MAY , 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 90
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by the Registrant in connection with this offering
are as follows. All amounts other than the SEC registration fee, NASD filing fee
and Nasdaq National Market application fee are estimates.
<TABLE>
<S> <C>
SEC registration fee........................................ $9,591.00
NASD filing fee............................................. $
Nasdaq National Market listing fee.......................... $ *
Printing and engraving...................................... $ *
Legal fees and expenses..................................... $ *
Accounting fees and expenses................................ $ *
Blue sky fees and expenses (including legal fees)........... $ *
Transfer agent and registrar fees........................... $ *
Miscellaneous............................................... $ *
---------
Total............................................. $ *
=========
</TABLE>
- -------------------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act").
As permitted by the Delaware General Corporation Law, the Registrant's
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 (i) for any breach
of the director's duty of loyalty to the Registrant or its stockholders, (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) under section 174 of the Delaware General
Corporation Law (regarding unlawful dividends and stock purchases) or (iv) for
any transaction from which the director derived an improper personal benefit.
As permitted by the Delaware General Corporation Law, the Bylaws of the
Registrant provide that (i) the Registrant is required to indemnify its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law, subject to certain very limited exceptions, (ii) the Registrant
may indemnify its other employees and agents as set forth in the Delaware
General Corporation Law, (iii) the Registrant is required to advance expenses,
as incurred, to its directors and executive officers in connection with a legal
proceeding to the fullest extent permitted by the Delaware General Corporation
Law, subject to certain very limited exceptions and (iv) the rights conferred in
the Bylaws are not exclusive.
The Registrant intends to enter into indemnification agreements with each
of its directors and executive officers to give such directors and officers
additional contractual assurances regarding the
II-1
<PAGE> 91
scope of the indemnification set forth in the Registrant's Amended and Restated
Certificate of Incorporation and to provide additional procedural protections.
The Registrant, with approval by the Registrant's Board of Directors, expects to
obtain directors' and officers' liability insurance. At present, there is no
pending litigation or proceeding involving a director, officer or employee of
the Registrant regarding which indemnification is sought, nor is the Registrant
aware of any threatened litigation that may result in claims for
indemnification.
Reference is also made to Section of the Underwriting Agreement, which
provides for the indemnification of officers, directors and controlling persons
of the Registrant against certain liabilities, including liabilities under the
Securities Act. Section of the Underwriting Agreement also provides
that such Underwriters will contribute to certain liabilities of such persons
under the Securities Act.
Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1996, the Registrant has issued and sold (without payment
of any selling commission to any person) the following unregistered securities:
(1) In August 1996, the Registrant issued and sold 400,000 shares of
Common Stock to Bowne & Co. at an average price per share of $1.16.
(2) In March 1998, the Registrant issued warrants to Hoover's Inc. to
purchase 40,001 shares of Common Stock at an exercise price per share
of $1.25 in consideration for advances.
(3) In July 1998, the Registrant issued its convertible debenture,
convertible into 670,000 shares of Common Stock, along with warrants
to purchase 666,667 shares of Common Stock at an exercise price per
share of $1.50 to Globix Corporation in exchange for $1,000,000.
(4) In August 1998, the Registrant issued warrants to each of Frederic Ury
and Neal Moscow to purchase 7,500 shares of Common Stock,
respectively, at an exercise price per share of $0.50 in consideration
for professional services rendered.
(5) In August 1998, the Registrant issued warrants to VM Equity Partners
to purchase 7,500 shares of Common Stock and 33,333 shares of Common
Stock at an exercise price per share of $0.50 and $1.50 respectively,
in consideration for professional services rendered.
(6) In November 1998, the Registrant issued warrants to each of Mitchell
Littman, Bernard Krooks and Richard Roth to purchase 2,500 shares of
Common Stock, respectively, at an exercise price per share of $0.50 in
consideration for professional services rendered.
(7) In December 1998, the Registrant issued 70,000 shares of Common Stock
to William F. Nicklin in exchange for $105,000.
(8) In December 1998, the Registrant issued 33,333 shares of Common Stock
to J. Shelby Bryan in exchange for $50,000.
(9) In December 1998, the Registrant issued 20,000 shares of Common Stock
to Juergen Goersch and 80,000 shares of Common Stock to Stefan Chopin
and Barbara Chopin in exchange for the cancellation of a $125,000
liability owed by the Registrant to Pequot Systems (iXL).
II-2
<PAGE> 92
(10) In January 1999, the Registrant issued warrants to VM Equity Partners
to purchase 5,167 shares of Common Stock at an exercise price per
share of $1.50 in consideration for professional services rendered.
(11) In March 1999, the Registrant issued warrants to VM Equity Partners to
purchase 6,000 shares of Common Stock at an exercise price per share
of $4.50 in consideration for professional services rendered.
(12) In March 1999, the Registrant issued 110,000 shares to VMR Luxembourg
in exchange for $495,000.
(13) In March 1999, the Registrant issued 10,000 shares to Speech
Compression Technologies in exchange for $45,000.
(14) In March 1999, the Registrant issued 120,000 shares to Sidney Kahn,
Meyer German, Rostev Limited, Charles Salfeld, Pierre Schoenheimer,
Linda Heller Kamm, John Puente, William Rollnick and Samuel Beard in
exchange for $540,000.
(15) From November 11, 1998 through March 25, 1999, the Registrant granted
stock options to purchase an aggregate of 800,000 shares of Common
Stock to employees and directors with exercise prices ranging from
$.25 to $4.50 per share pursuant to the Registrant's 1996 Stock Option
Plan in consideration for services.
(16) In May 1999, the Registrant issued warrants to VM Equity Partners to
purchase 33,500 shares of Common Stock at an exercise price per share
of $1.492535 in consideration for professional services rendered.
(17) In March 1999, the Registrant issued warrants to C.E. Unterberg,
Towbin to purchase 12,000 shares of Common Stock at an exercise price
of $4.50 per share in consideration for professional services.
Exemption from registration for the transactions described above was
claimed pursuant to Section 4(2) of the Securities Act of 1933, as amended,
regarding transactions by the issuer not involving a public offering, in that
these transactions were made, without general solicitation or advertising, to
sophisticated investors with access to all relevant information necessary to
evaluate these investments and who represented to the Registrant that the shares
were being acquired for investment.
II-3
<PAGE> 93
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
1.01 Form of Underwriting Agreement.*
3.01 Certificate of Incorporation, as amended.*
3.02 Amended and Restated Certificate of Incorporation.
3.03 Bylaws.
4.01 Form of Specimen Stock Certificate for the Registrant's
Common Stock.
4.02 10% Convertible Subordinated Debenture due 2001.*
4.03 Warrant to Purchase Common Stock.*
5.01 Opinion of Littman Krooks Roth & Ball P.C. regarding
legality of securities being registered.
10.01 Form of Indemnity Agreement to be entered into between the
Registrant with each of its directors and executive
officers.
10.02 1996 Stock Option Plan.*
10.03 1999 Stock Option Plan.
10.04 1999 Outside Director Stock Option Plan.
10.05 Amended and Restated Employment Agreement dated as of May 6,
1999 between the Registrant and Marc Strausberg.
10.06 Amended and Restated Employment Agreement dated as of May 6,
1999 between the Registrant and Susan Strausberg.
10.07 Employment Agreement, dated as of April 23, 1999, between
the Registrant and Tom Vos.
10.08 Employment Agreement, dated as of May 3, 1999, between the
Registrant and Greg Adams.
10.09 Employment Agreement, dated as of March 11, 1999 between the
Registrant and Brian Fitzpatrick.
10.10 Employment Agreement, dated as of May 19, 1997, between the
Registrant and Jay Sears.
10.11 Employment Agreement, dated as of May 3, 1999, between the
Registrant and David Trenck
10.12 Securities Purchase Agreement, dated as of July 23, 1998 by
and between the Registrant and Globix Corporation.*
10.13 Form of Registration Rights Agreement for December 1998
Investors.
10.14 Form of Subscription Agreement, including registration
rights, for March 1999 Investors.
10.15 Lease Agreement, dated April 4, 1997 by and between 50
Washington Street Realty Corp., Pequot Systems, Inc and the
Registrant.*
10.16 Dissemination Services Agreement dated September 11, 1998 by
and between TRW, Inc. and the Registrant.*
10.17 Trademark License Agreement dated March 26, 1999 between the
US Securities & Exchange Commission and the Registrant.
10.18 Agreement dated March 1, 1998 by and between the Registrant
and Pequot Systems, Inc.
10.19 Form of Content License Agreement.
10.20 Restated Equity Purchase Agreement by and among the
Registrant, Bowne & Co., Inc., Globix Corporation, Marc
Strausberg, Susan Strausberg and Michael Horowitz.
23.01 Consent of Littman Krooks Roth & Ball P.C. (included in
Exhibit 5.01).
23.02 Report on Schedule and Consent of KPMG LLP.
</TABLE>
II-4
<PAGE> 94
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
24.01 Power of Attorney (see Page II-5 of the Registration
Statement).*
27.01 Financial Data Schedule (EDGAR Version Only).
</TABLE>
- -------------------------
* Previously filed.
(b) Financial Statement Schedules:
Schedule II -- Valuation and Qualifying Accounts.
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission have been
omitted because they are not required under the related instructions or are
inapplicable, or because the information has been provided in the Financial
Statement or the Notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public 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, 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, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 95
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Pre-Effective Amendment No. 1 Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of South
Norwalk, State of Connecticut, on the 7th day of May, 1999.
EDGAR ONLINE, INC.
By: /s/ SUSAN STRAUSBERG
---------------------------------------
Susan Strausberg
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Susan Strausberg, Marc Strausberg and Tom
Vos, and each of them, his true and lawful attorneys-in-fact and agents, with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462 promulgated under the
Securities Act, and all post-effective amendments thereto, and to file the same,
with all exhibits thereto and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or his or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act, this
Registration Statement was signed by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ SUSAN STRAUSBERG Chief Executive Officer, and May 7, 1999
- --------------------------------------------------- Director
Susan Strausberg
PRINCIPAL FINANCIAL AND PRINCIPAL ACCOUNTING
OFFICER:
* Chief Financial Officer May 7, 1999
- ---------------------------------------------------
Greg D. Adams
DIRECTORS:
/s/ MARC STRAUSBERG Chairman of the Board May 7, 1999
- ---------------------------------------------------
Marc Strausberg
</TABLE>
II-6
<PAGE> 96
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<S> <C> <C>
/s/ SUSAN STRAUSBERG Director May 7, 1999
- ---------------------------------------------------
Susan Strausberg
/s/ TOM VOS Director May 7, 1999
- ---------------------------------------------------
Tom Vos
* Director May 7, 1999
- ---------------------------------------------------
Marc Bell
* Director May 7, 1999
- ---------------------------------------------------
Stefan Chopin
* Director May 7, 1999
- ---------------------------------------------------
Mark Maged
* Director May 7, 1999
- ---------------------------------------------------
Bruce Bezpa
</TABLE>
* By Tom Vos, Attorney-in-Fact
II-7
<PAGE> 97
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
EDGAR ONLINE, INC.
FINANCIAL STATEMENT SCHEDULE
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
CHARGED
BALANCE AT COSTS BALANCE AT
BEGINNING AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS(1) PERIOD
- ----------- ---------- -------- ------------- ----------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts
Receivable
Year ended December 31, 1996............ $ -- -- -- --
Year ended December 31, 1997............ $ -- 22,500 -- 22,500
Year ended December 31, 1998............ $22,500 62,207 (53,165) 31,542
</TABLE>
- -------------------------
(1) Write-offs of receivables.
II-8
<PAGE> 1
Exhibit 3.02
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
EDGAR(R) ONLINE, INC.
EDGAR(R) Online, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is EDGAR(R) Online, Inc. The
corporation was originally incorporated under the name Cybernet Data Systems,
Inc. and the date of filing of the original certificate of incorporation of the
corporation with the Secretary of State of the State of Delaware is November 3,
1995.
2. The certificate of incorporation is hereby amended by increasing
the number of shares of capital stock, designating a series of Preferred Stock
and changing the name of the corporation from " EDGAR(R) Online, Inc." to "EDGAR
Online, Inc."
3. The provisions of the certificate of incorporation of the
corporation as heretofore amended and/or supplemented, and as herein amended are
hereby restated and integrated into the single instrument which is hereinafter
set forth, and which is entitled Amended and Restated Certificate of
Incorporation of Edgar Online, Inc., without any further amendment other than
the amendments herein certified and without any discrepancy between the
provisions of the certificate of incorporation as heretofore amended and
supplemented and the provisions of the said single instrument hereinafter set
forth.
4. The amendments and the restatement of the certificate of
incorporation hereby certified have been duly adopted by the board of directors
and stockholders in accordance with the provisions of Sections 228, 242, and 245
of the General Corporation Law of the State of Delaware and the certificate of
incorporation of the corporation.
5. The certificate of incorporation of the corporation, as amended and
restated herein, shall at the effective time of this Amended and Restated
Certificate of Incorporation, read as follows:
ARTICLE I
The name of the corporation is EDGAR Online, Inc.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is 1013 Center Rd., Wilmington, DE 19805. The name of the registered
agent at such address is Corporation Service Company.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
The total number of shares of all classes of stock which the
corporation has authority to issue is Thirty-one Million (31,000,000) shares,
consisting of two classes: Thirty Million (30,000,000) shares of Common Stock,
$0.01 par value per share, and One Million (1,000,000) shares of Preferred
Stock, $0.01 par value per share.
<PAGE> 2
The Board of Directors is authorized, subject to any limitations
prescribed by the law of the State of Delaware, to provide for the issuance of
the shares of Preferred Stock in one or more series, and, by filing a
certificate of designation pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be included in
each such series, to fix the designation, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof, and to increase or decrease the number of shares of any such series
(but not below the number of shares of such series then outstanding). The number
of authorized shares of Preferred Stock may also be increased or decreased (but
not below the number of shares thereof then outstanding) by the affirmative vote
of the holders of a majority of the stock of the corporation entitled to vote,
unless a vote of any other holders is required pursuant to a certificate or
certificates establishing a series of Preferred Stock.
Except as otherwise expressly provided in any certificate of
designation designating any series of Preferred Stock pursuant to the foregoing
provisions of this Article IV, any new series of Preferred Stock may be
designated, fixed and determined as provided herein by the Board of Directors
without approval of the holders of Common Stock or the holders of Preferred
Stock, or any series thereof, and any such new series may have powers,
preferences and rights, including, without limitation, voting rights, dividend
rights, liquidation rights, redemption rights and conversion rights, senior to,
junior to or pari passu with the rights of the Common Stock, the Preferred
Stock, or any future class or series of Preferred Stock or Common Stock.
ARTICLE V
The Board of Directors of the corporation shall have the power to
adopt, amend or repeal Bylaws of the corporation.
ARTICLE VI
A. Election of directors need not be by written ballot unless the
Bylaws of the corporation shall so provide.
B. Special meetings of stockholders of the corporation may be called
only by the Board of Directors pursuant to a resolution adopted by a majority of
the total number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time any such resolution
is presented to the Board for adoption), the Chairman of the Board, the Chief
Executive Officer or any holder of twenty five percent (25%) of the outstanding
Common Stock of the corporation.
ARTICLE VII
Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation or other cause may be filled (a) by the
stockholders at any meeting, (b) by a majority of the directors, although less
than a
-2-
<PAGE> 3
quorum, or (c) by a sole remaining director, and directors so chosen shall hold
office for a term expiring at the next annual meeting of stockholders at which
the term of office of the class to which they have been elected expires, and
until their respective successors are elected, except in the case of the death,
resignation, or removal of any director. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
ARTICLE VIII
A. To the fullest extent permitted by law, no director of the
corporation shall be personally liable for monetary damages for breach of
fiduciary duty as a director. Without limiting the effect of the preceding
sentence, if the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability of a director,
then the liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation Law,
as so amended.
B. To the extent permitted by applicable law, this corporation is also
authorized to provide indemnification of (and advancement of expenses to) agents
(and any other persons to which Delaware law permits this corporation to provide
indemnification) through bylaw provisions, agreements with such agents or other
persons, vote of stockholders or disinterested directors or otherwise, in excess
of the indemnification and advancement otherwise permitted by Section 145 of the
Delaware General Corporation Law, subject only to limits created by applicable
Delaware law (statutory or non-statutory), with respect to actions for breach of
duty to the corporation, its stockholders, and others.
C. Neither any amendment nor repeal of any of the foregoing provisions
of this Article VIII, nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this Article VIII, shall eliminate, reduce or
otherwise adversely affect any limitation on the personal liability of a
director of the corporation existing at the time of such amendment, repeal or
adoption of such an inconsistent provision.
-3-
<PAGE> 4
The undersigned officer hereby acknowledges that the foregoing
certificate is her act and deed and that the facts stated herein are true.
Date: May 7, 1999
-----------------------------------------
Susan Strausberg, Chief Executive Officer
-4-
<PAGE> 1
BYLAWS
OF
EDGAR ONLINE, INC.
(a Delaware corporation)
As Adopted March 25, 1999
ARTICLE I
STOCKHOLDERS
Section 1.1: Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors at such date, time and place, either within
or without the State of Delaware, as the Board of Directors shall each year fix.
Any other proper business may be transacted at the annual meeting.
Section 1.2: Special Meetings. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
Chief Executive Officer, by a majority of the members of the Board of Directors
or any holder of at least twenty-five percent (25%) of the outstanding Common
Stock of the Corporation. Special meetings may not be called by any other person
or persons. If a special meeting of stockholders is called by any person or
persons other than by a majority of the members of the Board of Directors, then
such person or persons shall call such meeting by delivering a written request
to call such meeting to each member of the Board of Directors, and the Board of
Directors shall then determine the time, date and place of such special meeting,
which shall be held not more than one hundred twenty (120) nor less than
thirty-five (35) days after the written request to call such special meeting was
delivered to each member of the Board of Directors.
Section 1.3: Notice of Meetings. Written notice of all meetings of
stockholders shall be given stating the place, date and time of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise required by applicable law or the Certificate of
Incorporation of the Corporation, such notice shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting to each
stockholder of record entitled to vote at such meeting.
Section 1.4: Adjournments. Any meeting of stockholders may adjourn from
time to time to reconvene at the same or another place, and notice need not be
given of any such adjourned meeting if the time, date and place thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, then a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting. At the adjourned meeting the Corporation may transact
any business that might have been transacted at the original meeting.
Section 1.5: Quorum. At each meeting of stockholders the holders of a
majority of the shares of stock entitled to vote at the meeting, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business, except if otherwise required by applicable law. If a quorum shall fail
to attend any meeting, the chairman of the meeting or the holders of a majority
of the shares entitled to vote who are present, in person or by proxy, at the
meeting may adjourn the meeting. Shares of the Corporation's stock belonging to
the Corporation (or to another corporation, if a majority of the shares entitled
to vote in the election of directors of such other corporation are held,
directly or indirectly, by the Corporation), shall neither be entitled to vote
nor be counted for quorum purposes; provided, however, that the foregoing shall
not limit the right of the Corporation or any other corporation to vote any
shares of the Corporation's stock held by it in a fiduciary capacity.
<PAGE> 2
Section 1.6: Organization. Meetings of stockholders shall be presided over
by such person as the Board of Directors may designate, or, in the absence of
such a person, the Chief Executive Officer of the Corporation, or, in the
absence of such person, the Chairman of the Board, or, in the absence of such
person, such person as may be chosen by the holders of a majority of the shares
of stock entitled to vote who are present, in person or by proxy, at the
meeting. Such person shall be chairman of the meeting and, subject to Section
1.10 hereof, shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seems to him or her to be in order. The Secretary of the
Corporation shall act as secretary of the meeting, but in his or her absence the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 1.7: Voting; Proxies. Unless otherwise provided by law or the
Certificate of Incorporation, and subject to the provisions of Section 1.8 of
these Bylaws, each stockholder shall be entitled to one (1) vote for each share
of stock held by such stockholder. Each stockholder entitled to vote at a
meeting of stockholders may authorize another person or persons to act for such
stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in
any manner permitted by applicable law. Voting at meetings of stockholders need
not be by written ballot unless such is demanded at the meeting before voting
begins by a stockholder or stockholders holding shares representing at least one
percent (1%) of the votes entitled to vote at such meeting, or by such
stockholder's or stockholders' proxy; provided, however, that an election of
directors shall be by written ballot if demand is so made by any stockholder at
the meeting before voting begins. If a vote is to be taken by written ballot,
then each such ballot shall state the name of the stockholder or proxy voting
and such other information as the chairman of the meeting deems appropriate.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Unless otherwise provided by applicable law, the
Certificate of Incorporation or these Bylaws, every matter other than the
election of directors shall be decided by the affirmative vote of the holders of
a majority of the shares of stock entitled to vote thereon that are present in
person or represented by proxy at the meeting and are voted for or against the
matter.
Section 1.8: Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors and which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. If no record date is fixed by the Board of Directors,
then the record date shall be as provided by applicable law. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 1.9: List of Stockholders Entitled to Vote. A complete list of
stockholders entitled to vote at any meeting of stockholders, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder, shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present at the meeting.
Section 1.10: Inspectors of Elections.
(a) Applicability. Unless otherwise provided in the Corporation's
Certificate of Incorporation or required by the Delaware General Corporation
Law, the following provisions of this Section 1.10 shall apply only if and when
the Corporation has a class of voting stock that is: (i) listed on a national
securities exchange; (ii) authorized for quotation on an automated interdealer
quotation system of a registered national securities association; or (iii) held
of record by more than 2,000 stockholders; in all other cases, observance of the
provisions of this Section 1.10 shall be optional, and at the discretion of the
Corporation.
(b) Appointment. The Corporation shall, in advance of any meeting of
stockholders, appoint one or more inspectors of election to act at the meeting
and make a written report thereof. The Corporation may designate one
<PAGE> 3
or more persons as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting of stockholders,
the person presiding at the meeting shall appoint one or more inspectors to act
at the meeting.
(c) Inspector's Oath. Each inspector of election, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of his or her ability.
(d) Duties of Inspectors. At a meeting of stockholders, the
inspectors of election shall (i) ascertain the number of shares outstanding and
the voting power of each share, (ii) determine the shares represented at a
meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period of time a record of
the disposition of any challenges made to any determination by the inspectors,
and (v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.
(e) Opening and Closing of Polls. The date and time of the opening
and the closing of the polls for each matter upon which the stockholders will
vote at a meeting shall be announced by the inspectors at the meeting. No
ballot, proxies or votes, nor any revocations thereof or changes thereto, shall
be accepted by the inspectors after the closing of the polls unless the Court of
Chancery upon application by a stockholder shall determine otherwise.
(f) Determinations. In determining the validity and counting of
proxies and ballots, the inspectors shall be limited to an examination of the
proxies, any envelopes submitted with those proxies, any information provided in
connection with proxies in accordance with Section 212(c)(2) of the Delaware
General Corporation Law, ballots and the regular books and records of the
Corporation, except that the inspectors may consider other reliable information
for the limited purpose of reconciling proxies and ballots submitted by or on
behalf of banks, brokers, their nominees or similar persons which represent more
votes than the holder of a proxy is authorized by the record owner to cast or
more votes than the stockholder holds of record. If the inspectors consider
other reliable information for the limited purpose permitted herein, the
inspectors at the time they make their certification of their determinations
pursuant to this Section 1.11 shall specify the precise information considered
by them, including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
Section 1.11: Notice of Stockholder Business; Nominations.
(a) Annual Meeting of Stockholders.
(i) Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the stockholders at
an annual meeting of stockholders shall be made (A) pursuant to the notice of
such meeting, (B) by or at the direction of the Board of Directors or (C) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of the notice provided for in this Section 1.11, who is entitled to vote
at such meeting and who complies with the notice procedures set forth in this
Section 1.11.
(ii) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (C) of subparagraph
(a)(i) of this Section 1.11, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such other business
must otherwise be a proper matter for stockholder action; provided, however,
that the provisions of this subparagraph (a)(ii) and subparagraph (a)(iii) shall
not apply to (A) any stockholder holding at least twenty-five percent (25%) of
the outstanding Common Stock of the Corporation or (B) any stockholder that has
an agreement with the Corporation for the nomination of a person or persons for
election to the Board of Directors. To be timely, a stockholder's notice must be
delivered to the Secretary at the principal executive offices of the Corporation
not later than the close of business on the sixtieth (60th) day nor earlier than
the close of business on the ninetieth (90th) day prior to the first anniversary
of the preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is more than thirty (30) days before or more
than sixty (60) days after such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than the close of business on the
ninetieth (90th) day prior to such annual meeting and not later than the close
of business on the later of the sixtieth (60th) day prior to such annual meeting
or the close of business on the tenth (10th) day following the day on which
public announcement of the date of such meeting is first made by the
Corporation. Such
<PAGE> 4
stockholder's notice shall set forth: (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if elected; (b) as
to any other business that the stockholder proposes to bring before the meeting,
a brief description of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting and any material
interest in such business of such stockholder and the beneficial owner, if any,
on whose behalf the proposal is made; and (c) as to the stockholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (1) the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner, and (2) the class and
number of shares of the Corporation that are owned beneficially and held of
record by such stockholder and such beneficial owner.
(iii) Notwithstanding anything in the second sentence of
subparagraph (a)(ii) of this Section 1.11 to the contrary, in the event that the
number of directors to be elected to the Board of Directors of the Corporation
is increased and there is no public announcement by the Corporation naming all
of the nominees for director or specifying the size of the increased board of
directors at least seventy (70) days prior to the first anniversary of the
preceding year's annual meeting (or, if the annual meeting is held more than
thirty (30) days before or sixty (60) days after such anniversary date, at least
seventy (70) days prior to such annual meeting), a stockholder's notice required
by this Section 1.11 shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary of the Corporation at the principal executive office
of the Corporation not later than the close of business on the tenth (10th) day
following the day on which such public announcement is first made by the
Corporation.
(b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of such meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of such meeting (i) by or at the direction of the Board of
Directors, (ii) by a stockholder holding at least twenty-five percent (25%) of
the outstanding Common Stock of the Corporation or having an agreement with the
Corporation for the nomination of a person or persons for election to the Board
of Directors, (iii) provided that the Board of Directors, such holder of at
least twenty-five percent (25%) of the outstanding Common Stock of the
Corporation or such stockholder having such an agreement has determined that
directors shall be elected at such meeting, by any other stockholder of the
Corporation who is a stockholder of record at the time of giving of notice of
the special meeting, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 1.11. In the event
the Corporation, any holder of, twenty-five percent (25%) of the outstanding
Common Stock of the Corporation or any stockholder having an agreement with the
Corporation for the nomination of a person or persons for election to the Board
of Directors calls a special meeting of stockholders for the purpose of electing
one or more directors to the Board of Directors, any other stockholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by subparagraph (a)(ii) of this Section 1.11 shall
be delivered to the Secretary of the Corporation at the principal executive
offices of the Corporation not earlier than the ninetieth (90th) day prior to
such special meeting and not later than the close of business on the later of
the sixtieth (60th) day prior to such special meeting or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.
(c) General.
(i) Only such persons who are nominated in accordance with the
procedures set forth in this Section 1.11 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 1.11. Except as otherwise provided by law or these
bylaws, the chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the meeting
was made or proposed, as the case may be, in accordance with the procedures set
forth in this Section 1.11 and, if any proposed nomination or business is not in
compliance herewith, to declare that such defective proposal or nomination shall
be disregarded.
(ii) For purposes of this Section 1.11, the term "public
announcement" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service or
<PAGE> 5
in a document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section
1.11, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth herein. Nothing in this Section 1.11 shall be deemed to affect
any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1: Number; Qualifications. The Board of Directors shall consist
of one or more members. The initial number of directors shall be seven (7), and
thereafter shall be fixed from time to time by resolution of the Board of
Directors. No decrease in the authorized number of directors constituting the
Board of Directors shall shorten the term of any incumbent director. Directors
need not be stockholders of the Corporation.
Section 2.2: Election; Resignation; Removal; Vacancies. Each director
shall serve until his or her successor is elected and qualified, or until his or
her earlier resignation or removal. Any director may resign at any time upon
written notice to the Corporation. Any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors and any vacancy
occurring in the Board of Directors for any cause, and any newly created
directorship resulting from any increase in the authorized number of directors
to be elected by all stockholders having the right to vote as a single class,
may be filled by the stockholders, by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director.
Section 2.3: Regular Meetings. Regular meetings of the Board of Directors
may be held at such places, within or without the State of Delaware, and at such
times as the Board of Directors may from time to time determine. Notice of
regular meetings need not be given if the date, times and places thereof are
fixed by resolution of the Board of Directors.
Section 2.4: Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the Chief Executive Officer or a
majority of the members of the Board of Directors then in office and may be held
at any time, date or place, within or without the State of Delaware, as the
person or persons calling the meeting shall fix. Notice of the time, date and
place of such meeting shall be given, orally or in writing, by the person or
persons calling the meeting to all directors at least four (4) days before the
meeting if the notice is mailed, or at least twenty-four (24) hours before the
meeting if such notice is given by telephone, hand delivery, facsimile or
similar communication method. Unless otherwise indicated in the notice, any and
all business may be transacted at a special meeting.
Section 2.5: Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee of the Board, may participate in a meeting of the
Board or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to
conference telephone or similar communications equipment shall constitute
presence in person at such meeting.
Section 2.6: Quorum; Vote Required for Action. At all meetings of the
Board of Directors a majority of the total number of authorized directors shall
constitute a quorum for the transaction of business. Except as otherwise
provided herein or in the Certificate of Incorporation, or required by law, the
vote of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 2.7: Organization. Meetings of the Board of Directors shall be
presided over by the Chief Executive Officer, or in his or her absence by the
Chairman of the Board, or in his or her absence by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his or her
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 2.8: Written Action by Directors. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or such
<PAGE> 6
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee,
respectively.
Section 2.9: Powers. The Board of Directors may, except as otherwise
required by law or the Certificate of Incorporation, exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.
Section 2.10: Compensation of Directors. Directors, as such, may receive,
pursuant to a resolution of the Board of Directors, fees and other compensation
for their services as directors, including without limitation their services as
members of committees of the Board of Directors.
ARTICLE III
COMMITTEES
Section 3.1: Committees. The Board of Directors may, by resolution passed
by a majority of the total number of authorized directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of the committee, the member or members thereof present at any meeting of
such committee who are not disqualified from voting, whether or not he, she or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified
member. Any such committee, to the extent provided in a resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation and may authorize the seal of the Corporation to be affixed to all
papers that may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
as provided in subsection (a) of Section 151 of the Delaware General Corporation
Law, fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation, or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation, or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series), adopting an agreement of merger or consolidation under Sections 251
or 252 of the Delaware General Corporation Law, recommending to the stockholders
the sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution, or amending the Bylaws of the
Corporation; and unless the resolution of the Board of Directors expressly so
provides, no such committee shall have the power or authority to declare a
dividend, authorize the issuance of stock or adopt a certificate of ownership
and merger pursuant to section 253 of the Delaware General Corporation Law.
Section 3.2: Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these Bylaws.
ARTICLE IV
OFFICERS
Section 4.1: Generally. The officers of the Corporation shall consist of a
Chief Executive Officer and/or a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other officers, including a Chairman of the
Board of Directors, one or more Assistant Officers and/or Chief Financial
Officer, as may from time to time be appointed by the Board of Directors. All
officers shall be elected by the Board of Directors; provided, however, that the
Board of Directors may empower the Chief Executive Officer of the Corporation to
appoint officers other than the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer or the Treasurer. Each
officer shall hold office until his or her successor is elected and qualified or
until his or her earlier resignation or
<PAGE> 7
removal. Any number of offices may be held by the same person. Any officer may
resign at any time upon written notice to the Corporation. Any vacancy occurring
in any office of the Corporation by death, resignation, removal or otherwise may
be filled by the Board of Directors. The Chief Executive Officer may also give
one or more employees of the Corporation position titles that include "Vice
President" without making such persons officers of the Corporation.
Section 4.2: Chief Executive Officer. Subject to the control of the Board
of Directors and such supervisory powers, if any, as may be given by the Board
of Directors, the powers and duties of the Chief Executive Officer of the
Corporation are:
(a) To act as the general manager and, subject to the control of the
Board of Directors, to have general supervision, general management, direction
and control of the business and affairs of the Corporation and the general
supervision and direction of all of the officers, employees and agents of the
Corporation;
(b) To preside at all meetings of the stockholders and of the Board
of Directors;
(c) To call meetings of the stockholders and of the Board of
Directors to be held at such times and, subject to the limitations prescribed by
law or by these Bylaws, at such places as he or she shall deem proper; and
(d) To affix the signature of the Corporation to all deeds,
conveyances, mortgages, guarantees, leases, obligations, bonds, certificates and
other papers and instruments in writing which have been authorized by the Board
of Directors or which, in the judgment of the Chief Executive Officer, should be
executed on behalf of the Corporation; to sign certificates for shares of stock
of the Corporation; and, subject to the direction of the Board of Directors, to
have general charge of the property of the Corporation and to supervise and
control all officers, agents and employees of the Corporation.
Section 4.3: Chairman of the Board. The Chairman of the Board shall have
such powers and duties as provided in these bylaws and as the Board of Directors
may from time to time prescribe.
Section 4.4: President. The President shall be the Chief Executive Officer
of the Corporation unless the Board of Directors shall have designated another
officer as the Chief Executive Officer of the Corporation. Subject to the
provisions of these Bylaws and to the direction of the Board of Directors, and
subject to the supervisory powers of the Chief Executive Officer (if the Chief
Executive Officer is an officer other than the President), and subject to such
supervisory powers and authority as may be given by the Board of Directors to
the Chairman of the Board, and/or to any other officer, the President shall have
the responsibility for the general management and the control of the business
and affairs of the Corporation and the general supervision and direction of all
of the officers, employees and agents of the Corporation (other than the Chief
Executive Officer, if the Chief Executive Officer is an officer other than the
President) and shall perform all duties and have all powers that are commonly
incident to the officer of President or that are delegated to the President by
the Board of Directors.
Section 4.5: Vice President. Each Vice President shall have all such
powers and duties as are delegated to him or her by the Board of Directors or
the Chief Executive Officer. A Vice President may be designated by the Board to
perform the duties and exercise the powers of the Chief Executive Officer or the
President in the event of the Chief Executive Officer's or President's absence
or disability.
Section 4.6: Chief Financial Officer. Subject to the direction of the
Board of Directors, the Chief Executive Officer and the President, the Chief
Financial Officer shall perform all duties and have all powers that are commonly
incident to the office of chief financial officer.
Section 4.7: Treasurer. The Treasurer shall have custody of all monies and
securities of the Corporation. The Treasurer shall make such disbursements of
the funds of the Corporation as are authorized and shall render from time to
time an account of all such transactions. The Treasurer shall also perform such
other duties and have such other powers as are commonly incident to the office
of Treasurer, or as the Board of Directors, the Chief Executive Officer or the
President may from time to time prescribe.
Section 4.8: Secretary. The Secretary shall issue or cause to be issued
all authorized notices for, and shall keep,
<PAGE> 8
or cause to be kept, minutes of all meetings of the stockholders and the Board
of Directors. The Secretary shall have charge of the corporate minute books and
similar records and shall perform such other duties and have such other powers
as are commonly incident to the office of Secretary, or as the Board of
Directors, the Chief Executive Officer or the President may from time to time
prescribe.
Section 4.9: Assistant Officers. The Assistant Officers, which may include
one or more Assistant Secretaries and/or one or more Assistant Treasurers, in
general shall perform such duties as are customary or as shall be assigned to
them by resolution of the Board of Directors. If required by the Board of
Directors, the Assistant Treasurers shall respectively give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
Board of Directors shall determine.
Section 4.10: Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officers
or agents, notwithstanding any provision hereof.
Section 4.11: Removal. Any officer of the Corporation shall serve at the
pleasure of the Board of Directors and may be removed at any time, with or
without cause, by the Board of Directors. Such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation.
ARTICLE V
STOCK
Section 5.1: Certificates. Every holder of stock shall be entitled to have
a certificate signed by or in the name of the Corporation by the Chairman or
Vice-Chairman of the Board of Directors, or the President or a Vice President,
and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, of the Corporation, certifying the number of shares owned by such
stockholder in the Corporation. Any or all of the signatures on the certificate
may be a facsimile.
Section 5.2: Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the place
of any certificate previously issued by it, alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or such owner's legal representative, to agree to
indemnify the Corporation and/or to give the Corporation a bond sufficient to
indemnify it, against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
Section 5.3: Other Regulations. The issue, transfer, conversion and
registration of stock certificates shall be governed by such other regulations
as the Board of Directors may establish.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification of Officers and Directors. Each person who was
or is made a party to, or is threatened to be made a party to, or is involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he or she (or a
person of whom he or she is the legal representative), is or was a director or
officer of the Corporation or is or was serving at the request of the
Corporation as a director or officer of another corporation (including any
subsidiary of the Corporation), or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
shall be indemnified and held harmless by the Corporation to the fullest extent
permitted by the Delaware General Corporation Law, against all expenses,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes and penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of his or her heirs, executors and
administrators.
<PAGE> 9
Section 6.2: Advance of Expenses. The Corporation shall pay all expenses
(including attorneys' fees) incurred by such a director or officer in defending
any such proceeding as they are incurred in advance of its final disposition;
provided, however, that if the Delaware General Corporation Law then so
requires, the payment of such expenses incurred by such a director or officer in
advance of the final disposition of such proceeding shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be indemnified under
this Article VI or otherwise; and provided, further, that the Corporation shall
not be required to advance any expenses to a person against whom the Corporation
directly brings a claim, in a proceeding, alleging that such person has breached
his or her duty of loyalty to the Corporation, committed an act or omission not
in good faith or that involves intentional misconduct or a knowing violation of
law, or derived an improper personal benefit from a transaction.
Section 6.3: Non-Exclusivity of Rights. The rights conferred on any person
in this Article VI shall not be exclusive of any other right that such person
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaw, agreement, vote or consent of stockholders or
disinterested directors, or otherwise. Additionally, nothing in this Article VI
shall limit the ability of the Corporation, in its discretion, to indemnify or
advance expenses to persons whom the Corporation is not obligated to indemnify
or advance expenses pursuant to this Article VI.
Section 6.4: Indemnification Contracts. The Board of Directors is
authorized to cause the Corporation to enter into indemnification contracts with
any director, officer, employee or agent of the Corporation, or any person
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans, providing indemnification rights
to such person. Such rights may be greater than those provided in this Article
VI.
Section 6.5: Effect of Amendment. Any amendment, repeal or modification of
any provision of this Article VI shall be prospective only, and shall not
adversely affect any right or protection conferred on a person pursuant to this
Article VI and existing at the time of such amendment, repeal or modification.
ARTICLE VII
NOTICES
Section 7.1: Notice. Except as otherwise specifically provided herein or
required by law, all notices required to be given pursuant to these Bylaws shall
be in writing and may in every instance be effectively given by hand delivery
(including use of a delivery service), by depositing such notice in the mail,
postage prepaid, or by sending such notice by prepaid telegram, telex, overnight
express courier, mailgram or facsimile. Any such notice shall be addressed to
the person to whom notice is to be given at such person's address as it appears
on the records of the Corporation. Each notice of a special meeting of
stockholders or directors shall specify the business to be transacted and the
purpose of such meeting. The notice shall be deemed given (i) in the case of
hand delivery, when received by the person to whom notice is to be given or by
any person accepting such notice on behalf of such person, (ii) in the case of
delivery by mail, upon deposit in the mail, (iii) in the case of delivery by
overnight express courier, on the first business day after such notice is
dispatched, and (iv) in the case of delivery via facsimile, when dispatched.
Section 7.2: Waiver of Notice. Whenever notice is required to be given
under any provision of these Bylaws, a written waiver of notice, signed by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting at the beginning of the meeting to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice.
ARTICLE VIII
INTERESTED DIRECTORS
Section 8.1: Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more
<PAGE> 10
of its directors or officers, or between the Corporation and any other
corporation, partnership, association or other organization in which one or more
of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee thereof that authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if: (i) the material facts as to his, her or their relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; (ii) the material facts as to his, her or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders. Interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
ARTICLE IX
MISCELLANEOUS
Section 9.1: Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
Section 9.2: Seal. The Board of Directors may provide for a corporate
seal, which shall have the name of the Corporation inscribed thereon and shall
otherwise be in such form as may be approved from time to time by the Board of
Directors.
Section 9.3: Form of Records. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of account
and minute books, may be kept on, or be in the form of, magnetic tape,
diskettes, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
Section 9.4: Reliance Upon Books and Records. A member of the Board of
Directors, or a member of any committee designated by the Board of Directors
shall, in the performance of his or her duties, be fully protected in relying in
good faith upon records of the Corporation and upon such information, opinions,
reports or statements presented to the Corporation by any of the Corporation's
officers or employees, or committees of the Board of Directors, or by any other
person as to matters the member reasonably believes are within such other
person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation.
Section 9.5: Certificate of Incorporation Governs. In the event of any
conflict between the provisions of the Corporation's Certificate of
Incorporation and Bylaws, the provisions of the Certificate of Incorporation
shall govern.
Section 9.6: Severability. If any provision of these Bylaws shall be held
to be invalid, illegal, unenforceable or in conflict with the provisions of the
Corporation's Certificate of Incorporation, then such provision shall
nonetheless be enforced to the maximum extent possible consistent with such
holding and the remaining provisions of these Bylaws (including without
limitation, all portions of any section of these Bylaws containing any such
provision held to be invalid, illegal, unenforceable or in conflict with the
Certificate of Incorporation, that are not themselves invalid, illegal,
unenforceable or in conflict with the Certificate of Incorporation) shall remain
in full force and effect.
ARTICLE X
AMENDMENT
Section 10.1: Amendments. Stockholders of the Corporation holding a
majority of the Corporation's
<PAGE> 11
outstanding voting stock shall have the power to adopt, amend or repeal Bylaws.
To the extent provided in the Corporation's Certificate of Incorporation, the
Board of Directors of the Corporation shall also have the power to adopt, amend
or repeal Bylaws of the Corporation, except insofar as Bylaws adopted by the
stockholders shall otherwise provide.
<PAGE> 1
[NUMBER GRAPHIC] [SHARES GRAPHIC]
<TABLE>
<S> <C> <C>
COMMON STOCK EDGAR ONLINE, INC. CUSIP 279765 10 1
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS
</TABLE>
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE,
OF EDGAR ONLINE, INC.
(hereinafter called the "Corporation"), transferable on the books of the
Corporation by the holder hereof in person or by duly authorized attorney, upon
the 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 Certificate of Incorporation of the Corporation to all of
which the holder hereof by acceptance hereof assents.
This Certificate is not valid unless countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
/s/ Susan J. Strausberg [Edgar Online, Inc. /s/ Tom Vos
CHIEF EXECUTIVE OFFICER Corporate PRESIDENT AND
AND SECRETARY Seal CHIEF OPERATING OFFICER
Delaware
1995]
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, NY)
TRANSFER AGENT
BY
AUTHORIZED OFFICER
<PAGE> 2
EDGAR ONLINE, INC.
The Corporation will furnish without charge to each stockholder who so
requests a statement of the designations, powers, preferences and relative
participating, optional or other special rights of each class of stock or series
thereof of the Corporation 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, the undersigned hereby sells, assigns and transfers 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 capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
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.
Signature(s) Guaranteed:
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.
<PAGE> 1
LITTMAN KROOKS ROTH & BALL P.C.
655 Third Avenue
New York, New York 10017
May 7, 1999
EDGAR Online, Inc.
50 Washington Street
Norwalk, CT 06854
Re: Registration Statement on Form S-1
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 (File No.
333-75291) originally filed by EDGAR Online, Inc. (the "Company") with the
Securities and Exchange Commission (the "Commission") on March 30, 1999, as
thereafter amended or supplemented (the "Registration Statement"), in connection
with the registration under the Securities Act of 1933, as amended, of up to
3,450,000 shares of the Company's Common Stock (the "Shares"). The Shares, which
include an over-allotment option granted by certain stockholders of the Company
to the Underwriters to purchase up to 450,000 additional shares of the Company's
Common Stock, are to be sold to the Underwriters by certain stockholders of the
Company as described in the Registration Statement for resale to the public. As
your counsel in connection with this transaction, we have examined the
proceedings taken and are familiar with the proceedings proposed to be taken by
you in connection with the sale and issuance of the Shares.
It is our opinion that, upon completion of the proceedings being
taken or contemplated by us, as your counsel, to be taken prior to the issuance
of the Shares being sold by the Company and upon completion of the proceedings
being taken in order to permit such transactions to be carried out in accordance
with the securities laws of the various states where required, the Shares being
sold by the Company, when issued and sold in the manner described in the
Registration Statement and in accordance with the resolutions adopted by the
Board of Directors of the Company, will be legally and validly issued, fully
paid and non-assessable. The Shares being sold by the stockholders of the
Company have been validly issued, are non-assessable and, to our knowledge, are
fully paid.
Our opinion with respect to the shares being sold by the
stockholders of the Company being fully paid is based solely upon your written
representations to us with respect to the consideration received for such
Shares.
We consent to the use of this opinion as an exhibit to said
Registration Statement and further consent to the use of our name wherever
appearing in said Registration Statement, including the prospectus constituting
a part thereof, and in any amendment or supplement thereto.
By giving this consent, we do not concede that we come within the
categories of persons whose consent is required under the Act or the General
Rules and Regulations promulgated thereunder.
/s/ Littman Krooks Roth & Ball P.C.
------------------------------------
<PAGE> 1
EDGAR ONLINE, INC.
INDEMNITY AGREEMENT
This Indemnity Agreement (this "Agreement"), dated as of May 6, 1999, is
made by and between EDGAR Online, Inc., a Delaware corporation (the "Company"),
and _________________, a director and/or officer of the Company (the
"Indemnitee").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance and/or indemnification,
due to increased exposure to litigation costs and risks resulting from their
service to such corporations, and due to the fact that the exposure frequently
bears no reasonable relationship to the compensation of such directors and
officers;
B. Based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company, and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company contractually to
indemnify officers and directors and to assume for itself maximum liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company;
C. Section 145 of the General Corporation Law of the State of Delaware,
under which the Company is organized ("Section 145"), empowers the Company to
indemnify by agreement its officers, directors, employees and agents, and
persons who serve, at the request of the Company, as directors, officers,
employees or agents of other corporations or enterprises, and expressly provides
that the indemnification provided by Section 145 is not exclusive; and
D. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to the
Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS.
1.1 Agent. For the purposes of this Agreement, "agent" of the
Company means any person who is or was a director or officer of the Company or a
subsidiary of the Company; or is or was serving at the request of, for the
convenience of, or to represent the interest of the Company or a subsidiary of
the Company as a director or officer of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise or an affiliate of the
Company; or was a director or officer of a foreign or domestic corporation which
was a predecessor corporation of the Company. The term "enterprise" includes any
employee benefit plan of the Company, its subsidiaries, affiliates and
predecessor corporations.
1.2 Expenses. For purposes of this Agreement, "expenses" includes
all direct and indirect costs of any type or nature whatsoever (including,
without limitation, all attorneys' fees and related disbursements and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification or advancement of expenses
under this Agreement, Section 145 or otherwise; provided, however, that expenses
shall not include any judgments, fines, ERISA excise taxes or penalties or
amounts paid in settlement of a proceeding.
<PAGE> 2
1.3 Proceeding. For the purposes of this Agreement, "proceeding"
means any threatened, pending or completed action, suit or other proceeding,
whether civil, criminal, administrative, investigative or any other type
whatsoever.
1.4 Subsidiary. For purposes of this Agreement, "subsidiary" means
any corporation of which more than 50% of the outstanding voting securities is
owned directly or indirectly by the Company, by the Company and one or more of
its subsidiaries or by one or more of the Company's subsidiaries.
2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue to
serve as an agent of the Company, at the will of the Company (or under separate
agreement, if such agreement exists), in the capacity the Indemnitee currently
serves as an agent of the Company, faithfully and to the best of his ability, so
long as he is duly appointed or elected and qualified in accordance with the
applicable provisions of the charter documents of the Company or any subsidiary
of the Company; provided, however, that the Indemnitee may at any time and for
any reason resign from such position (subject to any contractual obligation that
the Indemnitee may have assumed apart from this Agreement), and the Company or
any subsidiary shall have no obligation under this Agreement to continue the
Indemnitee in any such position.
3. DIRECTORS' AND OFFICERS' INSURANCE. The Company shall, to the extent
that the Board determines it to be economically reasonable, maintain a policy of
directors' and officers' liability insurance ("D&O Insurance"), on such terms
and conditions as may be approved by the Board.
4. MANDATORY INDEMNIFICATION. Subject to Section 9 below, the Company
shall indemnify the Indemnitee:
4.1 Third Party Actions. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Company) by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
or penalties and amounts paid in settlement) actually and reasonably incurred by
him in connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; and
4.2 Derivative Actions. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding by or in the right
of the Company to procure a judgment in its favor by reason of the fact that he
is or was an agent of the Company, or by reason of anything done or not done by
him in any such capacity, against any amounts paid in settlement of any such
proceeding and all expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company; except that no
indemnification under this subsection shall be made in respect of any claim,
issue or matter as to which such person shall have been finally adjudged to be
liable to the Company by a court of competent jurisdiction due to willful
misconduct of a culpable nature in the performance of his duty to the Company,
unless and only to the extent that the Court of Chancery or the court in which
such proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such amounts which the
Court of Chancery or such other court shall deem proper; and
4.3 Exception for Amounts Covered by Insurance. Notwithstanding the
foregoing, the Company shall not be obligated to indemnify the Indemnitee for
expenses or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) to the extent such have been paid directly to the Indemnitee by D&O
Insurance.
5. PARTIAL INDEMNIFICATION AND CONTRIBUTION.
-2-
<PAGE> 3
5.1 Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) incurred by him in the investigation, defense, settlement or
appeal of a proceeding but is not entitled, however, to indemnification for all
of the total amount thereof, then the Company shall nevertheless indemnify the
Indemnitee for such total amount except as to the portion thereof to which the
Indemnitee is not entitled to indemnification.
5.2 Contribution. If the Indemnitee is not entitled to the
indemnification provided in Section 4 for any reason other than the statutory
limitations set forth in the Delaware General Corporation Law, then in respect
of any threatened, pending or completed proceeding in which the Company is
jointly liable with the Indemnitee (or would be if joined in such proceeding),
the Company shall contribute to the amount of expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred and paid or payable by the Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and the Indemnitee on the other hand from the transaction from which
such proceeding arose and (ii) the relative fault of the Company on the one hand
and of the Indemnitee on the other hand in connection with the events which
resulted in such expenses, judgments, fines or settlement amounts, as well as
any other relevant equitable considerations. The relative fault of the Company
on the one hand and of the Indemnitee on the other hand shall be determined by
reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such expenses, judgments, fines or settlement amounts. The Company
agrees that it would not be just and equitable if contribution pursuant to this
Section 5 were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.
6. MANDATORY ADVANCEMENT OF EXPENSES.
6.1 Advancement. Subject to Section 9 below, the Company shall
advance all expenses incurred by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the fact
that the Indemnitee is or was an agent of the Company or by reason of anything
done or not done by him in any such capacity. The Indemnitee hereby undertakes
to promptly repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Company under the provisions of this Agreement, the
Certificate of Incorporation or Bylaws of the Company, the General Corporation
Law of Delaware or otherwise. The advances to be made hereunder shall be paid by
the Company to the Indemnitee within thirty (30) days following delivery of a
written request therefor by the Indemnitee to the Company.
6.2 Exception. Notwithstanding the foregoing provisions of this
Section 6, the Company shall not be obligated to advance any expenses to the
Indemnitee arising from a lawsuit filed directly by the Company against the
Indemnitee if an absolute majority of the members of the Board reasonably
determines in good faith, within thirty (30) days of the Indemnitee's request to
be advanced expenses, that the facts known to them at the time such
determination is made demonstrate clearly and convincingly that the Indemnitee
acted in bad faith. If such a determination is made, the Indemnitee may have
such decision reviewed by another forum, in the manner set forth in Sections
8.3, 8.4 and 8.5 hereof, with all references therein to "indemnification" being
deemed to refer to "advancement of expenses," and the burden of proof shall be
on the Company to demonstrate clearly and convincingly that, based on the facts
known at the time, the Indemnitee acted in bad faith. The Company may not avail
itself of this Section 6.2 as to a given lawsuit if, at any time after the
occurrence of the activities or omissions that are the primary focus of the
lawsuit, the Company has undergone a change in control. For this purpose, a
change in control shall mean a given person or group of affiliated persons or
groups increasing their beneficial ownership interest in the Company by at least
twenty (20) percentage points without advance Board approval.
-3-
<PAGE> 4
7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.
7.1 Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
7.2 If, at the time of the receipt of a notice of the commencement
of a proceeding pursuant to Section 7.1 hereof, the Company has D&O Insurance in
effect, the Company shall give prompt notice of the commencement of such
proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such D&O Insurance policies.
7.3 In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee (which approval shall not be unreasonably withheld),
upon the delivery to the Indemnitee of written notice of its election to do so.
After delivery of such notice, approval of such counsel by the Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
the Indemnitee under this Agreement for any fees of counsel subsequently
incurred by the Indemnitee with respect to the same proceeding, provided that:
(a) the Indemnitee shall have the right to employ his own counsel in any such
proceeding at the Indemnitee's expense; (b) the Indemnitee shall have the right
to employ his own counsel in connection with any such proceeding, at the expense
of the Company, if such counsel serves in a review, observer, advice and
counseling capacity and does not otherwise materially control or participate in
the defense of such proceeding; and (c) if (i) the employment of counsel by the
Indemnitee has been previously authorized by the Company, (ii) the Indemnitee
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Indemnitee in the conduct of any such defense or (iii) the
Company shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of the Indemnitee's counsel shall be at
the expense of the Company.
8. DETERMINATION OF RIGHT TO INDEMNIFICATION.
8.1 To the extent the Indemnitee has been successful on the merits
or otherwise in defense of any proceeding referred to in Section 4.1 or 4.2 of
this Agreement or in the defense of any claim, issue or matter described
therein, the Company shall indemnify the Indemnitee against expenses actually
and reasonably incurred by him in connection with the investigation, defense or
appeal of such proceeding, or such claim, issue or matter, as the case may be.
-4-
<PAGE> 5
8.2 In the event that Section 8.1 is inapplicable, or does not apply
to the entire proceeding, the Company shall nonetheless indemnify the Indemnitee
unless the Company shall prove by clear and convincing evidence to a forum
listed in Section 8.3 below that the Indemnitee has not met the applicable
standard of conduct required to entitle the Indemnitee to such indemnification.
8.3 The Indemnitee shall be entitled to select the forum in which
the validity of the Company's claim under Section 8.2 hereof that the Indemnitee
is not entitled to indemnification will be heard from among the following,
except that the Indemnitee can select a forum consisting of the stockholders of
the Company only with the approval of the Company:
(a) A quorum of the Board consisting of directors who are not
parties to the proceeding for which indemnification is being sought;
(b) The stockholders of the Company;
(c) Legal counsel mutually agreed upon by the Indemnitee and
the Board, which counsel shall make such determination in a written opinion;
(d) A panel of three arbitrators, one of whom is selected by
the Company, another of whom is selected by the Indemnitee and the last of whom
is selected by the first two arbitrators so selected; or
(e) The Court of Chancery of Delaware or other court having
jurisdiction of subject matter and the parties.
8.4 As soon as practicable, and in no event later than thirty (30)
days after the forum has been selected pursuant to Section 8.3 above, the
Company shall, at its own expense, submit to the selected forum its claim that
the Indemnitee is not entitled to indemnification, and the Company shall act in
the utmost good faith to assure the Indemnitee a complete opportunity to defend
against such claim.
8.5 If the forum selected in accordance with Section 8.3 hereof is
not a court, then after the final decision of such forum is rendered, the
Company or the Indemnitee shall have the right to apply to the Court of Chancery
of Delaware, the court in which the proceeding giving rise to the Indemnitee's
claim for indemnification is or was pending or any other court of competent
jurisdiction, for the purpose of appealing the decision of such forum, provided
that such right is executed within sixty (60) days after the final decision of
such forum is rendered. If the forum selected in accordance with Section 8.3
hereof is a court, then the rights of the Company or the Indemnitee to appeal
any decision of such court shall be governed by the applicable laws and rules
governing appeals of the decision of such court.
8.6 Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 8 involving the Indemnitee and against all expenses incurred by the
Indemnitee in connection with any other proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the rights of the
Indemnitee under this Agreement unless a court of competent jurisdiction finds
that each of the material claims and/or defenses of the Indemnitee in any such
proceeding was frivolous or not made in good faith.
9. EXCEPTIONS. Any other provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:
9.1 Claims Initiated by Indemnitee. To indemnify or advance expenses
to the Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, except with respect to
proceedings specifically authorized by the Board or brought to establish or
enforce a right to indemnification and/or advancement of expenses arising under
this Agreement, the charter documents
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<PAGE> 6
of the Company or any subsidiary or any statute or law or otherwise, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board finds it to be appropriate; or
9.2 Unauthorized Settlements. To indemnify the Indemnitee hereunder
for any amounts paid in settlement of a proceeding unless the Company consents
in advance in writing to such settlement, which consent shall not be
unreasonably withheld; or
9.3 Securities Law Actions. To indemnify the Indemnitee on account
of any suit in which judgment is rendered against the Indemnitee for an
accounting of profits made from the purchase or sale by the Indemnitee of
securities of the Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; or
9.4 Unlawful Indemnification. To indemnify the Indemnitee if a final
decision by a court having jurisdiction in the matter shall determine that such
indemnification is not lawful. In this respect, the Company and the Indemnitee
have been advised that the Securities and Exchange Commission takes the position
that indemnification for liabilities arising under the federal securities laws
is against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for adjudication.
10. NON-EXCLUSIVITY. The provisions for indemnification and advancement of
expenses set forth in this Agreement shall not be deemed exclusive of any other
rights which the Indemnitee may have under any provision of law, the Company's
Certificate of Incorporation or Bylaws, the vote of the Company's stockholders
or disinterested directors, other agreements or otherwise, both as to action in
the Indemnitee's official capacity and to action in another capacity while
occupying his position as an agent of the Company, and the Indemnitee's rights
hereunder shall continue after the Indemnitee has ceased acting as an agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee.
11. GENERAL PROVISIONS
11.1 Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification and advancement of expenses to the Indemnitee to the fullest
extent now or hereafter permitted by law, except as expressly limited herein.
11.2 Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
then: (a) the validity, legality and enforceability of the remaining provisions
of this Agreement (including, without limitation, all portions of any paragraphs
of this Agreement containing any such provision held to be invalid, illegal or
unenforceable that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 11.1 hereof.
11.3 Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver.
11.4 Subrogation. In the event of full payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all documents required
and shall do all acts that may be necessary or desirable to secure such rights
and to enable the Company effectively to bring suit to enforce such rights.
11.5 Counterparts. This Agreement may be executed in one or more
counter-parts, which shall together constitute one agreement.
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11.6 Successors and Assigns. The terms of this Agreement shall bind,
and shall inure to the benefit of, the successors and assigns of the parties
hereto.
11.7 Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given: (a) if
delivered by hand and receipted for by the party addressee; or (b) if mailed by
certified or registered mail, with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on the
signature page of this Agreement or as subsequently modified by written notice.
11.8 Governing Law. This Agreement shall be governed exclusively by
and construed according to the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.
11.9 Consent to Jurisdiction. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Connecticut for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement.
11.10 Attorneys' Fees. In the event Indemnitee is required to bring
any action to enforce rights under this Agreement (including, without
limitation, the expenses of any Proceeding described in Section 3), the
Indemnitee shall be entitled to all reasonable fees and expenses in bringing and
pursuing such action, unless a court of competent jurisdiction finds each of the
material claims of the Indemnitee in any such action was frivolous and not made
in good faith.
IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity
Agreement effective as of the date first written above.
EDGAR ON LINE, INC. INDEMNITEE:
By: By:
Title:
Address: Address:
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EDGAR ONLINE, INC 1999 STOCK OPTION PLAN
1. GENERAL PROVISIONS
(a) PURPOSE
This 1999 Stock Option Plan ("Plan") is intended to promote the
interests of EDGAR Online, Inc., a Delaware corporation (the
"Corporation"), and its shareholders by providing individuals who
render valuable services to the Corporation (or any Parent or
Subsidiary, as defined below), on whose judgment, initiative, and
efforts the successful conduct of the business of the Corporation
depends, and who are responsible for the management, growth, and
protection of the business, with the opportunity to acquire
ownership interests, through the issuance of options to acquire
shares of the Common Stock (each, an "Option"), in the Corporation
so as to encourage them to continue in the employ of the Corporation
(or any Parent or Subsidiary) and to maximize their performance.
(b) TERMINOLOGY
For the purposes of this Plan, any capitalized term shall have the
meaning assigned under Section 3(h) hereof.
(c) ADMINISTRATION OF THE PLAN
(i) This Plan shall be administered either the Board or a
committee of two (2) or more Board members appointed by the
Board to which the Board has delegated administrative
functions under the Plan (the "Committee"). Members of any
committee to which the Board has delegated any administrative
functions shall serve for such terms as the Board shall
determine and subject to the Board's right of removal. All
delegations of authority to any committee shall be and remain
revocable by the Board.
(ii) The Committee shall have full power and authority to
implement, interpret and administer the Plan, to establish all
such rules and regulations as it deems appropriate, and to
make such determinations under the Plan and any outstanding
Option grants or share issuances as it deems necessary or
advisable. Decisions of the Committee shall be final and
binding on all parties who have an interest in the Plan or any
outstanding Option or share issuance.
(iii) The Committee shall have the absolute discretion and authority
to determine, subject to the provisions of this Plan, the
terms of any Option grant. In addition to
<PAGE> 2
any other matters over which the Committee has discretion
hereunder, the Committee shall determine which, if any,
eligible individuals will be granted Options in accordance
with the Plan. The Committee will determine the number of
shares to be covered by each such grant, the status of the
granted Option as either an Incentive Option or a
Non-Statutory Option, the time or times at which each granted
Option is to become exercisable, the vesting schedule (if any)
applicable to shares issued pursuant to the granted Options,
the performance goals to be attained in order for Options to
be granted and the maximum term for which the Option may
remain outstanding.
(iv) The Committee may, in its absolute discretion, without
amendment to the Plan, (i) accelerate the date on which any
Option granted under the Plan becomes exercisable or otherwise
adjust any of the terms of such Option (except that no such
adjustment shall, without the consent of an optionee, reduce
the optionee's rights under any previously granted and
outstanding Option) and (ii) otherwise adjust or waive any
condition imposed on any Option grant made hereunder.
(v) In addition, the Committee may, in its absolute discretion and
without amendment to the Plan, grant Options on the condition
that the optionee surrender to the Committee for cancellation
such other Options (including, without limitation, Options
with higher exercise prices) as the Committee specifies.
Notwithstanding Section 1 (e)(i) herein, prior to the
surrender of such other Options, Options granted pursuant to
the preceding sentence of this Section 1 (c)(v) shall not
count against the limit set forth in such Section 1(e)(i).
(vi) No member of the Committee shall be liable for any action,
omission or determination relating to the Plan, and the
Corporation (and any affiliate that may adopt the Plan),
jointly and severally, shall indemnify and hold harmless each
member of the Committee and each other director or employee of
the Corporation (or affiliate) to whom any duty or Power
relating to the administration or interpretation of the Plan
has been delegated against any cost or expense (including
counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee)
arising out of any action, omission or determination unless
such action, omission or determination was taken or made by
such member, director or employee in bad faith and without
reasonable belief that it was in the best interests of the
Corporation and its affiliates as the case may be.
(d) SELECTION OF OPTIONEES AND PARTICIPANTS
The persons eligible to receive issuances under the Plan are limited
to Employees, non-employee members of the Board of the Corporation
(or of any Parent or Subsidiary) and consultants and other
independent contractors who provide valuable services to the
Corporation (or of any Parent or Subsidiary).
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<PAGE> 3
(e) STOCK SUBJECT TO THE PLAN
(i) Common Stock of the Corporation will be issued under the Plan.
The maximum number of shares of Common Stock which may be
issued over the term of the Plan shall not exceed 600,000
shares, subject to adjustment from time to time in accordance
with the provisions of this Section 1.
(ii) Shares reserved for issuance under granted Options but not in
fact issued pursuant to Options granted under the Plan due to
the expiration or termination of the Options or the
cancellation of the Options in accordance with Section 2(h),
will again become available for issuance under the Plan.
(iii) In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock dividend, stock split,
combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without
receipt of consideration, then appropriate adjustments shall
be made to (i) the aggregate number and/or class of shares
issuable under the Plan and (ii) the aggregate number and/or
class of shares and the Option price per share in effect under
each outstanding Option in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined
by the Committee shall be final, binding and conclusive.
(f) AMENDMENT OF THE PLAN AND AWARDS
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever. However,
no such amendment or modification shall adversely affect the rights
and obligations of an optionee with respect to Options at the time
outstanding under the Plan, nor adversely affect the rights of any
issuee with respect to Common Stock issued under the Plan prior to
such action unless such issuee consents to such amendment. In
addition, the Board shall not, without the approval of the
Corporation's shareholders, amend the Plan so as to (i) increase the
maximum number of shares issuable under the Plan (except for
adjustments required under Section 1 (e)(iii)), (ii) materially
increase the benefits accruing to individuals who participate in the
Plan, or (iii) materially modify the eligibility requirements for
participation in the Plan. The Board may amend the Plan, subject to
the limitations cited above, in such manner as it deems necessary to
permit the granting of Options meeting the requirements of future
amendments or issued regulations, if any, to the Code or to the
Exchange Act.
(g) EFFECTIVE DATE AND TERM
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<PAGE> 4
(i) The Plan shall become effective when shareholder approval of
the Plan is obtained. Options may be granted, pursuant to the
terms of the Plan, from and after the effective date.
(ii) The Plan shall terminate upon the date on which all shares
available for issuance under the Plan have been issued
pursuant to the exercise of Options granted under Section 2.
The termination of the Plan shall have no effect on any shares
issued and outstanding under the Plan, and such shares shall
thereafter continue to have force and effect in accordance
with the provisions of the agreements evidencing such
issuances.
(h) NO EMPLOYMENT OR SERVICE RIGHTS
(i) No Special Employment Rights. Nothing contained in the Plan
shall confer upon any person any right with respect to the
continuation of his or her employment by or service with the
Corporation, Parent or a Subsidiary or interfere in any way
with the right of the Corporation, subject to the terms of any
separate employment or consulting agreement to the contrary,
at any time to terminate such employment or service or to
increase or decrease the compensation of the person from the
rate in existence at the time of the grant of an Option.
Nothing in the Plan shall interfere with or otherwise restrict
in any way the rights of the Corporation (or any Parent or
Subsidiary) to engage in any Corporate Transaction.
(ii) No Rights to Option. No person shall have any claim or right
to receive an Option hereunder. The Committee's granting of an
Option to an optionee at any time shall neither require the
Committee to grant an Option to such optionee or any other
optionee or other person at any time nor preclude the
Committee from making subsequent grants to such optionee or
any other optionee or other person.
2. OPTION GRANTS
(a) TERMS AND CONDITIONS OF OPTIONS
The Committee may grant Options pursuant to the Plan. Such Options
shall be evidenced by agreements in such form as the Committee shall
from time to time approve; provided, however, that each such
instrument shall comply with the terms and conditions of the
relevant parts of this Section 2. All Options granted under the Plan
shall be clearly identified in the agreement evidencing such Options
as either Incentive Options or as Non-Statutory Options or a
combination of both.
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<PAGE> 5
(b) OPTION EXERCISE PRICE.
The Option exercise price per share shall be fixed by the Committee,
subject to Section 2(g) in the case of Incentive Options. In the
case of Non-Statutory Options, such price per share shall not be
less than 85% of the Fair Market Value of a share of Common Stock.
(c) TERM AND EXERCISE OF OPTIONS.
Each Option granted under the Plan shall be exercisable at such time
or times, during such period, and for such number of shares as shall
be determined by the Committee and set forth in the stock Option
agreement evidencing such Option.
(d) OPTION EXERCISABLE IN WHOLE OR IN PART
Each Option shall be exercisable in whole or in part. The partial
exercise of an Option shall not cause the expiration, termination or
cancellation of the remaining portion thereof
(e) NO ASSIGNMENT.
During the lifetime of the optionee, the Option shall be exercisable
only by the optionee and shall not be assignable or transferable by
the optionee otherwise than by will or by the laws of descent and
distribution following the optionee's death or by the consent of the
Board.
(f) TERMINATION OF SERVICE.
The following provisions shall govern the exercise period applicable
to any Options held by the optionee at the time of cessation of
Service or death:
(i) Should the optionee cease to remain in Service for any reason
other than death or Permanent Disability, then the period
during which each outstanding Option held by such optionee, to
the extent otherwise exercisable, is to remain exercisable
shall be limited to the three (3) month period following the
date of such cessation of Service.
(ii) Should such Service terminate by reason of Permanent
Disability or should
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<PAGE> 6
the optionee die while holding one or more outstanding
Options, then the period during which each such Option to the
extent otherwise exercisable is to remain exercisable shall be
limited to the twelve (12) month period following the later of
date of the optionee's cessation of Service or death. During
the limited exercise period following the optionee's death,
the Option may be exercised by the personal representative of
the optionee's estate or by the person or persons to whom the
Option is transferred pursuant to the optionee's will or in
accordance with the laws of descent and distribution.
(iii) The Committee shall have full power and authority to extend
(either at the time the Option is granted or at any time while
the Option remains outstanding) the period of time for which
the Option is to remain exercisable following the optionee's
cessation of Service, from the limited period otherwise
applicable under Section 2(f), to such greater period of time
as the Committee may deem appropriate under the circumstances.
(iv) Notwithstanding the above no Option shall be exercisable after
the specified expiration date of the Option term.
(v) Each such Option shall, during the applicable limited exercise
period, be exercisable only with respect to the shares for
which the Option was exercisable on the date of the optionee's
cessation of Service.
(g) INCENTIVE OPTIONS
(i) The terms and conditions specified in this Section 2 shall be
applicable to Incentive Options granted under the Plan, except
to the extent such provisions are inconsistent with the
provisions this Section 2(g). Options which are specifically
designated as Non-Statutory Options when issued under the Plan
shall not be subject to such terms and conditions set forth
herein.
(ii) The exercise price of an Incentive Option shall be the Fair
Market Value of a share of Common Stock, subject to Section
2(g)(iii). The aggregate Fair Market Value of shares of
Corporation Stock with respect to which Incentive Options
granted hereunder are exercisable for the first time by an
optionee during any calendar year under the Plan and any other
stock Option plan of the Corporation (or any "subsidiary
corporation" of the Corporation within the meaning of Section
424 of the Code) shall not exceed $100,000. Such Fair Market
Value shall be determined as of the date on which each such
Incentive Option is granted. In the event that the aggregate
Fair Market Value of shares of Corporation Stock with respect
to such Incentive Options exceeds $100,000, then Incentive
Options granted hereunder to such optionee shall, to the
extent and in the order in which they were granted,
automatically be deemed to be Non-Statutory Options, but all
other terms and provisions of such Incentive
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<PAGE> 7
Options shall remain unchanged.
(iii) No Incentive Option may be granted to an individual if, at the
time of the proposed grant, such individual owns stock
possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation or any of its
"subsidiary corporations" (within the meaning of Section 424
of the Code), unless (I) the exercise price of such Incentive
Option is at least 110% of the Fair Market Value of a share of
Corporation Stock at the time such Incentive Option is granted
and (II) such Incentive Option is not exercisable after the
expiration of five years from the date such Incentive Option
is granted.
(iv) No Incentive Option may be granted to an individual if at the
time of the proposed grant, such individual is not an employee
of the Corporation.
(v) No Incentive Option may be granted after 10 years from the
date the Plan is adopted, or the date such plan is approved by
the shareholders, whichever is earlier.
(vi) No Incentive Option may be exercisable after the expiration of
10 years from the date such Incentive Option is granted.
(vii) An Incentive Option shall not be transferable by an optionee
otherwise than by will or the laws of descent and
distribution, and shall be exercisable during the optionee's
lifetime, only by such optionee.
(h) CANCELLATION AND NEW GRANT OF OPTIONS
The Committee shall have the authority to effect, at any time and
from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding Options under the Plan and
the grant in substitution therefor of new Options under the Plan
covering the same or a different numbers of shares of Common Stock
but having an Option price per share established at the time of such
cancellation and regrant in accordance with the provisions of this
Plan.
3. MISCELLANEOUS
(a) LOANS
(i) The Committee may assist any optionee in the exercise of one
or more Options granted to such optionee including the
satisfaction of any Federal and State income and employment
tax obligations arising therefrom, by (i) authorizing
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<PAGE> 8
the extension of a loan from the Corporation to such optionee,
or (ii) permitting the optionee to pay the Option price or
purchase price for the purchased Common Stock in installments
over a period of years.
(ii) The terms of any loan or installment method of payment
(including the interest rate, at no less than the applicable
federal rate as in effect from time to time, and terms of
repayment) shall be established by the Committee in its sole
discretion. Loans or installment payments shall be secured by
the purchased shares of Common Stock but otherwise may be
authorized with or without security or collateral. However,
any loan made to a consultant or other non-employee advisor
must be secured in addition by property other than the
purchased shares of Common Stock. In all events the maximum
credit available to each optionee may not exceed the sum of
(i) the aggregate Option price payable for the purchased
shares plus (ii) any Federal and State income and employment
tax liability incurred by the optionee in connection with such
exercise or purchase.
(b) VESTING OF SHARES AND REPURCHASE RIGHTS
(i) The Committee, in its absolute discretion, may issue fully and
immediately vested shares of Common Stock, or the Committee
may impose such vesting requirements as it deems appropriate
with the Corporation retaining a right to repurchase any
unvested shares. The terms of the vesting schedule and of the
Corporation's repurchase rights shall be as determined by the
Committee and set forth in the agreement governing such
issuance.
(ii) Any new, additional or different shares of stock or other
property (including money paid other than as a regular cash
dividend) which the holder of unvested Common Stock may have
the right to receive by reason of a stock dividend, stock
split, reclassification or other change affecting the
outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the
same vesting and repurchase limitations applicable to the
unvested Common Stock with respect to which it was paid or
arose, and (ii) such escrow arrangements as the Committee
shall deem appropriate.
(iii) No person to whom shares of Common Stock have been issued
pursuant to the Plan may transfer any such shares which have
not vested.
(c) MARKET STAND-OFF AGREEMENTS
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<PAGE> 9
The Committee may require each person to whom any shares are issued
under this Plan to enter into an agreement which restricts or
prohibits the sale of any stock of the Corporation by such person
for a reasonable period of time following a public offering of any
shares of stock by the Corporation.
(d) RIGHT OF FIRST REFUSAL
Until such time as the Corporation's outstanding shares of Common
Stock are first registered under Section 12(g) of the Exchange Act,
the Committee may subject any shares issued pursuant to the Plan to
a right of first refusal with respect to any proposed disposition of
such shares other than a transfer permitted by Section 2(e). Such
right of first refusal shall be exercisable by the Corporation (or
its assignees) in accordance with the terms and conditions specified
in the instrument governing the issuance of such shares.
(e) SECURITIES LAWS: LEGEND
(i) Options or Shares of Common Stock shall not be issued or
delivered under this Plan unless and until the Corporation
shall have determined that there has been full and adequate
compliance with all applicable requirements of the Federal and
state securities laws and all other applicable legal and
regulatory requirements. Without limiting the generality of
the above, and notwithstanding any other provision of the
Plan, the Plan shall at all time comply with the provisions of
Rule 16b-3 (including, without limitation, its plan amendment
provisions) promulgated under the Exchange Act, or any
successor rule ("Rule 16b-3") in the event Options are granted
to such persons as are required to file reports under Section
16(a) of the Exchange Act. In such cases, the Plan shall be
administered by (i) the Committee if the Committee may
administer the Plan in compliance with Rule 16b-3 with respect
to a plan intended to qualify thereunder as a discretionary
plan, or (ii) a committee designated by the Committee to
administer the Plan, which Committee shall be constituted in
such a manner as to permit the Plan to comply with Rule 1 6b-3
with respect to a plan intended to qualify thereunder as a
discretionary plan.
(ii) Shares issued under the Plan shall bear such legends as the
Committee deems necessary or appropriate, including such
restrictive legends as the Committee shall require to reflect
the terms of any agreement between the optionee and the
Corporation.
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<PAGE> 10
(f) SHAREHOLDER RIGHTS
(i) Subject to the rights of the Corporation set forth herein or
in any other agreement entered into between the Corporation
and an issuee of shares under the Plan, each person to whom
shares of Common Stock have been issued under the Plan shall
have all the rights of a shareholder with respect to those
shares whether or not his/her interest in such shares is
vested. Accordingly, the issuee shall have the right to vote
such shares and to receive any cash dividends or other
distributions paid or made with respect to such shares.
(ii) No person shall have any rights as a stockholder with respect
to any shares of Corporation Stock covered by or relating to
any Option granted pursuant to the Plan until the date the
person becomes the owner of record with respect to such
shares. Except as otherwise expressly provided in Section 1(e)
hereof, no adjustment to any Option shall be made for
dividends or other rights for which the record date occurs
prior to the date such stock certificate is issued.
(g) ACCELERATION
The Committee may, in its discretion, provide for the automatic
acceleration upon the occurrence of a Corporate Transaction at the
time of which any Option will become exercisable or for the lapse of
any repurchase right tied to vesting by including a provision to
such effect in the documents evidencing the rights of the optionee.
Every optionee under the Plan shall be entitled to ten (10) business
days' prior notice to the occurrence of any Corporate Transaction,
to the extent that the occurrence of any such Corporate Transaction
is within the Corporation's knowledge.
(8) DEFINITIONS
The following definitions shall be in effect under this Plan:
(i) BOARD shall mean the Board of Directors of the Corporation.
(ii) CODE shall mean the Internal Revenue Code of 1986, as amended.
(iii) COMMON STOCK shall mean the common stock of the Corporation.
(iv) CORPORATE TRANSACTION shall mean either of the following
stockholder- approved transactions to which the Corporation is a
party:
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<PAGE> 11
(1) any transaction or series of related transactions (including,
without limitation, any reorganization, merger or
consolidation) in which more than fifty percent (50%) of the
Corporation's outstanding voting stock is transferred to a
person or persons different from those who held the stock
immediately prior to such transaction, or
(2) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.
(v) EMPLOYEE shall mean an individual who is in the employ of the
Corporation or any Parent or Subsidiary, subject to the control and
direction of the employer entity as to both the work to be performed
and the manner and method of performance.
(vi) EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as
amended.
(vii) FAIR MARKET VALUE per share of Common Stock on any relevant date
under the Plan shall be the value determined in accordance with the
following provisions:
(1) If the Common Stock is not at the time listed or admitted to
trading on any Stock Exchange but is traded on the NASDAQ
National Market System, the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question, as the price is reported by the National Association
of Securities Dealers through the NASDAQ National Market
System or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(2) If the Common Stock is at the time listed or admitted to
trading on any Stock Exchange, then the Fair Market Value
shall be the closing selling price per share of Common Stock
on the date in question on he Stock Exchange determined by the
Committee to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling
price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(3) If the Common Stock is at the time neither listed nor admitted
to
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<PAGE> 12
trading on any Stock Exchange nor traded on the NASDAQ
National Market System, then such Fair Market Value shall be
determined by taking into account such factors as the
Committee shall deem appropriate.
(viii) INCENTIVE OPTION shall mean a stock Option which satisfies
the requirements of Section 422 of the Code.
(ix) NON-STATUTORY OPTION shall mean a stock Option not intended
to meet the requirements of Section 422 of the Code.
(x) PARENT shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with
the Corporation, provided each corporation in the unbroken
chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(xi) PERMANENT DISABILITY shall have the meaning assigned to such
term in Section 22(e)(3) of the Code.
(xii) SERVICE shall mean the provision of services to the
Corporation or any Parent or Subsidiary by an individual in
the capacity of an Employee, a non-employee member of the
Board or a consultant or independent contractor.
(xiii) SUBSIDIARY shall mean each corporation (other than the
Corporation) in an unbroken chain of corporations beginning
with the Corporation, provided each such corporation (other
than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
(i) USE OF PROCEEDS: EXPENSES
Any cash proceeds received by the Corporation from the issuance of
shares of Common Stock under the Plan shall be used for general
corporate purposes. The expenses of the Plan shall be paid by the
Corporation.
(j) WITHHOLDING
The Corporation's obligation to deliver shares upon the exercise of
any Options granted under hereunder shall be subject to the
satisfaction of all applicable Federal,
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State and local income and employment tax withholding requirements.
(k) REGULATORY APPROVALS
The implementation of the Plan, the granting of any Options and the
issuance of Common Stock upon the exercise of the Option grants made
hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the Options granted under it, and the
Common Stock issued pursuant to it.
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<PAGE> 14
EDGAR ONLINE, INC. STOCK OPTION AGREEMENT
RECITALS
The Board of Directors of EDGAR Online, Inc. (the "Corporation") has adopted the
EDGAR Online, Inc. 1999 Stock Option Plan (the "Plan") for the purpose of
attracting and retaining the services of persons who contribute to the growth
and financial success of the Corporation.
Optionee is a person who the Committee believes has and will contribute to the
growth and financial success of the Corporation and this Agreement is executed
pursuant to and is intended to carry out the purposes of the Plan.
AGREEMENT
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and conditions set forth in
this Agreement, the Corporation hereby grants to Optionee, as of the grant
date (the "Grant Date") specified in the accompanying Notice of Grant of
Stock Option (the "Grant Notice"), a stock option to purchase up to that
number of shares of the Corporation's Common Stock (the "Option Shares")
as is specified in the Grant Notice. The Option Shares shall be
purchasable from time to time during the option term at the option price
per share (the "Option Price") specified in the Grant Notice.
2. OPTION TERM. This option shall expire at the close of business on the
expiration date (the "Expiration Date") specified in the Grant Notice,
unless sooner terminated in accordance with Paragraph 5, 6 or 17.
3. LIMITED TRANSFERABILITY. During the lifetime of Optionee, this option
shall be exercisable only by Optionee and shall not be assignable or
transferable by the optionee otherwise than by will or by the laws of
descent and distribution following the optionee's death.
4. DATES OF EXERCISE. This option may be exercisable for the Option Shares in
one or more installments as is specified in the Grant Notice. As the
option becomes exercisable in one or more installments, the installments
shall accumulate and the option shall remain exercisable for such
installments until the Expiration Date or the sooner termination of
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the option term under Paragraph 5 or Paragraph 6 of this Agreement.
5. ACCELERATED TERMINATION OF OPTION TERM. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be
exercisable) prior to the Expiration Date should any of the following
provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason other than
death or permanent disability while this option is outstanding, then
the period for exercising this option, if it is otherwise
exercisable, shall be reduced to a three (3) month period commencing
with the date of such cessation of Service, but in no event shall
this option be exercisable at any time after the Expiration Date.
Upon the expiration of such three (3) month period or (if earlier)
upon the Expiration Date, this option shall terminate and cease to
be outstanding.
(b) Should Optionee die while this option is outstanding, then the
personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the law of descent and distribution shall
have the right to exercise this option. Such right shall lapse and
this option shall cease to be exercisable upon the earlier of (A)
the expiration of the twelve (12) month period measured from the
date of Optionee's death or (B) the Expiration Date. Upon the
expiration of such twelve (12) month period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be
outstanding.
(c) Should Optionee become permanently disabled and cease by reason
thereof to remain in Service while this option is outstanding, then
the Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of Service) during which to exercise
this option but in no event shall this option be exercisable at any
time after the Expiration Date. Optionee shall be deemed to be
permanently disabled if Optionee is unable to engage in any
substantial gainful activity for the Corporation or the parent or
subsidiary corporation retaining his/her services by reason of any
medically determinable physical or mental impairment, which can be
expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months.
Upon the expiration of such limited period of exercisability or (if
earlier) upon the Expiration Date, this option shall terminate and
cease to be outstanding.
(d) During the limited period of exercisability applicable under
subparagraph (a), (b) or (c) above, this option may be exercised for
any or all of the Option Shares for which this option is, at the
time of the Optionee's cessation of Service, exercisable in
accordance with the exercise schedule specified in the Grant Notice
and the provisions of Paragraph 6 of this Agreement.
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<PAGE> 16
(e) For purposes of this Paragraph 5 and for all other purposes under
this Agreement:
(i) The Optionee shall be deemed to remain in SERVICE for so long
as the Optionee continues to render periodic services to the
Corporation or any Parent or Subsidiary corporation, whether
as an Employee, a non-employee member of the board of
directors, or an independent contractor or consultant.
(ii) The Optionee shall be deemed to be an EMPLOYEE of the
Corporation and to continue in the Corporation's employ for so
long as the Optionee remains in the employ of the Corporation
or one or more of its Parent or Subsidiary corporations,
subject to the control and direction of the employer entity as
to both the work to be performed and the manner and method of
performance.
(iii) A corporation shall be considered to be a SUBSIDIARY
corporation of the Corporation if it is a member of an
unbroken chain of corporations beginning with the Corporation,
provided each such corporation in the chain (other than the
last corporation) owns, at the time of determination, stock
possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such
chain.
(iv) A corporation shall be considered to be a PARENT corporation
of the Corporation if it is a member of an unbroken chain
ending with the Corporation, provided each such corporation in
the chain (other than the Corporation) owns, at the time of
determination, stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the
other corporations in such chain.
6. SPECIAL TERMINATION OF OPTION.
(a) This Option, to the extent not previously exercised, shall terminate
and cease to be exercisable upon the consummation of one or more of
the following stockholder-approved transactions (a "Corporate
Transaction") unless this Option is expressly assumed by the
successor corporation or parent thereof:
(i) any transaction or series of related transactions (including,
without limitation, any reorganization or merger or
consolidation) in which more than 50% of the Corporation's
voting stock is transferred to a person or persons different
from those who held the stock immediately prior to such
transaction, or
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<PAGE> 17
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.
(b) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise make
changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
7. ADJUSTMENT IN OPTION SHARES
(a) In the event any change is made to the Corporation's outstanding
Common Stock by reason of any stock split, stock dividend,
combination of shares, exchange of shares, or other change affecting
the outstanding Common Stock as a class without receipt of
consideration, then appropriate adjustments shall be made to (i) the
total number of Option Shares subject to this option, (ii) the
number of Option Shares for which this option is to be exercisable
from and after each installment date specified in the Grant Notice
and (iii) the Option Price payable per share in order to reflect
such change and thereby preclude a dilution or enlargement of
benefits hereunder.
(b) If this option is to be assumed in connection with a Corporate
Transaction described in Paragraph 6 or is otherwise to remain
outstanding, then this option shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply and pertain
to the number and class of securities which would have been issuable
to the Optionee in the consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the
Option Price payable per share, provided the aggregate Option Price
payable hereunder shall remain the same.
8. PRIVILEGE OF STOCK OWNERSHIP. The holder of this option shall not have any
of the rights of a shareholder with respect to the Option Shares until
such individual shall have exercised the option and paid the Option Price.
9. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect to all or any part of
the Option Shares for which this option is at the time exercisable,
Optionee (or in the case of exercise after Optionee' 5 death, the
Optionee's executor, administrator, heir or legatee, as the case may
be) must take the following actions:
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<PAGE> 18
(i) Execute and deliver to the Secretary of the Corporation a
Stock Vesting and Repurchase Agreement (the "Repurchase
Agreement") in substantially the form of Exhibit B to the
Grant Notice.
(ii) Pay the aggregate Option Price for the purchased shares in one
or more forms approved under the Plan.
(iii) Furnish to the Corporation appropriate documentation that the
person or persons exercising the option, if other than
Optionee, have the right to exercise this option.
(b) Should the Corporation's outstanding Common Stock be registered
under Section 12(g) of the Securities Exchange Act of 1934, as
amended, at the time the option is exercised, then the Option Price
may also be paid as follows:
(i) in shares of Common Stock held by the Optionee and valued at
fair market value on the Exercise Date; or
(ii) through a special sale and remittance procedure pursuant to
which the Optionee is to provide irrevocable written
instructions (a) to a designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate
Option Price payable for the purchased shares plus all
applicable Federal and State income and employment taxes
required to be withheld by the Corporation by reason of such
purchase and (b) to the Corporation to deliver the
certificates for the purchased shares directly to such
brokerage firm in order to effect the sale transaction.
(c) For purposes of this Agreement, the Exercise Date shall be the date
on which the executed Repurchase Agreement shall have been delivered
to the Corporation, and the fair market value of a share of Common
Stock on any relevant date shall be determined in accordance with
subparagraphs (i) through (iii) below:
(i) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded on the NASDAQ
National Market System, the fair market value shall be the
closing selling price of one share of Common Stock on the date
in question, as such price is reported by the National
Association of Securities Dealers through its NASDAQ system or
any successor system. If there is no closing selling price for
the Common Stock on the date in question, then the closing
selling price on the last preceding date for which such
quotation exists shall be
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<PAGE> 19
determinative of fair market value.
(ii) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the fair market value
shall be the closing selling price per share of Common Stock
on the date in question on the stock exchange determined by
the Committee to be the primary market for the Common Stock,
as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of
Common Stock on such exchange on the date in question, then
the fair market value shall be the closing selling price on
the exchange on the last preceding date for which such
quotation exists.
(iii) If the Common Stock at the time is neither listed nor admitted
to trading on any stock exchange nor traded in the over-the-
counter market, or if the Committee determines that the value
determined pursuant to subparagraphs (i) and (ii) above does
not accurately reflect the fair market value of the Common
Stock, then such fair market value shall be determined by the
Committee after taking into account such factors as the
Committee shall deem appropriate.
(d) As soon after the Exercise Date as practical, the Corporation shall
mail or deliver to Optionee or to the other person or persons
exercising this option a certificate or certificates representing
the shares so purchased and paid for, with the appropriate legends
affixed thereto.
(e) In no event may this option be exercised for any fractional shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of Option Shares upon
such exercise shall be subject to compliance by the Corporation and
the Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange on
which shares of the Corporation's Common Stock may be listed at the
time of such exercise and issuance.
(b) In connection with the exercise of this option, Optionee shall
execute and deliver to the Corporation such representations in
writing as may be requested by the Corporation in order for it to
comply with the applicable requirements of Federal and State
securities laws.
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<PAGE> 20
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
Paragraph 3 or 6, the provisions of this Agreement shall inure to the
benefit of; and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of Optionee and the successors and
assigns of the Corporation.
12. NOTICES. Any notice required to be given or delivered to the Corporation
under the terms of this Agreement shall be in writing and addressed to the
Corporation in care of the Corporate Secretary at its principal corporate
offices. Any notice required to be given or delivered to Optionee shall be
in writing and addressed to Optionee at the address indicated below
Optionee's signature line on the Grant Notice. All notices shall be deemed
to have been given or delivered upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified.
13. LOANS. The Committee may, in its absolute discretion and without any
obligation to do so, assist the Optionee in the exercise of this option by
(i) authorizing the extension of a loan to the Optionee from the
Corporation or (ii) permitting the Optionee to pay the option price for
the purchased Common Stock in installments over a period of years. The
terms of any such loan or installment method of payment (including the
interest rate, the requirements for collateral and the terms of repayment)
shall be established by the Committee in its sole discretion.
14. CONSTRUCTION. This Agreement and the option evidenced hereby are made and
granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan. All decisions of
the Committee with respect to any question or issue arising under the Plan
or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
15. GOVERNING LAW. The interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of New York without
resort to that State's conflict-of-laws rules.
16. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE STOCK OPTION. In the event
this option is designated an Incentive Option in the Grant Notice, the
following terms and conditions shall also apply to the grant:
(a) This option shall cease to qualify for favorable tax treatment as an
Incentive Option under the Federal tax laws if (and to the extent)
this option is exercised for one or more Option Shares: (i) more
than three (3) months after the date the
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<PAGE> 21
Optionee ceases to be an Employee for any reason other than death or
permanent disability (as defined in Paragraph 5) or (ii) more than
one (1) year after the date the Optionee ceases to be an Employee by
reason of death or permanent disability.
(b) This option shall have a maximum term often (10) years measured from
the Grant Date.
(c) This option shall be neither transferable nor assignable by Optionee
other than by will or by the laws of descent and distribution
following Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee once.
(d) Should this option be designated as immediately exercisable in the
Grant Notice, then this option shall not become exercisable in the
calendar year in which granted if (and to the extent) the aggregate
fair market value (determined at the Grant Date) of the
Corporation's Common Stock for which this option would otherwise
first become exercisable in such calendar year would, when added to
the aggregate fair market value (determined as of the respective
date or dates of grant) of the Corporation's Common Stock for which
this option or one or more other Incentive Options granted to the
Optionee prior to the Grant Date (whether under the Plan or any
other option plan of the Corporation or its parent or subsidiary
corporations) first become exercisable during the same calendar
year, exceed One Hundred Thousand Dollars ($100,000) in the
aggregate. To the extent the exercisability of this option is
deferred by reason of the foregoing limitation, the deferred portion
will first become exercisable in the first calendar year or years
thereafter in which the One Hundred Thousand Dollar ($100,000)
limitation of this Paragraph 18.B would not be contravened.
(e) Should this option be designated as exercisable in installments in
the Grant Notice, then no installment under this option (whether
annual or monthly) shall qualify for favorable tax treatment as an
Incentive Option under the Federal tax laws if (and to the extent)
the aggregate fair market value (determined at the Grant Date) of
the Corporation's Common Stock for which such installment first
becomes exercisable hereunder will, when added to the aggregate fair
market value (determined as of the respective date or dates of
grant) of the Corporation's Common Stock for which one or more other
Incentive Options granted to the Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation
or any parent or subsidiary corporation) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars
($100,000) in the aggregate.
17. SECURITIES MATTERS.
(a) The Corporation shall be under no obligation to effect the
registration pursuant to
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any securities law of any interests in the Plan or any Option Shares
to be issued hereunder. Notwithstanding anything herein to the
contrary, the Corporation shall not be obligated to cause to be
issued or delivered any certificates evidencing shares of
Corporation Stock pursuant to the Plan unless and until the
Corporation is advised by its counsel that the issuance and delivery
of such certificates is in compliance with all applicable laws,
regulations of governmental authority, and the requirements of any
securities exchange on which shares of the Corporation may be
traded. The Committee may require, as a condition of the issuance
and delivery of certificates evidencing Option Shares that the
Optionee make such covenants, agreements, and representations, and
that such certificates bear such legends, as the Committee, in its
sole discretion, deems necessary or desirable.
(b) The exercise of the Option shall be effective only at such time as
counsel to the Corporation shall have determined that the issuance
and delivery of Option Shares pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental
authority, and the requirements of any securities exchange on which
shares of Corporation Stock are traded. The Committee may, in its
sole discretion, defer the effectiveness of any exercise of the
Option in order to allow the issuance of Option Shares to be made
pursuant to registration or an exemption from registration or other
methods for compliance available under federal or state securities
laws. The Committee shall inform the Optionee in writing of its
decision to defer the effectiveness of the exercise of the Option.
During the period that the effectiveness of the exercise of the
Option has been deferred, the Optionee may, by written notice,
withdraw such exercise and obtain a refund of any amount paid with
respect thereto.
(c) All Option Shares shall constitute "restricted securities" and may
not be transferred except in compliance with the registration
requirements of applicable law or an exemption therefrom.
(d) Certificates for Option Shares, when issued, may have substantially
the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately
transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER
HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE
DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER) THAT SUCH OFFER SALE, PLEDGE, TRANSFER
OR OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE
LAWS.
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<PAGE> 23
This legend shall not be required for Option Shares issued pursuant
to an effective registration statement in accordance with applicable
federal and state securities laws
18. WITHHOLDING. Optionee hereby agrees to make appropriate arrangements with
the Corporation or parent or subsidiary corporation employing Optionee for
the satisfaction of all Federal, State or local income tax withholding
requirements and Federal social security employee tax requirements
applicable to the exercise of this option.
EDGAR Online, Inc.
__________________________________
Name of Optionee
By: __________________________________ __________________________________
Name Signature
Title: ______________________________
Date: _____________ Date:_____________
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<PAGE> 24
EDGAR ONLINE, INC.
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following stock option grant (the "Option")
pursuant to the 1999 STOCK OPTION PLAN (the "Plan") to purchase shares of the
Common Stock of EDGAR ONLINE, INC. (the "Corporation"):
Optionee:
Grant Date:
Grant Number:
Option Exercise Price: $ per share
Number of Option Shares:
Vesting Schedule:
Expiration Date: 10 years from Grant Date.
Type of Option: _______ Incentive Option _______ Non-Statutory Stock Option
Optionee understands that the Option is granted pursuant to the Plan. By signing
below, Optionee agrees to be bound by the terms and conditions of the Plan and
the terms and conditions of the Option as set forth in the Stock Option
Agreement attached hereto as Exhibit A. Optionee understands that any Option
Shares purchased under the Option will be subject to the terms and conditions
set forth in the Stock Purchase Agreement attached hereto as Exhibit B.
Optionee hereby acknowledges receipt of a copy of the Plan in the form
attached hereto as Exhibit C.
REPURCHASE RIGHTS. THE OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED
UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO REPURCHASE RIGHTS AND RIGHTS
OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS UPON ANY
PROPOSED SALE, ASSIGNMENT, TRANSFER, ENCUMBRANCE OR OTHER DISPOSITION OF THE
CORPORATION'S SHARES. THE TERMS AND CONDITIONS OF SUCH RIGHTS ARE SPECIFIED IN
THE STOCK PURCHASE AGREEMENT.
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<PAGE> 25
Nothing in this Notice or in the Plan shall confer upon the Optionee any right
to continue in the Service of the Corporation for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation or the Optionee, which rights are hereby expressly reserved by each,
to terminate Optionee's Service at any time for any reason whatsoever, with or
without cause.
Date:
EDGAR ONLINE, INC.
By____________________________________
Title:
Optionee ______________________________________
SSN#: ____________
Address:
25
<PAGE> 1
Exhibit 10.04
EDGAR Online, Inc. 1999
OUTSIDE DIRECTORS STOCK OPTION PLAN
1. INTRODUCTION
1.01 PURPOSE. The purpose of the Plan (as defined below) is to foster and
promote the long-term financial success and other interests of the Company
(as defined below) and enhance shareholder value by enabling the Company
to attract and retain the continued services of outstanding outside
directors whose judgment, interest and special effort is essential to the
successful conduct of its operations by means of an opportunity to acquire
or increase their proprietary interests in the Company and thereby to
encourage their continued service as directors and to provide them
additional incentives to achieve the growth objectives of the Company.
1.02 NAME. This plan shall be known as the Edgar Online, Inc. 1999 Outside
Directors Stock Option Plan (the "PLAN").
1.03 EFFECTIVE DATE. The Plan shall be effective upon its approval by the
Company's shareholders at the Company's 1999 annual meeting. If the Plan
is approved by the shareholders, the first option grants will
automatically be made at the Board (as defined below) meeting immediately
following the 1999 annual meeting.
2. DEFINITIONS
For Plan purposes, except where the context clearly indicates otherwise, the
following terms shall have the meanings set forth below:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" shall have the meaning ascribed to such term in Section
4.01 hereof.
(d) "COMPANY" shall mean Edgar Online, Inc., a Delaware corporation, or
any successor thereto.
(e) "COMMON STOCK" shall mean the Company's Common Stock, par value $0.01
per share, and such other stock and securities as may be substituted therefor.
<PAGE> 2
(f) "DIRECTOR" shall mean any individual who is a member of the Board.
(g) "EXCHANGE ACT" Securities Exchange Act of 1934, as amended.
(h) "FAIR MARKET VALUE" per share of Common Stock on any relevant date under
the Plan shall be the value determined in accordance with the following
provisions:
(1) If the Common Stock is not at the time listed or admitted to trading
on any Stock Exchange but is traded on the NASDAQ National Market
System, the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as the price is
reported by the National Association of Securities Dealers through the
NASDAQ National Market System or any successor system. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(2) If the Common Stock is at the time listed or admitted to trading on
any Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Committee to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(3) If the Common Stock is at the time neither listed nor admitted to
trading on any Stock Exchange nor traded on the NASDAQ National Market
System, then such Fair Market Value shall be determined by taking into
account such factors as the Committee shall deem appropriate.
(i) "OPTION" shall mean any option under the Plan, none of which shall qualify
as an Incentive Stock Option within the meaning of Section 422 of the Code.
(j) "OPTION GRANT DATE" shall have the meaning ascribed to such term in Section
5.04 hereof.
(k) "OPTIONEE" shall mean any person who has been granted an Option.
(l) "OUTSIDE DIRECTOR" shall mean a Director who is not also an active
full-time employee of the Company or a corporation or other entity in which
the Company owns, directly or indirectly, a voting stock or voting equity
interest of more than fifty percent (50%).
(m) "PLAN" shall have the meaning ascribed to such term in Section 1.02 hereof
Page 2
<PAGE> 3
3. SHARES SUBJECT TO OPTION
3.01 AVAILABLE SHARES. The shares of Common Stock which shall be issued and
delivered upon exercise of Options may be either authorized and unissued
shares of Common Stock or authorized and issued shares of Common Stock held by
the Company as treasury stock. The number of shares of Common Stock reserved for
issuance under the Plan shall not exceed one hundred thousand (100,000). Any
shares of Common Stock subject to an Option which for any reason either
terminates unexercised or expires, shall again be available for issuance under
the Plan.
3.02 CHANGES IN COMMON STOCK. In the event of any stock dividend or stock
split, recapitalization (including, without limitation, the payment of an
extraordinary dividend), merger, consolidation, combination spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, the aggregate number of shares of Common Stock available for
issuance hereunder or subject to Options and the respective exercise prices of
outstanding Options may be appropriately adjusted by the Board without any
change in the aggregate purchase prices to be paid therefor; provided, however,
that any fractional shares resulting from any such adjustment shall be
disregarded.
3.03 RESERVATION OF SHARES. The Company, during the term of this Plan, will at
all times reserve and keep available, the number of shares of Common Stock as
shall be sufficient to satisfy the requirements of the Plan. If at any time
there are not sufficient available shares under the Plan to grant each Outside
Director an Option to purchase the number of shares provided above, each Outside
Director shall receive an option to purchase an equal number of the remaining
available shares, determined by dividing the remaining available shares by the
number of Outside Directors. Inability of the Company to obtain from any
regulatory body having jurisdictional authority deemed by the Company's counsel
to be necessary to the lawful issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the non-issuance or sale of
such Shares as to which such requisite authority shall not have been obtained.
4. ADMINISTRATION
4.01 GENERAL RULES. The Plan shall be administered by a committee (the
"COMMITTEE") which shall consist of all of the members of the Board who are not
Outside Directors and such Outside Directors who are not then participating in
the Plan. Members of the Committee shall not be eligible to participate in the
Plan while serving on the Committee. Subject to the provisions of the Plan, the
Committee shall have the power (a) to interpret and construe the provisions of
the Plan or any Option and such interpretation or construction shall be final
and binding; (b) accelerate the date on which any Option becomes exercisable and
(c) to make any other determinations regarding the Plan which are not otherwise
expressly provided herein. The Committee may prescribe, amend and rescind rules
and regulations relative to the Plan or its construction or interpretation. A
majority of the Committee shall constitute a quorum. All determinations of the
Committee shall be made by the vote of a
Page 3
<PAGE> 4
majority of its members; provided, however, that if there are fewer than three
(3) members of the Committee at any time, all determinations shall be a joint
determination of its members. Except as otherwise provided herein, the Committee
shall have no discretion to determine the number of Shares subject to Options,
the terms upon which, the time at which, or the period within which Shares may
be acquired or the Option may be acquired and exercised.
4.02 INDEMNIFICATION. Each person who is or shall have been a member of the
Committee shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting from any claim,
action, suit, or proceeding to which he may be a party or in which he may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to defend the same before he
undertakes to defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.
4.03 COMPLIANCE WITH LAW. It is intended that the Plan and its operations comply
with the provisions of Rule 16b-3 under the Exchange Act (or any successor
rule). If any provision of the Plan or any grant hereunder would disqualify the
Plan or such grant under, or would not comply with, Rule 16b-3 (or any
successor rule), such provision or grant shall be construed or deemed amended
to conform to Rule 16b-3.
4.04 APPLICATION OF FUNDS. The proceeds received by the Company from the sale
of Common Shares pursuant to options granted hereunder will be used for general
corporate purposes.
4.05 EXPENSES. The expenses of this Plan shall be borne by the Company.
5. STOCK OPTIONS
5.01 OPTION AGREEMENTS. Each Option shall be evidenced by a stock option
agreement between the Company and the Optionee which shall contain the terms and
conditions required by the Plan and such other terms and conditions, not
inconsistent herewith, as the Committee may deem appropriate in each case.
5.02 ELIGIBILITY AND PARTICIPATION. Only an Outside Director may participate in
the Plan. An Option shall not be granted to any Outside Director who at any
time during the preceding two year period was an employee of the Company or was
eligible to receive any options to purchase Common Stock.
Page 4
<PAGE> 5
5.03 OPTION GRANT SIZE AND GRANT DATE
(a) AUTOMATIC INITIAL GRANTS. Subject to Section 5.03(b), after the
Effective Date, each person who is appointed an Outside Director shall
automatically be granted an Option to purchase Seven Thousand Five
Hundred (7,500) shares of Common Stock.
(b) EXISTING OUTSIDE DIRECTORS. Each person who is an Outside Director on
the Effective Date shall not be eligible for a grant of any Option
until the date of the annual stockholders' meeting to be held in 2002.
(c) AUTOMATIC ADDITIONAL GRANTS. Each Outside Director who completes a
consecutive 3-year period of service as an Outside Director, measured
from the date of the previous Option grant hereunder, shall
automatically be granted an additional Option to purchase Seven
Thousand Five Hundred (7,500) shares of Common Stock.
(d) VESTING. Each Option granted hereunder shall vest, and thereby become
exercisable, in three (3) equal annual installments on each one-year
anniversary of the date on which such Option is granted; provided,
however, that for each such installment to vest the Optionee shall then
be serving as an Outside Director on the vesting date for such
installment.
5.04 TIME OF GRANTING OPTIONS. The date of grant of an Option (the "OPTION GRANT
DATE") shall, for all purposes, be the date on which the Outside Director
becomes a member of the Board.
5.05 EXERCISE PRICE. The price at which each share of Common Stock covered by
an Option may be purchased shall be one hundred percent (100%) of the Fair
Market Value of the Common Stock on the Option Grant Date.
5.06 PERIOD FOR EXERCISE OF OPTIONS. All rights to exercise an Option shall
terminate upon the earlier of (a) ten (10) years from the Option Grant
Date, or (b) as set forth in Section 5.10.
5.07 METHOD OF EXERCISE. Each Option may be exercised in whole or in part from
time to time as specified in the stock option agreement. Each Optionee may
exercise an Option by giving written notice of the exercise to the Company,
specifying the number of shares to be purchased, accompanied by payment in
full of the exercise price therefor. The exercise price may be paid in cash
or by check. The Committee also may allow cashless exercise or payment by
any other means which the Committee determines to be consistent with the
Plan's purpose and applicable law. No Optionee shall be under any
obligation to exercise any Option.
<PAGE> 6
5.08 NO RIGHTS AS SHAREHOLDER. An Optionee shall not have any rights as a
shareholder with respect to the shares covered by an Option until such
shares have been delivered to him.
5.09 NO RIGHT TO CONTINUE AS AN OUTSIDE DIRECTOR. Neither the Plan, nor the
granting of an Option nor any other action taken pursuant to the Plan,
shall constitute or be evidence of any agreement or understanding, express
or implied, that the Company will retain a director for any period of
time.
5.10 CEASING TO BE A DIRECTOR
(a) TERMINATION. If an Outside Director terminates service as an Outside
Director for any reason other than those set forth in clauses (b) and
(c) below, any vested Options held by such Outside Director at the
time of such termination shall lapse and expire 90 days after the date
of such termination and any unvested Options shall lapse and expire on
the date of such termination.
(b) DEATH. If an Outside Director's service as an Outside Director is
terminated by death, the representative of such Outside Director's
estate or beneficiaries thereof to whom the Option has been
transferred shall have the right during the period commencing on the
date of Outside Director's death and ending one (1) year thereafter to
exercise any then-outstanding Options in whole or in part.
(c) TERMINATION FOR CAUSE. If an Outside Director's service as an Outside
Director is terminated for cause, all vested and unvested Options held
by him at the time of such termination for cause shall lapse and
expire immediately upon such termination.
6. GENERAL
6.01 NONTRANSFERABILITY. No Option shall be transferable or assignable except
by last will and testament or the laws of descent and distribution;
provided, however, that the Committee may, in its discretion, grant
Options that are transferable to family members of the Optionee or to
trusts or partnerships for such family members. The Committee may also
amend outstanding Options to provide for such transferability.
6.02 GENERAL RESTRICTION. Each Option shall be subject to the requirement that
if at any time the Board shall determine, in its discretion, that the
listing, registration, or qualification of securities upon any securities
exchange or under any state or federal law, or the consent or approval of
any government regulatory body, is necessary or desirable as a condition
of, or in connection with, the granting of such Option or the issue or
purchase of securities thereunder, such Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions
not acceptable to the Board.
<PAGE> 7
6.03 EXPIRATION AND TERMINATION OF THE PLAN. Options may be granted under the
Plan at any time and from time to time, prior to April 30, 2009, the date
on which the Plan will expire, except as to Options then outstanding, which
shall remain in effect until they have been exercised or have expired. The
Plan may be abandoned or terminated at any time by the Board, without
further approval of the stockholders, except with respect to any Options
then outstanding.
6.04 AMENDMENT OR MODIFICATION AND TERMINATION. With approval of the Board but
not of the shareholders of the Company, at any time and from time to time,
the Committee may amend, or modify the Plan. However, no such amendment or
modification of the Plan may be made without the approval of the
shareholders of the Company, if such approval is required by the Code, the
Exchange Act, any national securities exchange or system on which the
Common Stock is then listed or reported or a regulatory body having
jurisdiction with respect thereto. No amendment, or modification of the
Plan shall in any material manner adversely affect any Option previously
granted, without the written consent of the Optionee holding such Option.
6.05 WITHHOLDING TAXES. The Company shall have the power and the right to deduct
or withhold, or require a Optionee to remit to the Company, an amount
sufficient to satisfy any federal, state and local taxes required by law to
be withheld with respect to any grant, exercise, or payment made under or
as a result of the Plan. With respect to tax withholding which may be
required upon the exercise of Options, Optionees may elect, subject to the
approval of the Committee, to satisfy such withholding requirement, in
whole or in part, by having the Company withhold shares of Common Stock
having a Fair Market Value on the date the tax is to be determined, equal
to the minimum marginal total tax which could be imposed on the
transaction. All elections shall be irrevocable, made in writing and signed
by the Optionee.
6.06 GOVERNING LAW. Except as otherwise required by applicable federal laws, the
Plan shall be governed by, and construed in accordance with, the laws of
the state of Delaware.
6.07 SUCCESSORS. All obligations of the Company under the Plan shall be binding
on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business and/or assets of the
Company.
6.08 GENDER AND NUMBER. Except when otherwise indicated by the context, words in
the masculine gender used in the Plan shall include the feminine gender,
the singular shall include the plural, and the plural shall include the
singular.
6.09 HEADINGS. The headings contained herein are for the purpose of convenience
only and are not intended to define or limit the contents of the Plan.
<PAGE> 1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of the 6th day of May
1999 (the "Effective Date"), between EDGAR Online, Inc. with its principal
office at 50 Washington Street, Norwalk, Connecticut ("Company"), and Marc
Strausberg having an address at 196 Haviland Court, Stamford, Connecticut 06903
("Employee").
W I T N E S S E T H:
WHEREAS, the Company operates an Internet financial information business;
and
WHEREAS, the Company and the Employee entered into an employment agreement
dated as of January 1, 1996 (the "Original Agreement"); and
WHEREAS, the Company and the Employee desire to amend certain provisions
of the employment agreement by entering into an amended and restated employment
agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Employment. The Company shall employ the Employee and the Employee
shall serve the Company, upon the terms and conditions hereinafter set forth.
2. Term. The term of the Employee's employment shall commence on the
Effective Date and unless terminated earlier or extended as provided below,
shall continue for a period of five years from the Effective Date (the
"Employment Term"). Upon the expiration of the initial employment term and on
each anniversary date thereafter, the employment of Employee shall be renewed
and extended for an additional year unless either party provides written notice
to the other party, of his or its, as the case may be, desire to terminate this
Agreement at least thirty (30) days prior to the renewal date.
Page 1 of 12
<PAGE> 2
3. Duties. During the Employment Term, the Employee shall have such
duties, functions, authority and responsibilities normally associated with the
positions and offices of Chairman of the Board of Directors and Chief
Information Officer. During the Employment Term, the Employee shall devote his
full attention and business time to the business and affairs of the Company and
the Employee will use his best efforts to perform faithfully and efficiently,
and to discharge, the Employee's responsibilities and duties under this
Agreement. Notwithstanding the foregoing, the Employee may devote such time to
manage his personal affairs and to serve on community, corporate, civic,
professional or charitable boards or committees, so long as such activities do
not unreasonably interfere with the performance of the Employee's duties and
responsibilities under this Agreement.
4. Compensation and Employee Benefits.
(a) The Employee's base salary during the initial term of employment
shall be no less than $150,000 commencing on the Effective Date payable in
accordance with the Company's payroll practices as in effect from time to time.
The Employee's base salary will be reviewed annually by the Company's Board of
Directors (the "Board") to determine whether an increase is warranted or
appropriate. The Employee also will be entitled to be considered for awards each
year under the Company's then existing incentive compensation program, which may
take into account individual and Company-wide performance, or such other
performance criteria as the Board may from time to time apply.
(b) The Employee hereby waives any and all rights that he may have
had to annual salary increases for years 1997, 1998 and 1999 under the terms and
conditions of the Original Agreement. The Company agrees to pay the Employee all
salary previously deferred at the earlier of (i) the demand by the Employee
which can be made at any time following the first
Page 2 of 12
<PAGE> 3
anniversary of the Effective Date and (ii) the closing date of the initial
public offering of the Company's common stock.
5. Benefits. During the Employment Term, the Employee shall have the right
to participate in such health and disability insurance plans which the Company
may provide to its senior executive officers and for which the Employee is
eligible, the premiums of which shall be paid by the Company (e.g., long term
disability, life insurance and medical insurance for the Employee and his
dependents). During the Employment term, the Employee will be entitled four
weeks of paid vacation in accordance with the Company's policy. Such vacation
may be taken in the Employee's discretion with the prior approval of the
Company, and at such time or times as are not inconsistent with the reasonable
business needs of the Company.
6. Business Expenses. All reasonable travel, entertainment and other
expenses incident to the performance of the Employee's duties or the rendering
of services incurred on behalf of the Company by the Employee during the
Employment Term shall be paid by the Company.
7. Termination. Notwithstanding the provisions of Section 2 hereof, the
Employee's employment with the Company may be earlier terminated as follows:
(a) By action taken by the Board, the Employee may be discharged for
cause (as defined below), effective as of such time as the Board shall
determine. Upon discharge of the Employee pursuant to this Section 7(a), the
Company shall have no further obligation or duties to the Employee, except for
payment of (i) the deferred salary amount discussed in Section 4(b) hereof and
(ii) accrued salary, bonus and benefits payable to the Employee through the date
of termination of employment, and the Employee shall have no further obligations
or duties to the Company, except as provided in Section 8.
Page 3 of 12
<PAGE> 4
(b) In the event of (i) the death of the Employee or (ii) by action
of the Board in the event of the inability of the Employee, by reason of
physical or mental disability, to continue substantially to perform his duties
hereunder for an aggregate period of 180 days during the Employment Term, during
which 180 day period salary and any other benefits hereunder shall not be
suspended or diminished. Upon any termination of the Employee's employment under
this Section 7(b), the Company shall have no further obligations or duties to
the Employee, except for payment of (i) the deferred salary amount discussed in
Section 4(b) hereof and (ii) accrued salary, bonus and benefits payable to the
Employee through the date of termination of employment, and the Employee shall
have no further obligations or duties to the Company, except as provided in
Section 8.
(c) In the event that there is a change of control of the Company
(as defined below), and the Agreement is terminated by either the Employee or
the Company for whatever reason within one year of such a change of control, the
Company shall pay to the Employee, in addition to the payment of (i) the
deferred salary amount discussed in Section 4(b) hereof and (ii) accrued salary,
bonus and benefits payable to the Employee through the date of termination of
employment, a severance payment from the Company equal to the product of 2.99
times the sum of (x) the Employee's then applicable annual base salary and (y)
the average of the last two year's cash bonuses paid by the Company to the
Employee. In addition, all stock options and other awards under the Company's
stock option plans shall immediately vest and remain exercisable for the a
period of the lesser of (i) the original term of the stock option and (ii) five
years.
(d) For purposes of this Agreement, the Company shall have "cause"
to terminate the Employee's employment under this Agreement upon (i) the failure
by the Employee to substantially perform his duties under this Agreement, (ii)
the engaging by the
Page 4 of 12
<PAGE> 5
Employee in criminal misconduct (including embezzlement and criminal fraud)
which is materially injurious to the Company, monetarily or otherwise, (iii) the
conviction of the Employee of a felony, or (iv) gross negligence on the part of
the Employee. The Company shall give written notice to the Employee, which
notice shall specify the grounds for the proposed termination and the Employee
shall be given thirty (30) days to cure if the grounds arise under clauses (i)
or (iv) above.
(e) For purposes of this Agreement, a "change of control of the
Company" shall mean the occurrence of (i) the acquisition by an individual,
entity, or group of the beneficial ownership of 50% or more (other than by Marc
and Susan Strausberg and their affiliates) of (1) the outstanding common stock,
or (2) the combined voting power of the Company's voting securities; provided,
however, that the following acquisitions will not constitute a "change of
control": (x) any acquisition by any employee benefit plan of the Company or any
affiliate or (y) any acquisition by any corporation if, immediately following
such acquisition, more than 50% of the outstanding common stock and the
outstanding voting securities of such corporation is beneficially owned by all
or substantially all of those who, immediately prior to such acquisition, were
the beneficial owners of the common stock and the Company's voting securities
(in substantially similar proportions as their ownership of such Company
securities immediately prior thereto); or (ii) the approval by the Company's
stockholders of a reorganization, merger or consolidation, other than one with
respect to which all or substantially all of those who were the beneficial
owners, immediately prior to such reorganization, merger or consolidation, of
the Common Stock and the Company's voting securities beneficially own,
immediately after such transaction, more than 50% of the outstanding common
stock and voting securities of the corporation resulting from such transaction
(in substantially the same proportions as their
Page 5 of 12
<PAGE> 6
ownership, immediately prior thereto, of the Common Stock and the Company's
voting securities); or (iii) the approval by the Company's stockholders of the
sale or other disposition of all or substantially all of the assets of the
Company, other than to a subsidiary of the Company
8. Confidentiality; Noncompetition.
(a) The Company and the Employee acknowledge that the services to be
performed by the Employee under this Agreement are unique and extraordinary and,
as a result of such employment, the Employee will be in possession of
confidential information relating to the business practices of the Company. The
term "confidential information" shall mean any and all information (oral or
written) relating to the Company or any of its affiliates, or any of their
respective activities, other than such information which can be shown by the
Employee to be in the public domain (such information not being deemed to be in
the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 8(a), including, but not limited to, information
relating to: trade secrets, proprietary information, personnel lists, financial
information, research projects, services used, pricing, customers, customer
lists and prospects, product sourcing, marketing and selling and servicing. The
Employee agrees that he will not, during his employment or subsequent to the
termination of employment, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any confidential information
regarding the clients, customers or business practices of the Company acquired
by the Employee during his employment by Company, without the prior written
consent of Company; provided, however, that the Employee understands that
Employee will be prohibited from misappropriating any trade secret at any time
during or after the termination of employment. At no time during the Employment
Term, or thereafter shall the Employee directly
Page 6 of 12
<PAGE> 7
or indirectly, disparage the commercial, business or financial reputation of the
Company.
(b) In consideration of Company's hiring Employee, the payment by
the Company to the Employee as described below and for other good and valuable
consideration, the Employee hereby agrees that he shall not, during the
Employment Term and for a period of one (1) year following such employment (the
"Restrictive Period"), directly or indirectly, take any action which constitutes
an interference with or a disruption of any of the Company's business
activities.
(c) For purposes of clarification, but not of limitation, the
Employee hereby acknowledges and agrees that the provisions of subparagraph 8(b)
above shall serve as a prohibition against him, during the Restrictive Period :
(1) directly or indirectly, contacting, soliciting or
directing any person, firm, or corporation to contact or solicit,
any of the Company's customers, prospective customers, or business
partners for the purpose of selling or attempting to sell, any
products and/or services that are the same as or similar to the
products and services provided by the Company to its customers
during the Restrictive Period. In addition, the Employee will not
disclose the identity of any such business partners, customers, or
prospective customers, or any part thereof, to any person, firm,
corporation, association, or other entity for any reason or purpose
whatsoever; and
(2) directly or indirectly, engaging or carrying on in any
manner (including, without limitation, as principal, shareholder,
partner, lender, agent, employee, consultant, or investor (other
than a passive investor with less than a five percent (5%) interest)
trustee or through the agency of any corporation,
Page 7 of 12
<PAGE> 8
partnership, limited liability company, or association) in any
business that is in competition with the engaged in any business in
competition with the business of the Company; and
(3) soliciting on his own behalf or on behalf of any other
person, the services of any person who is an employee of the
Employer, and soliciting any of the Employer's employees to
terminate employment with the Employer.
(d) Upon the termination of the Employee's employment for any reason
whatsoever, all documents, records, notebooks, equipment, price lists,
specifications, programs, customer and prospective customer lists and other
materials which refer or relate to any aspect of the business of the Company
which are in the possession or under the control of the Employee including all
copies thereof, shall be promptly returned to the Company.
(e) The parties hereto hereby acknowledge and agree that (i) the
Company would be irreparably injured in the event of a breach by the Employee of
any of his obligations under this Section 8, (ii) monetary damages would not be
an adequate remedy for any such breach, and (iii) the Company shall be entitled
to injunctive relief, in addition to any other remedy which it may have, in the
event of any such breach.
(f) The rights and remedies enumerated in Section 8(e) shall be
independent of the other, and shall be enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
(g) If any provision contained in this Section 8 is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
Page 8 of 12
<PAGE> 9
(h) If any provision contained in this Section 8 is found to be
unenforceable by reason of the extent, duration or scope thereof, or otherwise,
then the court making such determination shall have the right to reduce such
extent, duration, scope or other provision and in its reduced form any such
restriction shall thereafter be enforceable as contemplated hereby.
(i) It is the intent of the parties hereto that the covenants
contained in this Section 8 shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is
sought (the Employee hereby acknowledging that said restrictions are reasonably
necessary for the protection of the Company). Accordingly, it is hereby agreed
that if any of the provisions of this Section 8 shall be adjudicated to be
invalid or unenforceable for any reason whatsoever, said provision shall be
(only with respect to the operation thereof in the particular jurisdiction in
which such adjudication is made) construed by limiting and reducing it so as to
be enforceable to the extent permissible, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of said
provision in any other jurisdiction.
9. Prior Agreements. This Agreement cancels and supersedes any and all
prior agreements and understandings between the parties hereto respecting the
employment of Employee by the Company, including, without limitation, the
Original Agreement.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, to the other party
hereto at his or its address as set forth in the beginning of this Agreement.
Either party may change the address to which notices, requests, demands and
other communications hereunder shall be sent by sending written notice of such
change of address to
Page 9 of 12
<PAGE> 10
the other party in the manner above provided.
11. Assignability and Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the executors, administrators, successors
and legal representatives of Employee and shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Employee may not
delegate or assign his duties or rights under this Agreement.
12. Waiver. Waiver by either party hereto of any breach or default by the
other party in respect of any of the terms and conditions of this Agreement
shall not operate as a waiver of any other breach or default, whether similar to
or different from the breach or default waived.
13. Complete Understanding: Amendment and Termination. This Agreement
constitutes the complete understanding between the parties with respect to the
employment of Employee hereunder and no statement, representation, warranty or
covenant has been made by either party with respect thereto except as expressly
set froth herein. This Agreement shall not be altered, modified, amended or
terminated except by written instrument signed by each of the parties hereto
provided, however, that the waiver by either party hereto of compliance with any
provision hereof or of any breach or default by the other party hereto need be
signed only by the party waiving such provision, breach or default.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one and the same Agreement.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
16. Paragraph Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this
Page 10 of 12
<PAGE> 11
Agreement.
17. Execution of Agreement. Employee shall execute this Agreement no later
than May 10, 1999. In the event Employee does not execute this Agreement by said
date, the non-signing of the Agreement constitutes Employee's choice to
terminate his employment with the Company.
18. Consideration. Employee hereby acknowledges and agrees that the
employment opportunity encompassed in this Agreement is contingent upon the
execution of this Agreement and that such employment, in addition to the mutual
promises herein, constitutes adequate consideration for this Agreement.
Page 11 of 12
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
EDGAR ONLINE, INC.
By: /s/ Tom Vos
--------------------------------------
Its: President and Chief Operating Officer
Date: May 6, 1999
/s/ Marc Strausberg
- -------------------
Marc Strausberg
Date: May 6, 1999
Page 12 of 12
<PAGE> 1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of the 6th day of May
1999 (the "Effective Date"), between EDGAR Online, Inc. with its principal
office at 50 Washington Street, Norwalk, Connecticut ("Company"), and Susan
Strausberg having an address at 196 Haviland Court, Stamford, Connecticut 06903
("Employee").
W I T N E S S E T H:
WHEREAS, the Company operates an Internet financial information business;
and
WHEREAS, the Company and the Employee entered into an employment agreement
dated as of January 1, 1996 (the "Original Agreement"); and
WHEREAS, the Company and the Employee desire to amend certain provisions
of the employment agreement by entering into an amended and restated employment
agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Employment. The Company shall employ the Employee and the Employee
shall serve the Company, upon the terms and conditions hereinafter set forth.
2. Term. The term of the Employee's employment shall commence on the
Effective Date and unless terminated earlier or extended as provided below,
shall continue for a period of five years from the Effective Date (the
"Employment Term"). Upon the expiration of the initial employment term and on
each anniversary date thereafter, the employment of Employee shall be renewed
and extended for an additional year unless either party provides written notice
to the other party, of her or its, as the case may be, desire to terminate this
Agreement at least thirty (30) days prior to the renewal date.
Page 1 of 12
<PAGE> 2
3. Duties. During the Employment Term, the Employee shall have such
duties, functions, authority and responsibilities normally associated with the
positions and offices of Chief Executive Officer and Secretary. During the
Employment Term, the Employee shall devote her full attention and business time
to the business and affairs of the Company and the Employee will use her best
efforts to perform faithfully and efficiently, and to discharge, the Employee's
responsibilities and duties under this Agreement. Notwithstanding the foregoing,
the Employee may devote such time to manage her personal affairs and to serve on
community, corporate, civic, professional or charitable boards or committees, so
long as such activities do not unreasonably interfere with the performance of
the Employee's duties and responsibilities under this Agreement.
4. Compensation and Employee Benefits.
(a) The Employee's base salary during the initial term of
employment shall be no less than $150,000 commencing on the Effective Date
payable in accordance with the Company's payroll practices as in effect from
time to time. The Employee's base salary will be reviewed annually by the
Company's Board of Directors (the "Board") to determine whether an increase is
warranted or appropriate. The Employee also will be entitled to be considered
for awards each year under the Company's then existing incentive compensation
program, which may take into account individual and Company-wide performance, or
such other performance criteria as the Board may from time to time apply.
(b) The Employee hereby waives any and all rights that she may
have had to annual salary increases for years 1997, 1998 and 1999 under the
terms and conditions of the Original Agreement. The Company agrees to pay the
Employee all salary previously deferred at the earlier of (i) the demand by the
Employee which can be made at any time following the first
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<PAGE> 3
anniversary of the Effective Date and (ii) the closing date of the initial
public offering of the Company's common stock.
5. Benefits. During the Employment Term, the Employee shall have the right
to participate in such health and disability insurance plans which the Company
may provide to its senior executive officers and for which the Employee is
eligible, the premiums of which shall be paid by the Company (e.g., long term
disability, life insurance and medical insurance for the Employee and her
dependents). During the Employment term, the Employee will be entitled four
weeks of paid vacation in accordance with the Company's policy. Such vacation
may be taken in the Employee's discretion with the prior approval of the
Company, and at such time or times as are not inconsistent with the reasonable
business needs of the Company.
6. Business Expenses. All reasonable travel, entertainment and other
expenses incident to the performance of the Employee's duties or the rendering
of services incurred on behalf of the Company by the Employee during the
Employment Term shall be paid by the Company.
7. Termination. Notwithstanding the provisions of Section 2 hereof, the
Employee's employment with the Company may be earlier terminated as follows:
(a) By action taken by the Board, the Employee may be
discharged for cause (as defined below), effective as of such time as the Board
shall determine. Upon discharge of the Employee pursuant to this Section 7(a),
the Company shall have no further obligation or duties to the Employee, except
for payment of (i) the deferred salary amount discussed in Section 4(b) hereof
and (ii) accrued salary, bonus and benefits payable to the Employee through the
date of termination of employment, and the Employee shall have no further
obligations or duties to the Company, except as provided in Section 8.
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<PAGE> 4
(b) In the event of (i) the death of the Employee or (ii) by
action of the Board in the event of the inability of the Employee, by reason of
physical or mental disability, to continue substantially to perform her duties
hereunder for an aggregate period of 180 days during the Employment Term, during
which 180 day period salary and any other benefits hereunder shall not be
suspended or diminished. Upon any termination of the Employee's employment under
this Section 7(b), the Company shall have no further obligations or duties to
the Employee, except for payment of (i) the deferred salary amount discussed in
Section 4(b) hereof and (ii) accrued salary, bonus and benefits payable to the
Employee through the date of termination of employment, and the Employee shall
have no further obligations or duties to the Company, except as provided in
Section 8.
(c) In the event that there is a change of control of the
Company (as defined below), and the Agreement is terminated by either the
Employee or the Company for whatever reason within one year of such a change of
control, the Company shall pay to the Employee, in addition to the payment of
(i) the deferred salary amount discussed in Section 4(b) hereof and (ii) accrued
salary, bonus and benefits payable to the Employee through the date of
termination of employment, a severance payment from the Company equal to the
product of 2.99 times the sum of (x) the Employee's then applicable annual base
salary and (y) the average of the last two year's cash bonuses paid by the
Company to the Employee. In addition, all stock options and other awards under
the Company's stock option plans shall immediately vest and remain exercisable
for the a period of the lesser of (i) the original term of the stock option and
(ii) five years.
(d) For purposes of this Agreement, the Company shall have
"cause" to terminate the Employee's employment under this Agreement upon (i) the
failure by the Employee to substantially perform her duties under this
Agreement, (ii) the engaging by the
Page 4 of 12
<PAGE> 5
Employee in criminal misconduct (including embezzlement and criminal fraud)
which is materially injurious to the Company, monetarily or otherwise, (iii) the
conviction of the Employee of a felony, or (iv) gross negligence on the part of
the Employee. The Company shall give written notice to the Employee, which
notice shall specify the grounds for the proposed termination and the Employee
shall be given thirty (30) days to cure if the grounds arise under clauses (i)
or (iv) above.
(e) For purposes of this Agreement, a "change of control of
the Company" shall mean the occurrence of (i) the acquisition by an individual,
entity, or group of the beneficial ownership of 50% or more (other than by Marc
and Susan Strausberg and their affiliates) of (1) the outstanding common stock,
or (2) the combined voting power of the Company's voting securities; provided,
however, that the following acquisitions will not constitute a "change of
control": (x) any acquisition by any employee benefit plan of the Company or any
affiliate or (y) any acquisition by any corporation if, immediately following
such acquisition, more than 50% of the outstanding common stock and the
outstanding voting securities of such corporation is beneficially owned by all
or substantially all of those who, immediately prior to such acquisition, were
the beneficial owners of the common stock and the Company's voting securities
(in substantially similar proportions as their ownership of such Company
securities immediately prior thereto); or (ii) the approval by the Company's
stockholders of a reorganization, merger or consolidation, other than one with
respect to which all or substantially all of those who were the beneficial
owners, immediately prior to such reorganization, merger or consolidation, of
the Common Stock and the Company's voting securities beneficially own,
immediately after such transaction, more than 50% of the outstanding common
stock and voting securities of the corporation resulting from such transaction
(in substantially the same proportions as their
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<PAGE> 6
ownership, immediately prior thereto, of the Common Stock and the Company's
voting securities); or (iii) the approval by the Company's stockholders of the
sale or other disposition of all or substantially all of the assets of the
Company, other than to a subsidiary of the Company
8. Confidentiality; Noncompetition.
(a) The Company and the Employee acknowledge that the services
to be performed by the Employee under this Agreement are unique and
extraordinary and, as a result of such employment, the Employee will be in
possession of confidential information relating to the business practices of the
Company. The term "confidential information" shall mean any and all information
(oral or written) relating to the Company or any of its affiliates, or any of
their respective activities, other than such information which can be shown by
the Employee to be in the public domain (such information not being deemed to be
in the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 8(a), including, but not limited to, information
relating to: trade secrets, proprietary information, personnel lists, financial
information, research projects, services used, pricing, customers, customer
lists and prospects, product sourcing, marketing and selling and servicing. The
Employee agrees that she will not, during her employment or subsequent to the
termination of employment, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any confidential information
regarding the clients, customers or business practices of the Company acquired
by the Employee during her employment by Company, without the prior written
consent of Company; provided, however, that the Employee understands that
Employee will be prohibited from misappropriating any trade secret at any time
during or after the termination of employment. At no time during the Employment
Term, or thereafter shall the Employee directly
Page 6 of 12
<PAGE> 7
or indirectly, disparage the commercial, business or financial reputation of the
Company.
(b) In consideration of Company's hiring Employee, the payment
by the Company to the Employee as described below and for other good and
valuable consideration, the Employee hereby agrees that she shall not, during
the Employment Term and for a period of one (1) year following such employment
(the "Restrictive Period"), directly or indirectly, take any action which
constitutes an interference with or a disruption of any of the Company's
business activities.
(c) For purposes of clarification, but not of limitation, the
Employee hereby acknowledges and agrees that the provisions of subparagraph 8(b)
above shall serve as a prohibition against her, during the Restrictive Period :
(1) directly or indirectly, contacting, soliciting or
directing any person, firm, or corporation to contact or solicit,
any of the Company's customers, prospective customers, or business
partners for the purpose of selling or attempting to sell, any
products and/or services that are the same as or similar to the
products and services provided by the Company to its customers
during the Restrictive Period. In addition, the Employee will not
disclose the identity of any such business partners, customers, or
prospective customers, or any part thereof, to any person, firm,
corporation, association, or other entity for any reason or purpose
whatsoever; and
(2) directly or indirectly, engaging or carrying on in any
manner (including, without limitation, as principal, shareholder,
partner, lender, agent, employee, consultant, or investor (other
than a passive investor with less than a five percent (5%) interest)
trustee or through the agency of any corporation,
Page 7 of 12
<PAGE> 8
partnership, limited liability company, or association) in any
business that is in competition with the engaged in any business in
competition with the business of the Company; and
(3) soliciting on her own behalf or on behalf of any other
person, the services of any person who is an employee of the
Employer, and soliciting any of the Employer's employees to
terminate employment with the Employer.
(d) Upon the termination of the Employee's employment for any
reason whatsoever, all documents, records, notebooks, equipment, price lists,
specifications, programs, customer and prospective customer lists and other
materials which refer or relate to any aspect of the business of the Company
which are in the possession or under the control of the Employee including all
copies thereof, shall be promptly returned to the Company.
(e) The parties hereto hereby acknowledge and agree that (i)
the Company would be irreparably injured in the event of a breach by the
Employee of any of her obligations under this Section 8, (ii) monetary damages
would not be an adequate remedy for any such breach, and (iii) the Company shall
be entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach.
(f) The rights and remedies enumerated in Section 8(e) shall
be independent of the other, and shall be enforceable, and all of such rights
and remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
(g) If any provision contained in this Section 8 is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
Page 8 of 12
<PAGE> 9
(h) If any provision contained in this Section 8 is found to
be unenforceable by reason of the extent, duration or scope thereof, or
otherwise, then the court making such determination shall have the right to
reduce such extent, duration, scope or other provision and in its reduced form
any such restriction shall thereafter be enforceable as contemplated hereby.
(i) It is the intent of the parties hereto that the covenants
contained in this Section 8 shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is
sought (the Employee hereby acknowledging that said restrictions are reasonably
necessary for the protection of the Company). Accordingly, it is hereby agreed
that if any of the provisions of this Section 8 shall be adjudicated to be
invalid or unenforceable for any reason whatsoever, said provision shall be
(only with respect to the operation thereof in the particular jurisdiction in
which such adjudication is made) construed by limiting and reducing it so as to
be enforceable to the extent permissible, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of said
provision in any other jurisdiction.
9. Prior Agreements. This Agreement cancels and supersedes any and all
prior agreements and understandings between the parties hereto respecting the
employment of Employee by the Company, including, without limitation, the
Original Agreement.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, to the other party
hereto at her or its address as set forth in the beginning of this Agreement.
Either party may change the address to which notices, requests, demands and
other communications hereunder shall be sent by sending written notice of such
change of
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<PAGE> 10
address to the other party in the manner above provided.
11. Assignability and Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the executors, administrators, successors
and legal representatives of Employee and shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Employee may not
delegate or assign her duties or rights under this Agreement.
12. Waiver. Waiver by either party hereto of any breach or default by the
other party in respect of any of the terms and conditions of this Agreement
shall not operate as a waiver of any other breach or default, whether similar to
or different from the breach or default waived.
13. Complete Understanding: Amendment and Termination. This Agreement
constitutes the complete understanding between the parties with respect to the
employment of Employee hereunder and no statement, representation, warranty or
covenant has been made by either party with respect thereto except as expressly
set froth herein. This Agreement shall not be altered, modified, amended or
terminated except by written instrument signed by each of the parties hereto
provided, however, that the waiver by either party hereto of compliance with any
provision hereof or of any breach or default by the other party hereto need be
signed only by the party waiving such provision, breach or default.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one and the same Agreement.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
16. Paragraph Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this
Page 10 of 12
<PAGE> 11
Agreement.
17. Execution of Agreement. Employee shall execute this Agreement no later
than May 10, 1999. In the event Employee does not execute this Agreement by said
date, the non-signing of the Agreement constitutes Employee's choice to
terminate her employment with the Company.
18. Consideration. Employee hereby acknowledges and agrees that the
employment opportunity encompassed in this Agreement is contingent upon the
execution of this Agreement and that such employment, in addition to the mutual
promises herein, constitutes adequate consideration for this Agreement.
Page 11 of 12
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
EDGAR ONLINE, INC.
By: /s/ Tom Vos
--------------------------------------
Its: President and Chief Operating Officer
Date: May 6, 1999
/s/ Susan Strausberg
- ----------------------------
Susan Strausberg
Date: May 6, 1999
Page 12 of 12
<PAGE> 1
Exhibit 10.07
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 23rd day of April 1999 (the "Effective Date"),
between EDGAR Online, Inc. with its principal office at 50 Washington Street,
Norwalk, Connecticut ("Company"), and Tom Vos having an address at 106 Grovers
Avenue, Black Rock, Connecticut ("Employee").
W I T N E S S E T H:
WHEREAS, the Company operates an Internet financial information business;
and
WHEREAS, the Company desires to employ the Employee as President and Chief
Operating Officer and to be assured of his services as such on the terms and
conditions set forth herein; and
WHEREAS, the Employee is willing to accept such employment on such terms
and conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Employment. The Company shall employ the Employee and the Employee
shall serve the Company, upon the terms and conditions hereinafter set forth.
2. Term. The term of the Employee's employment shall commence on the
Effective Date and unless terminated earlier or extended as provided below,
shall continue for a period of two years from the Effective Date (the
"Employment Term"). Upon the expiration of the initial employment term and on
each anniversary date thereafter, the employment of Employee shall be renewed
and extended for an additional year unless either party provides written notice
to the other party, of his or its, as the case may be, desire to terminate this
Agreement at least thirty (30)
Page 1 of 12
<PAGE> 2
days prior to the renewal date.
3. Duties. During the Employment Term, the Employee shall have such
duties, functions, authority and responsibilities normally associated with the
positions and offices of President and Chief Operating Officer. During the
Employment Term, the Employee shall devote his full attention and business time
to the business and affairs of the Company and the Employee will use his best
efforts to perform faithfully and efficiently, and to discharge, the Employee's
responsibilities and duties under this Agreement. Notwithstanding the foregoing,
the Employee may devote such time to manage his personal affairs and to serve on
community, corporate, civic, professional or charitable boards or committees, so
long as such activities do not unreasonably interfere with the performance of
the Employee's duties and responsibilities under this Agreement.
4. Compensation and Employee Benefits.
(a) The Employee's base salary during the initial term of employment
shall be no less than $125,000 commencing on the Effective Date payable in
accordance with the Company's payroll practices as in effect from time to time.
The Employee's base salary will be reviewed annually by the Company's Board of
Directors (the "Board") to determine whether an increase is warranted or
appropriate. The Employee also will be entitled to be considered for awards each
year under the Company's then existing incentive bonus program, which may take
into account individual and Company-wide performance, or such other performance
criteria as the Board may from time to time apply.
(b) If the Employee remains employed with the Company on the second
anniversary of the Effective Date, the Company will pay to the Employee a
retention bonus (the "Retention Bonus") equal to two times the sum of (x) the
Employee's then applicable base salary
Page 2 of 12
<PAGE> 3
and (y) the average of the last two year's cash bonuses paid by the Company to
the Employee.
5. Benefits. During the Employment Term, the Employee shall have the right
to participate in such health and disability insurance plans which the Company
may provide to its senior executive officers and for which the Employee is
eligible, the premiums of which shall be paid by the Company (e.g., long term
disability, life insurance and medical insurance for the Employee and his
dependents). During the Employment term, the Employee will be entitled four
weeks of paid vacation in accordance with the Company's policy. Such vacation
may be taken in the Employee's discretion with the prior approval of the
Company, and at such time or times as are not inconsistent with the reasonable
business needs of the Company.
6. Business Expenses. All reasonable travel, entertainment and other
expenses incident to the performance of the Employee's duties or the rendering
of services incurred on behalf of the Company by the Employee during the
Employment Term shall be paid by the Company.
7. Termination. Notwithstanding the provisions of Section 2 hereof, the
Employee's employment with the Company may be earlier terminated as follows:
(a) By action taken by the Board, the Employee may be discharged for
cause (as defined below), effective as of such time as the Board shall
determine. Upon discharge of the Employee pursuant to this Section 7(a), the
Company shall have no further obligation or duties to the Employee, except for
payment of base salary and bonus through the effective date of termination and
the Employee shall have no further obligations or duties to the Company, except
as provided in Section 8.
(b) In the event of (i) the death of the Employee or (ii) by action
of the Board in the event of the inability of the Employee, by reason of
physical or mental disability, to
Page 3 of 12
<PAGE> 4
continue substantially to perform his duties hereunder for an aggregate period
of 180 days during the Employment Term, during which 180 day period salary and
any other benefits hereunder shall not be suspended or diminished. Upon any
termination of the Employee's employment under this Section 7(b), the Company
shall have no further obligations or duties to the Employee, and the Employee
shall have no further obligations or duties to the Company, except as provided
in Section 8.
(c) In the event that there is a change of control of the Company
(as defined below), and the Agreement is terminated by either the Employee or
the Company for whatever reason within one year of such a change of control, the
Company shall pay to the Employee, in addition to accrued salary and benefits
payable to the Employee through the date of termination of employment, (i) the
Retention Bonus and (ii) a severance payment from the Company equal to two times
the sum of (x) the Employee's then applicable base salary and (y) the average of
the last two year's cash bonuses paid by the Company to the Employee. In
addition, all stock options and other awards under the Company's 1996 and 1999
stock option plans shall immediately vest and remain exercisable for the a
period of the lesser of (i) the original term of the stock option and (ii) five
years.
(d) For purposes of this Agreement, the Company shall have "cause"
to terminate the Employee's employment under this Agreement upon (i) the failure
by the Employee to substantially perform his duties under this Agreement, (ii)
the engaging by the Employee in criminal misconduct (including embezzlement and
criminal fraud) which is materially injurious to the Company, monetarily or
otherwise, (iii) the conviction of the Employee of a felony, or (iv) gross
negligence on the part of the Employee. The Company shall give written notice to
the Employee, which notice shall specify the grounds for the proposed
Page 4 of 12
<PAGE> 5
termination and the Employee shall be given thirty (30) days to cure if the
grounds arise under clauses (i) or (iv) above.
(e) For purposes of this Agreement, a "change of control of the
Company" shall mean the occurrence of (i) the acquisition by an individual,
entity, or group of the beneficial ownership of 50% or more (other than by Marc
and Susan Strausberg and their affiliates) of (1) the outstanding common stock,
or (2) the combined voting power of the Company's voting securities; provided,
however, that the following acquisitions will not constitute a "change of
control": (x) any acquisition by any employee benefit plan of the Company or any
affiliate or (y) any acquisition by any corporation if, immediately following
such acquisition, more than 50% of the outstanding common stock and the
outstanding voting securities of such corporation is beneficially owned by all
or substantially all of those who, immediately prior to such acquisition, were
the beneficial owners of the common stock and the Company's voting securities
(in substantially similar proportions as their ownership of such Company
securities immediately prior thereto); or (ii) the approval by the Company's
stockholders of a reorganization, merger or consolidation, other than one with
respect to which all or substantially all of those who were the beneficial
owners, immediately prior to such reorganization, merger or consolidation, of
the Common Stock and the Company's voting securities beneficially own,
immediately after such transaction, more than 50% of the outstanding common
stock and voting securities of the corporation resulting from such transaction
(in substantially the same proportions as their ownership, immediately prior
thereto, of the Common Stock and the Company's voting securities); or (iii) the
approval by the Company's stockholders of the sale or other disposition of all
or substantially all of the assets of the Company, other than to a subsidiary of
the Company
8. Confidentiality; Noncompetition.
Page 5 of 12
<PAGE> 6
(a) The Company and the Employee acknowledge that the services to be
performed by the Employee under this Agreement are unique and extraordinary and,
as a result of such employment, the Employee will be in possession of
confidential information relating to the business practices of the Company. The
term "confidential information" shall mean any and all information (oral or
written) relating to the Company or any of its affiliates, or any of their
respective activities, other than such information which can be shown by the
Employee to be in the public domain (such information not being deemed to be in
the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 8(a), including, but not limited to, information
relating to: trade secrets, proprietary information, personnel lists, financial
information, research projects, services used, pricing, customers, customer
lists and prospects, product sourcing, marketing and selling and servicing. The
Employee agrees that he will not, during his employment or subsequent to the
termination of employment, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any confidential information
regarding the clients, customers or business practices of the Company acquired
by the Employee during his employment by Company, without the prior written
consent of Company; provided, however, that the Employee understands that
Employee will be prohibited from misappropriating any trade secret at any time
during or after the termination of employment. At no time during the Employment
Term, or thereafter shall the Employee directly or indirectly, disparage the
commercial, business or financial reputation of the Company.
(b) In consideration of Company's hiring Employee, the payment by
the Company to the Employee as described below and for other good and valuable
consideration,
Page 6 of 12
<PAGE> 7
the Employee hereby agrees that he shall not, during the Employment Term and for
a period of one (1) year following such employment (the "Restrictive Period"),
directly or indirectly, take any action which constitutes an interference with
or a disruption of any of the Company's business activities.
(c) For purposes of clarification, but not of limitation, the
Employee hereby acknowledges and agrees that the provisions of subparagraph 8(b)
above shall serve as a prohibition against him, during the Restrictive Period :
(1) directly or indirectly, contacting, soliciting or directing any
person, firm, or corporation to contact or solicit, any of the Company's
customers, prospective customers, or business partners for the purpose of
selling or attempting to sell, any products and/or services that are the
same as or similar to the products and services provided by the Company to
its customers during the Restrictive Period. In addition, the Employee
will not disclose the identity of any such business partners, customers,
or prospective customers, or any part thereof, to any person, firm,
corporation, association, or other entity for any reason or purpose
whatsoever; and
(2) directly or indirectly, engaging or carrying on in any manner
(including, without limitation, as principal, shareholder, partner,
lender, agent, employee, consultant, or investor (other than a passive
investor with less than a five percent (5%) interest) trustee or through
the agency of any corporation, partnership, limited liability company, or
association) in any business that is in competition with the engaged in
any business in competition with the business of the Company; and
Page 7 of 12
<PAGE> 8
(3) soliciting on his own behalf or on behalf of any other person,
the services of any person who is an employee of the Employer, and
soliciting any of the Employer's employees to terminate employment with
the Employer.(d) Upon the termination of the Employee's employment for any
reason whatsoever, all documents, records, notebooks, equipment, price
lists, specifications, programs, customer and prospective customer lists
and other materials which refer or relate to any aspect of the business of
the Company which are in the possession or under the control of the
Employee including all copies thereof, shall be promptly returned to the
Company.(e) The parties hereto hereby acknowledge and agree that (i) the
Company would be irreparably injured in the event of a breach by the
Employee of any of his obligations under this Section 8, (ii) monetary
damages would not be an adequate remedy for any such breach, and (iii) the
Company shall be entitled to injunctive relief, in addition to any other
remedy which it may have, in the event of any such breach .
(f) The rights and remedies enumerated in Section 8(e) shall be
independent of the other, and shall be enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
(g) If any provision contained in this Section 8 is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
(h) If any provision contained in this Section 8 is found to be
unenforceable by reason of the extent, duration or scope thereof, or otherwise,
then the court
Page 8 of 12
<PAGE> 9
making such determination shall have the right to reduce such extent, duration,
scope or other provision and in its reduced form any such restriction shall
thereafter be enforceable as contemplated hereby.
(i) It is the intent of the parties hereto that the covenants
contained in this Section 8 shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is
sought (the Employee hereby acknowledging that said restrictions are reasonably
necessary for the protection of the Company). Accordingly, it is hereby agreed
that if any of the provisions of this Section 8 shall be adjudicated to be
invalid or unenforceable for any reason whatsoever, said provision shall be
(only with respect to the operation thereof in the particular jurisdiction in
which such adjudication is made) construed by limiting and reducing it so as to
be enforceable to the extent permissible, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of said
provision in any other jurisdiction.
9. Prior Agreements. This Agreement cancels and supersedes any and all
prior agreements and understandings between the parties hereto respecting the
employment of Employee by the Company.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, to the other party
hereto at his or its address as set forth in the beginning of this Agreement.
Either party may change the address to which notices, requests, demands and
other communications hereunder shall be sent by sending written notice of such
change of address to the other party in the manner above provided.
11. Assignability and Binding Effect. This Agreement shall inure to the
benefit of
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<PAGE> 10
and shall be binding upon the executors, administrators, successors and legal
representatives of Employee and shall inure to the benefit of and be binding
upon the Company and its successors and assigns. The Employee may not delegate
or assign his duties or rights under this Agreement.
12. Waiver. Waiver by either party hereto of any breach or default by the
other party in respect of any of the terms and conditions of this Agreement
shall not operate as a waiver of any other breach or default, whether similar to
or different from the breach or default waived.
13. Complete Understanding: Amendment and Termination. This Agreement
constitutes the complete understanding between the parties with respect to the
employment of Employee hereunder and no statement, representation, warranty or
covenant has been made by either party with respect thereto except as expressly
set froth herein. This Agreement shall not be altered, modified, amended or
terminated except by written instrument signed by each of the parties hereto
provided, however, that the waiver by either party hereto of compliance with any
provision hereof or of any breach or default by the other party hereto need be
signed only by the party waiving such provision, breach or default.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one and the same Agreement.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
16. Paragraph Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Execution of Agreement. Employee shall execute this Agreement no later
than
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<PAGE> 11
April 30, 1999. In the event Employee does not execute this Agreement by said
date, the non-signing of the Agreement constitutes Employee's choice to
terminate his employment with the Company.
18. Consideration. Employee hereby acknowledges and agrees that the
employment opportunity encompassed in this Agreement is contingent upon the
execution of this Agreement and that such employment, in addition to the mutual
promises herein, constitutes adequate consideration for this Agreement.
Page 11 of 12
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
EDGAR ONLINE, INC.
By: /s/ Susan Strausburg
--------------------------------
Its: Chief Executive Officer
-------------------------------
Date: April 23, 1999
------------------------------
/s/ Tom Vos
- -----------------------------------
Tom Vos
Date: April 23, 1999
------------------------------
Page 12 of 12
<PAGE> 1
Exhibit 10.08
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of the First day of
March, 1999 (the "Effective Date"), between EDGAR ONLINE, INC. with its
principal office at 50 Washington Street, Norwalk, Connecticut ("Company"), and
GREG D. ADAMS, an individual having an address at 15 Highview Road, Ossining, NY
10562 ("Employee").
W I T N E S S E T H:
WHEREAS, the Company operates an Internet financial information business;
and
WHEREAS, the Employee desires to be employed by the Company and
acknowledges that the execution of the Agreement is a condition of such
employment; and
WHEREAS, the Company has previously entered into an employment agreement
with the Employee and the Company and the Employee desire to modify certain
provisions by entering into an amended and restated employment agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Employment. The Company shall employ the Employee and the Employee
shall serve the Company, upon the terms and conditions hereinafter set forth.
2. Term. The employment of Employee hereunder shall be for a period of
three years from the date hereof (the "Employment Term"). Upon the expiration of
the initial term and on each anniversary date thereafter, the employment of
Employee shall be renewed and extended for an additional year unless either
party terminates this agreement on thirty (30) days written notice prior to the
renewal date. In the event of the Company moving its Corporate Headquarters a
distance of more than 50 miles from its present location in Norwalk, CT (any
location in New York City shall be considered to be within this 50 mile radius),
the Employee shall have the right
Page 1 of 13
<PAGE> 2
to terminate this Agreement on 90 days written notice and receive severance in
the amount determined in accordance with Section 4 (c) hereof.
3. Duties. During the Employment Term, Employee shall have such duties,
functions and responsibilities on behalf of the Company as are generally
applicable to a Chief Financial Officer, provided, however, that Employee shall
not cause the Company to engage in any activity that is illegal, immoral or
unethical or that is outside the ordinary course of its business.
4. Compensation and Employee Benefits. Employee shall receive, as full
compensation for his services to the Company, payment based on an annual salary
of One Hundred Twenty Five Thousand ($125,000) Dollars, paid by the Company in
accordance with its standard payroll practices. The payment due Employee
hereunder shall be reviewed annually by the Company at the time of an annual,
written evaluation. The annual salary and each of the cash payments listed below
shall be subject to applicable withholding taxes as reflected on the W-9
completed by the Employee.
(a) Stock Options. The Company will grant Employee options to purchase
One Hundred Thousand (100,000) shares of Common Stock from the 1996
Employee Stock Option Plan at the exercise price of $4.50 per share,
with such options to vest as follows, provided the Employee is
employed by the Company on each date of vesting: at least 50,000
options will vest the at the sooner of the end of the IPO lockup
period or the first anniversary of the grant date. The remaining
options that don't vest then will vest on the second anniversary of
the grant date. You will also be given the same opportunity given to
other employees who receive option grants in March 1999 to have the
vesting of your grants accelerated based on achievement of Company
IPO targets.
Page 2 of 13
<PAGE> 3
(b) Future Options. The Company will request that its Board of Directors
grant Employee options to purchase another Twenty Five Thousand
(25,000) shares of common stock, at the then Fair Market Price, at
such time as the Board of Directors shall vote to increase the
number of shares allocated to employee stock option plans by at
least 300,000 shares. Company management will use its best efforts
to see to it that the vesting schedule for these options is
substantially the same as for the options above.
(c) Severance. The Company agrees that Employee will be entitled to
severance pay if terminated by the Company for any reason other than
those reasons set forth in Section 4(d) and 6 of this Agreement. The
severance payment shall be made to Employee immediately upon
termination in the amount of one half the Employee's annual salary
at the time of termination if the termination occurs within six
months of the Effective Date, one year's annual salary if
termination occurs between six months and twelve months from the
Effective Date, and eighteen month's salary if termination occurs
between twelve and thirty-six months from the Effective Date.
(d) Severance in Connection with a Change of Control. (i)
Notwithstanding anything contained herein to the contrary, in the
event that there is a change of control of the Company (as defined
below), and the Agreement is terminated by either the Employee or
the Company for whatever reason within one year of such a change of
control, the Company shall pay to the Employee, in addition to
accrued salary and benefits payable to the Employee through the date
of termination of employment, a severance payment from the Company
equal to 1 1/2 times the Employee's then applicable base salary. In
addition, all stock options and other awards under the
Page 3 of 13
<PAGE> 4
Company's 1996 and 1999 stock option plans shall immediately vest
and remain exercisable for a period of the lesser of the original
term of the stock option and five years.
(ii) For purposes of this Agreement, a "change of control of the
Company" shall mean the occurrence of (i) the acquisition by an
individual, entity, or group of the beneficial ownership of 50% or
more (other than by Marc and Susan Strausberg and their affiliates)
of (1) the outstanding common stock, or (2) the combined voting
power of the Company's voting securities; provided, however, that
the following acquisitions will not constitute a "change of
control": (x) any acquisition by any employee benefit plan of the
Company or any affiliate or (y) any acquisition by any corporation
if, immediately following such acquisition, more than 50% of the
outstanding common stock and the outstanding voting securities of
such corporation is beneficially owned by all or substantially all
of those who, immediately prior to such acquisition, were the
beneficial owners of the common stock and the Company's voting
securities (in substantially similar proportions as their ownership
of such Company securities immediately prior thereto); or (ii) the
approval by the Company's stockholders of a reorganization, merger
or consolidation, other than one with respect to which all or
substantially all of those who were the beneficial owners,
immediately prior to such reorganization, merger or consolidation,
of the Common Stock and the Company's voting securities beneficially
own, immediately after such transaction, more than 50% of the
outstanding common stock and voting securities of the corporation
resulting from such transaction (in substantially the same
proportions as their ownership, immediately prior thereto, of the
Common Stock and the Company's
Page 4 of 13
<PAGE> 5
voting securities); or (iii) the approval by the Company's
stockholders of the sale or other disposition of all or
substantially all of the assets of the Company, other than to a
subsidiary of the Company
(e) Bonus. The Company may pay a bonus to Employee of up to 50% of his
then applicable annual salary each year based on a performance
evaluation to be determined at the discretion of the Company in
December of each year.
(f) First Year Compensation. The Company will pay to the Employee cash
compensation of no less than $187,500 (including a bonus of $62,500)
during the first twelve months of employment. If the Employee is
terminated during the first twelve months of employment for any
reason, other than those set forth in Section 4(d) and 6 of this
Agreement, Employee will receive a pro rata share of this amount. In
the event of the Employee's death, payment of the pro rat amount
will be made to Employee's primary beneficiary.
(g) Vacation. Employee shall be entitled to paid vacation of four (4)
weeks during each year.
(h) Insurance. Employee shall receive all standard company insurance
coverage, e.g. long-term disability, medical insurance for the
employee and his dependents. The Company shall also pay the Employee
up to $1,000 per year to cover the cost of life insurance.
(i) Auto Allowance. Employee shall receive an automobile allowance of
$500 per month based on the commuting distance from his current
residence to our office in Norwalk, CT.
Page 5 of 13
<PAGE> 6
5. Disability. In the event that Employee shall be incapacitated by reason
of mental or physical disability or otherwise during the term of his employment
hereunder, such that he is prevented from performing the services required
hereunder for period of twelve (12) consecutive or non-consecutive weeks in any
period of six (6) consecutive months, the Company shall have the right, at its
option to terminate this Agreement as of the last day of such twelve (12) week
period by sending written notice of such termination to Employee in which event
the Company shall have no further obligations hereunder, other than the
obligation to pay Employee any accrued and unpaid compensation to which he is
entitled to the date of such termination.
6. Termination for Cause. The Company shall have the right to terminate
Employee's employment under this Agreement and any and all payments to be made
hereunder if Employee at any time during the term of his employment, commits any
of the following "Acts".
(a) Employee shall be convicted of any crime (whether or not involving the
Company) which (i) constitutes a felony in the jurisdiction involved or (ii) is
of such a nature as to affect adversely the reputation of the Company; or
(b) Employee shall commit an act of fraud, breach of loyalty or
malfeasance against the Company; or
(c) Employee shall cause the reputation and goodwill of the Company or its
affiliates to suffer substantial damage; or
(d) Employee shall violate any of the provisions of this Agreement; or
(e) Employee shall not perform his duties as directed by the Company.
The decision of the Board of Directors of the Company in such matter shall be
final.
In the event that the Company elects to terminate Employee's employment
under this Agreement for cause as set forth above, the Company shall send
written notice of such
Page 6 of 13
<PAGE> 7
termination to Employee and thereupon no further payments of any type shall be
made or shall be payable to Employee hereunder except for any accrued and unpaid
compensation earned by him or to which he is entitled prior to the date of such
termination.
7. Confidentiality; Noncompetition.
(a) The Company and the Employee acknowledge that the services to be
performed by the Employee under this Agreement are unique and extraordinary and,
as a result of such employment, the Employee will be in possession of
confidential information relating to the business practices of the Company. The
term "confidential information" shall mean any and all information (oral or
written) relating to the Company or any of its affiliates, or any of their
respective activities, other than such information which can be shown by the
Employee to be in the public domain (such information not being deemed to be in
the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 7(a), including, but not limited to, information
relating to: trade secrets, proprietary information, personnel lists, financial
information, research projects, services used, pricing, customers, customer
lists and prospects, product sourcing, marketing and selling and servicing. The
Employee agrees that he will not, during his employment or subsequent to the
termination of employment, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any confidential information
regarding the clients, customers or business practices of the Company acquired
by the Employee during his employment by Company, without the prior written
consent of Company; provided, however, that the Employee understands that he
will be prohibited from misappropriating any trade secret at any time during or
after the termination of employment. At
Page 7 of 13
<PAGE> 8
no time during the Employment Term, or thereafter shall the Employee directly or
indirectly, disparage the commercial, business or financial reputation of the
Company.
(b) In consideration of Company's hiring Employee, the payment by
the Company to the Employee of the compensation described herein and for other
good and valuable consideration, the Employee hereby agrees that he shall not,
during the Employment Term and for a period of one (1) year following such
employment (the "Restrictive Period"), directly or indirectly, take any action
which constitutes an interference with or a disruption of any of the Company's
business activities.
(c) For purposes of clarification, but not of limitation, the
Employee hereby acknowledges and agrees that the provisions of Section 7(b)
above shall serve as a prohibition against him, during the Restrictive Period:
(1) directly or indirectly, contacting, soliciting or directing any
person, firm, or corporation to contact or solicit, any of the Company's
customers, prospective customers, or business partners for the purpose of
selling or attempting to sell, any products and/or services that are the
same as or similar to the products and services provided by the Company to
its customers during the Restrictive Period. In addition, the Employee
will not disclose the identity of any such business partners, customers,
or prospective customers, or any part thereof, to any person, firm,
corporation, association, or other entity for any reason or purpose
whatsoever; and
(2) directly or indirectly, engaging or carrying on in any manner
(including, without limitation, as principal, shareholder, partner,
lender, agent, employee, consultant, or investor (other than a passive
investor with less than a
Page 8 of 13
<PAGE> 9
five percent (5%) interest) trustee or through the agency of any
corporation, partnership, limited liability company, or association) in
any business that is in competition with the engaged in any business in
competition with the business of the Company; and
(3) soliciting on his own behalf or on behalf of any other person,
the services of any person who is an employee of the Employer, and
soliciting any of the Employer's employees to terminate employment with
the Employer.
(d) Upon the termination of the Employee's employment for any reason
whatsoever, all documents, records, notebooks, equipment, price lists,
specifications, programs, customer and prospective customer lists and other
materials which refer or relate to any aspect of the business of the Company
which are in the possession or under the control of the Employee including all
copies thereof, shall be promptly returned to the Company.
(e) The parties hereto hereby acknowledge and agree that (i) the
Company would be irreparably injured in the event of a breach by the Employee of
any of his obligations under this Section 7, (ii) monetary damages would not be
an adequate remedy for any such breach, and (iii) the Company shall be entitled
to injunctive relief, in addition to any other remedy which it may have, in the
event of any such breach .
(f) The rights and remedies enumerated in Section 7(e) shall be
independent of the other, and shall be enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
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<PAGE> 10
(g) If any provision contained in this Section 7 is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
(h) If any provision contained in this Section 7 is found to be
unenforceable by reason of the extent, duration or scope thereof, or otherwise,
then the court making such determination shall have the right to reduce such
extent, duration, scope or other provision and in its reduced form any such
restriction shall thereafter be enforceable as contemplated hereby.
(i) It is the intent of the parties hereto that the covenants
contained in this Section 7 shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is
sought (the Employee hereby acknowledging that said restrictions are reasonably
necessary for the protection of the Company). Accordingly, it is hereby agreed
that if any of the provisions of this Section 7 shall be adjudicated to be
invalid or unenforceable for any reason whatsoever, said provision shall be
(only with respect to the operation thereof in the particular jurisdiction in
which such adjudication is made) construed by limiting and reducing it so as to
be enforceable to the extent permissible, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of said
provision in any other jurisdiction
8. Severability. If any covenant of Employee set forth in this Agreement
shall be invalid or unenforceable in any jurisdiction because of its duration or
geographic area or both, as the case may be, such covenant shall reduce in
duration or geographic area, or both, as the case may be, to such extent as to
make it valid and enforceable in such jurisdiction and in all other respects it
shall remain in full force and effect.
Page 10 of 13
<PAGE> 11
9. Prior Agreements. This Agreement cancels and supersedes any and all
prior agreements and understandings between the parties hereto respecting the
employment of Employee by the Company.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, to the other party
hereto at his or its address as set forth in the beginning of this Agreement.
Either party may change the address to which notices, requests, demands and
other communications hereunder shall be sent by sending written notice of such
change of address to the other party in the manner above provided.
11. Assignability and Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the executors, administrators, successors
and legal representatives of Employee and shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
12. Waiver. Waiver by either party hereto of any breach or default by the
other party in respect of any of the terms and conditions of this Agreement
shall not operate as a waiver of any other breach or default, whether similar to
or different from the breach or default waived.
13. Complete Understanding: Amendment and Termination. This Agreement
constitutes the complete understanding between the parties with respect to the
employment of Employee hereunder and no statement, representation, warranty or
covenant has been made by either party with respect thereto except as expressly
set froth herein. This Agreement shall not be altered, modified, amended or
terminated except by written instrument signed by each of the parties hereto;
provided, however, that the waiver by either party hereto of compliance with any
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<PAGE> 12
provision hereof or of any breach or default by the other party hereto need be
signed only by the party waiving such provision, breach or default.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one and the same Agreement.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
16. Paragraph Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Execution of Agreement. Employee shall execute this Agreement no later
than May 1, 1999. In the event said Agreement is not executed by Employee by
said date, the non-signing of the Agreement constitutes Employee's choice to
terminate his employment with the Company.
18. Consideration. Employee hereby acknowledges and agrees that the
employment opportunity encompassed in this Agreement is contingent upon the
execution of this Agreement and that such employment, in addition to the mutual
promises herein, constitutes adequate consideration for this Agreement.
Page 12 of 13
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
EDGAR ONLINE, INC.
By: /s/ Tom Vos
-------------------------------
Its: President and Chief Operating
Officer
Date: May 3, 1999
-----------------------------
/s/ Greg D. Adams
- -----------------------------------
Greg D. Adams
Date: May 3, 1999
-----------------------------
Page 13 of 13
<PAGE> 1
Exhibit 10.09
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 11th day of March, 1999 between EDGAR
ON-LINE, INC., a Delaware corporation with offices at 50 Washington Street,
Norwalk, Connecticut ("Company"), and BRIAN FITZPATRICK, an individual having an
address at 35 Mohawk Trail, Stamford, Connecticut ("Employee").
WITNESSETH:
WHEREAS, the Company operates an internet financial service business;
and
WHEREAS, the Employee desires to be employed by the Company and
acknowledges that the execution of the Agreement is a condition of such
employment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Employment. The Company shall employ the Employee and the
Employee shall serve the Company at a location not more than fifty (50) miles
from Norwalk, Connecticut, upon the terms and conditions hereinafter set forth.
2. Term. The employment of Employee hereunder shall be for a period of
three years from the date of commencement, such commencement to be not later
than April 9, 1999.
3. Duties. During the term of employment, Employee shall work
exclusively for the Company and shall have such duties, functions and
responsibilities on behalf of the Company as are generally applicable to a Vice
President of Sales and Marketing.
4. Compensation and Employee Benefits. Employee shall receive
compensation for his services from the Company as follows:
(a) Payment based on an annual salary of One Hundred and Twenty Five
Thousand ($125,000.00) Dollars, beginning on the date of commencement. Employee
shall be paid by the Company in accordance with its standard payroll policies
for executive employees at the same
<PAGE> 2
level as Employee, which as of this date call for bi-weekly payments in an
amount equal to one twenty-sixth (1/26) of the annual salary. The annual salary
and each of the sales commission and bonuses payments listed below shall be
subject to applicable withholding taxes as reflected on the W-9 completed by the
Employee.
(b) Bonuses and Sales Commission.
(i) Sign On Bonus. The Company shall pay Employee Eighty- Five
Thousand ($85,000.00) Dollars on his first day of employment.
(ii) Sales Commissions. The Company shall establish, with the
meaningful assistance of the Employee, a Sales Commission Plan that
will be used to compensate sales people. The Employee will be eligible
to participate in and receive sales commissions and/or override as
called for in this plan when it is put into effect.
(iii) Non Discretionary Bonus. If Employee remains employed by the
Company during the Term of the Agreement, Employee shall receive a
non-discretionary bonus ("Bonus") determined by calculating the
difference between the dollar figure set forth below and the Sales
Commissions/Overrides he has earned during that calendar year. The
Bonus shall be earned and payable on September 30th and December 31st,
1999 and on a semi-annual basis in 2000 and 2001 (i.e., June 30th and
December 31st), with sales commissions and overrides credited against
the Bonus each period until such time as the Bonus is exceeded. The
parties acknowledge that the 1999 Bonus shall be payable in full as
outlined herein (although Employee shall not have been employed the
entire year) provided Employee's date of commencement is no later than
April 12, 1999. The Bonuses for each year during the Term shall be as
follows:
Year 1999 One Hundred Thousand ($100,000.00) Dollars;
Year 2000 One Hundred and Twenty Five Thousand
($125,000.00) Dollars;
2
<PAGE> 3
Year 2001 One Hundred and Fifty Thousand ($150,000.00)
Dollars If sales commissions and overrides earned by the Employee
during the calendar year exceed the amount set forth above, then no
additional payment is due under this provision. This provision will
ensure that for each of the three years of this Agreement, the sum of
Sales Commission/Overrides and Bonus payments made to the Employee
will be no less than One Hundred Thousand ($100,000.00) Dollars in
year one, One Hundred and Twenty Five Thousand ($125,000.00) Dollars
in year two and One Hundred and Fifty Thousand ($150,000.00) Dollars
in year three, provided he remains employed by the Company. The terms
of this paragraph are not intended to limit Employee's ability to earn
commissions/overrides in accordance with the Commission Schedule
established pursuant to paragraph 4(b)(ii) hereof;
(iv) Stock Options. Employee shall be granted options to
purchase Sixty Thousand (60,000.00) Shares of common stock of the
Company at the strike price of Four Dollars ($4.00) per share in
accordance with the 1996 Stock Option Plan, with such options to vest
as follows provided the Employee is employed by the Company on each
date of vesting (except as set forth elsewhere in this Agreement):
Twenty Thousand (20,000.00) shares shall vest on the first anniversary
date from the date of commencement, Twenty Thousand (20,000.00) shares
shall vest on the second anniversary date from the date of
commencement and Twenty Thousand (20,000.00) shares shall vest on the
third anniversary date from the date of commencement.
(b) Vacation. Employee shall be entitled to paid vacation of four
(4) weeks during each year, or prorated during any fraction thereof.
(c) Insurance. Employee shall receive all standard company
insurance coverage, e.g. long-term disability, medical and dental
insurance, for the employee and his dependents
3
<PAGE> 4
on the same basis as is provided by Company for executive employees at
the same level as Employee.
(d) Stock Option Plan. Employee shall be entitled to participate in
any employee stock plans in accordance with their terms on the same
basis as is provided by Company for executive employees at the same
level as Employee.
5. Disability. In the event that Employee shall be incapacitated by
reason of mental or physical disability or otherwise during the term of his
employment hereunder, such that he is prevented from performing the services
required hereunder for period of twelve (12) consecutive or non-consecutive
weeks in any period of six (6) consecutive months, or eighteen (18) consecutive
or non-consecutive weeks in any one (1) year period, the Company shall have the
right, at its option to terminate this Agreement as of the last day of such
twelve (12) or eighteen (18) week period by sending written notice of such
termination to Employee in which event the Company shall have no further
obligations hereunder, other than (a) the obligation to pay Employee any accrued
and unpaid compensation (as defined in Paragraph 4) and accrued and unused
vacation to which he is entitled on the date of such termination, and (b) to
immediately vest in Employee on the date of such termination all stock options
granted in accordance with paragraph 4(b)(iv).
6. Termination for Cause. The Company shall have the right to
terminate Employee's employment under this Agreement and any and all payments to
be made hereunder if Employee at any time during the term of his employment,
commits any of the following "Acts".
(a) Employee shall be convicted of any crime (whether or not involving
the Company) which (i) constitutes a felony in the jurisdiction involved or (ii)
is of such a serious and willful nature (i.e., comparable to a felony) as to
affect adversely and materially the reputation of the Company; or
4
<PAGE> 5
(b) Employee shall commit an act of willful misconduct against the
Company (e.g., an act of material dishonesty); or
(c) Employee shall cause the reputation and goodwill of the Company or
its affiliates to suffer substantial damage; or
(d) Employee shall violate any of the material provisions of this
Agreement.
(e) Employee shall not perform his duties in good faith as reasonably
directed by the Company, its officers and directors.
In the event that the Company elects to terminate Employee's
employment under this Agreement for cause as set forth above, the Company shall
send written notice of such termination to Employee and Employee shall have five
(5) business days to cure such breach/default as defined in said written notice.
If, at the expiration of said five (5) business days, Employee has failed to
cure such breach/default (or Employee has failed to take such action within the
five (5) business day period so as to cause said breach/default to be cured
within twenty (20) business days of the written notice (whether or not Employee
shall take additional action that was unavailable during the initial five (5)
business day period)), then no further payments of any type shall be made or
shall be payable to Employee hereunder except for (i) any accrued and unpaid
compensation (as defined in Paragraph 4) and vacation earned by him or to which
he is entitled prior to the date of such termination, and (ii) any stock options
that would have vested within sixty (60) days of the termination date; provided,
however, that if Employee is terminated pursuant to Paragraph6(c) above, and,
notwithstanding the fact that Employee has taken all reasonable action(s) to
cure his default under section 6(c) within the applicable cure period, such
damage is not curable, then all stock options granted in accordance with
paragraph 4(b)(iv) herein shall immediately vest in Employee as of the date of
such termination.
5
<PAGE> 6
Notwithstanding anything in this Agreement to the contrary, in the
event that Company seeks to terminate Employee pursuant to paragraph 6(e)
hereof, then such action shall require (1) compliance with the notice
requirement and cure provision of the preceding paragraph, and (2) the
affirmative vote of the Board of Directors, such vote to be held at a special
meeting of a duly acting quorum of the Company's Board of Directors (which
quorum shall include a minimum of two (2) outside directors), wherein Employee
shall have received at least two (2) weeks prior written notice of said Board
meeting, the right to appear, with counsel, and the right to respond to the
claims made by the Company.
7. Restrictive Covenants and Confidentiality.
(a) Employee agrees that, for the term of this Agreement and for a
period of nine (9) months following the termination of this Agreement (either
for cause or default),, he shall not, without the prior written approval of the
Company, directly or indirectly, through any other individual or entity or
otherwise, become or be financially interested in, or associated in a sales and
marketing capacity with (whether as an officer, director, employee,
representative or otherwise) any individual or entity (other than the Company)
which, at the time of Employee's termination or within six (6) months of
Employee's termination date, is, a competitor or business partner of the
Company, provided, however, that anything above to the contrary notwithstanding,
Employee may, after the date of this Agreement, own, as an inactive investor,
securities of any corporation engaged in any professional service business
described above which are listed on a national securities exchange or traded in
the over-the-counter market, so long as Employee (or his spouse, parents,
siblings and children or any of their spouses or any of them together) shall not
beneficially own more than five (5%) percent of the outstanding voting
securities of such corporations.
6
<PAGE> 7
(b) Employee agrees that, for the term of this Employment Agreement
and for a period of nine (9) months following the term of this Agreement or its
renewal (or termination for cause or default), he shall not, without the prior
written approval of the Company, directly or indirectly, through any other
individual or entity or otherwise:
(i) solicit, entice, persuade or induce any individual who, at the
time Employee ceases to work for Company, is, or within six (6) months of
Employee's last date of employment with the Company shall have been, an employee
of the Company to terminate or refrain from renewing or extending his or her
employment with the Company or to become employed by or enter into contractual
relations with any other individual or entity competitive to Company and
Employee shall not approach any such employee for any such purpose or authorize
or knowingly cooperate with the taking of any such actions by any other
individual or entity; or
(ii) solicit, entice, persuade or induce any individual or entity
which, at the time Employee ceases to work for Company, is, or within six (6)
months of Employee's last date of employment with the Company shall have been a
customer or business partner of the Company (or if such entity shall have been
prospected as a customer or business partner within the six (6) month period
preceding termination of this Agreement), to terminate or refrain from renewing
or extending its contractual or other relationships with the Company, and
Employee shall not approach any such customer or supplier for such purpose or
authorize or knowingly cooperate with the taking of any such actions by any
other individual or entity.
(c) In the course of his employment with the Company, it is
anticipated that Employee shall have access to confidential information,
records, data and other knowledge owned and maintained by the Company as
confidential and proprietary information (and/or information disclosed to
Company by its customers under confidentiality agreements), which information is
not readily available to the public or any party not subject to a
confidentiality agreement
7
<PAGE> 8
("Confidential Information"). All such Confidential Information shall be and
remain the property of the Company. Employee agrees that, during and after the
term of his employment with the Company, he shall not, without the prior written
consent of the Company, disclose to any individual or entity, for any reason or
purpose whatsoever, any Confidential Information pertaining to the business
methods, systems, plans, policies or personnel of the Company.
(d) If a court of competent jurisdiction determines that any or all of
the provisions of this Paragraph #7 are void or unenforceable, then the parties
hereby authorize such court to modify the terms of this Paragraph #7 so that it
is enforceable. Specifically, the parties agree to be bound by any court-ordered
modifications to term, geographical scope, activities and/or information
restricted, and like modifications necessary to permit enforcement of Paragraph
#7.
(e) The terms of this Paragraph #7 shall survive the termination of
the Agreement, irrespective of the reasons for such termination.
8. Remedies. Employee acknowledges that the services to be rendered by
him to the Company and the rights and privileges granted to the Company by
Employee under the terms hereof, are of a special, unique, extraordinary and
intellectual character, which gives them a special value, the loss of which
cannot be reasonable or adequately compensated in damages in any action at law,
and that a breach by Employee of any of the material provisions contained in
this Agreement will cause the Company great and irreparable injury and damages.
By reason of this, Employee acknowledges that the Company shall be entitled to
seek, in addition to any other remedies it may have at law, in equity, or
otherwise to the remedies of injunction, specific performance and other
equitable relief for a breach by Employee of any of the material provisions of
this Agreement. This paragraph shall not be construed as a waiver of any of the
rights which the Company may have for damages, or otherwise.
8
<PAGE> 9
9. Severability. If any covenant of Employee set forth in this
Agreement shall be invalid or unenforceable in any jurisdiction because of its
duration or geographic area or both, as the case may be, such covenant shall
reduce in duration or geographic area, or both, as the case may be, to such
extent as to make it valid and enforceable in such jurisdiction and in all other
respects it shall remain in full force and effect.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
overnight, registered or certified mail, return receipt requested, to the other
party hereto at his or its address as set forth in the beginning of this
Agreement, with copies as follows:
If to Company: Neal L. Moskow, Esq.
Ury & Moskow, L.L.C.
518 Riverside Avenue
P.O. Box 231
Westport, Connecticut 06881
If to Employee: Robert Fitzpatrick, Esq.
10 Colony Drive West
West Orange, New Jersey 07052
Either party may change the address to which notices, requests, demands and
other communications hereunder shall be sent by sending written notice of such
change of address to the other party in the manner above provided.
11. Assignability and Binding Effect. This Agreement shall inure to
the benefit of and shall be binding upon the executors, administrators,
successors and legal representatives of Employee and shall inure to the benefit
of and be binding upon the Company and its successors and assigns.
12. Waiver. Waiver by either party hereto of any breach or default
by the other party in respect of any of the terms and conditions of this
Agreement shall not operate as a waiver of any other breach or default, whether
similar to or different from the breach or default waived.
9
<PAGE> 10
13. Complete Understanding: Amendment and Termination. (a) This
Agreement constitutes the complete understanding between the parties with
respect to the employment of Employee pursuant to the terms of this Agreement,
and no statement, representation, warranty or covenant has been made by either
party with respect to the terms of this Agreement except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or terminated
except by written instrument signed by each of the parties hereto provided,
however, that the waiver by either party hereto of compliance with any provision
hereof or of any breach or default by the other party hereto need be signed only
by the party waiving such provision, breach or default.
(b) The parties hereto expressly agree and acknowledge that (i) no
promise or inducement for this Agreement has been made by Company except as set
forth in this Agreement; (ii) this Agreement is executed by Employee and Company
freely and voluntarily, and without reliance upon any statement or
representation by the other party other than as set forth herein; (iii) each has
completely read and fully understands this Agreement and the meaning of its
provisions; (iv) each fully understands that it is giving up and/or obtaining
important rights; (v) each is legally competent to enter into this Agreement and
to accept full responsibility therefor; and (vi) this Agreement shall be final.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one and the same Agreement.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Connecticut.
16. Paragraph Headings. The paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10
<PAGE> 11
17. Execution of Agreement. Employee shall execute this Agreement no
later than March 12, 1999. In the event said Agreement is not executed by
Employee by said date, the non-signing of the Agreement constitutes Employee's
choice to terminate his employment with the Company.
18. Consideration. Employee hereby acknowledges and agrees that the
employment opportunity encompassed in this Agreement is contingent upon the
execution of this Agreement and that such employment, in addition to the mutual
promises herein, constitutes adequate consideration for this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
Dated: March 11, 1999 EDGAR ON-LINE, INC.
______________
By: /s/ Tom Vos
___________________________
Tom Vos
Its: Chief Operating Officer
EMPLOYEE
Dated: March 11, 1999 /s/ Brian Fitzpatrick
______________ _______________________________
BRIAN FITZPATRICK
11
<PAGE> 1
Exhibit 10.10
CYBERNET DATA SYSTEMS, INC. 5 RIVER ROAD SUITE 130
WILTON, CONNECTICUT 06987
VOICE: 203-834-6282
FAX: 203-834-6280
EMAIL: [email protected]
May 19, 1997
Mr. Jay Sears
2373 Broadway
Apt. 830
New York, NY 10024
Dear Jay:
This letter serves as a letter of understanding between Cybernet Data Systems,
Inc. (the "Company") and you concerning your employment by the Company.
1. The Company shall employ you, and you shall serve the company as Vice
President, Marketing and Business Development. Your responsibilities will
include the promotion of the Company's products and services and the development
of key business relationships.
2. As consideration for your services, you shall be entitled to receive
compensation as follows:
a) Base salary at the rate of $80,000 per year.
b). 16,000 shares of stock, representing approximately .20% in the
Company after the first 90 days of service (effective August 19, 1997)
with the Company. Should any liquidity event (ex. a public or private
sale of the Company) takes place prior to this 90 day term, ownership
of the 16,000 shares will become immediate.
c). Within 180 days, the Company intends to establish a plan for
employees to accumulate greater shares of stock in the Company, and you
will be a beneficiary of such a plan.
d). You are eligible for a discretionary bonus, and that if and when
such a bonus program is formalized in any manner, you will be a
beneficiary of such a plan.
e). Your employment shall begin on May 27, 1997 and shall continue
until termination by either party upon not less than 30 days notice to
the other. The Company agrees that you will be entitled to severance
pay in the following manner: if you are terminated prior to completion
of six months of service with the Company, you shall be entitled to
three months of severance pay; if you are terminated at any point after
six months of service with the Company, you shall be entitled to six
months of severance pay. Severance is payable upon termination.
Notwithstanding the foregoing, if you are terminated for cause,
including, but not limited to theft, fighting, dishonesty, disloyalty,
disability, lasting longer than sixty (60) days, etc., then no
severance shall be made.
f). You shall be entitled to participate in the following Company
benefits and such other benefits as may become available:
1). Medical insurance is available after the first 30 days of
employment. You and the Company agree to determine what
arrangement is best for both parties: to keep your current
insurance and have the Company cover out-of-pocket costs; or
to be placed on the Company's medical plan. Regardless, you
will always have access to the Company's medical plan.
<PAGE> 2
Cybernet Data Systems, Inc. Employment Agreement page 2
2). You shall be entitled to two weeks of vacation per year.
3). The Company has expressed its intention to put in place a
401(k) plan.
4). You and the Company have discussed travel expenses and
agree to determine what is best for both parties after the
execution of this agreement.
3). With regard to confidentiality and competitive activities:
a). You acknowledge that you will come into possession of
confidential information concerning products, clients,
customers and employees and you will agree that during your
employment and for a period of one year thereafter, you will
not disclose such information to any person or entity without
the Company's prior written consent.
b). You agree that you will not solicit any employees of the
Company to leave their employment and work for you or another
company during your employment and for a period of one year
thereafter; and
c). You agree that you will not compete, directly or
indirectly, with the Company for a period of six months after
your employment ends.
4). Alteration or Assignment of Agreement:
a). This agreement may not be changed except by a writing
signed by both parties.
b). This agreement may be assigned to any affiliate of
the Company or to any successor to a substantial portion of
the Company's assets or business.
Please confirm your agreement to the foregoing by signing and returning
a copy of this letter.
Sincerely,
CYBERNET DATA SYSTEMS, INC.
By: /s/ Susan Strausberg
----------------------------------
Susan Strausberg, President
By: /s/ Marc Strausberg
----------------------------------
Marc Strausberg, CEO
Agreement Confirmed:
By: /s/ Jay Sears
----------------------------------
Jay Sears
<PAGE> 1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of the First day of May, 1999 (the "Effective
Date"), between EDGAR ONLINE, INC. with its principal office at 50 Washington
Street, Norwalk, Connecticut ("Company"), and DAVID M TRENCK, an individual
having an address at 228 Stratfield Road, Apt. 3, Fairfield, Connecticut 06432
("Employee").
W I T N E S S E T H:
WHEREAS, the Company operates an Internet financial information business;
and
WHEREAS, the Employee desires to be employed by the Company and
acknowledges that the execution of the Agreement is a condition of such
employment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Employment. The Company shall employ the Employee and the Employee
shall serve the Company, upon the terms and conditions hereinafter set forth.
2. Term. The employment of Employee hereunder shall be for a period of
three years from the date hereof (the "Employment Term"). Upon the expiration of
the initial term and on each anniversary date thereafter, the employment of
Employee shall be renewed and extended for an additional year unless either
party terminates this agreement on thirty (30) days written notice prior to the
renewal date.
3. Duties. During the Employment Term, Employee shall hold the position of
Vice President of Operations with have such duties, functions and
responsibilities on behalf of the Company as are assigned to him by the Chief
Executive Officer or the President and Chief Operating Officer, provided,
however, that Employee shall not cause the Company to engage in
Page 1 of 11
<PAGE> 2
any activity that is illegal, immoral or unethical or that is outside the
ordinary course of its business.
4. Compensation and Employee Benefits. Employee shall receive, as full
compensation for his services to the Company, payment based on an annual salary
of Eighty Thousand ($80,000) Dollars, paid by the Company in accordance with its
standard payroll practices. The payment due Employee hereunder shall be reviewed
annually by the Company. The annual salary and each of the cash payments listed
below shall be subject to applicable withholding taxes as reflected on the W-9
completed by the Employee.
(a) Severance in Connection with a Change of Control. (i)
Notwithstanding anything contained herein to the contrary, in the
event that there is a change of control of the Company (as defined
below), and the Agreement is terminated by either the Employee or
the Company for whatever reason within one year of such a change of
control, the Company shall pay to the Employee, in addition to
accrued salary and benefits payable to the Employee through the date
of termination of employment, a severance payment from the Company
equal to 1 1/2 times the Employee's then applicable base salary. In
addition, all stock options and other awards under the Company's
1996 and 1999 stock option plans shall immediately vest and remain
exercisable for a period of the lesser of the original term of the
stock option and five years.
(ii) For purposes of this Agreement, a "change of control of the
Company" shall mean the occurrence of (i) the acquisition by an
individual, entity, or group of the beneficial ownership of 50% or
more (other than by Marc and Susan Strausberg and their affiliates)
of (1) the outstanding common stock, or (2) the combined voting
Page 2 of 11
<PAGE> 3
power of the Company's voting securities; provided, however, that
the following acquisitions will not constitute a "change of
control": (x) any acquisition by any employee benefit plan of the
Company or any affiliate or (y) any acquisition by any corporation
if, immediately following such acquisition, more than 50% of the
outstanding common stock and the outstanding voting securities of
such corporation is beneficially owned by all or substantially all
of those who, immediately prior to such acquisition, were the
beneficial owners of the common stock and the Company's voting
securities (in substantially similar proportions as their ownership
of such Company securities immediately prior thereto); or (ii) the
approval by the Company's stockholders of a reorganization, merger
or consolidation, other than one with respect to which all or
substantially all of those who were the beneficial owners,
immediately prior to such reorganization, merger or consolidation,
of the Common Stock and the Company's voting securities beneficially
own, immediately after such transaction, more than 50% of the
outstanding common stock and voting securities of the corporation
resulting from such transaction (in substantially the same
proportions as their ownership, immediately prior thereto, of the
Common Stock and the Company's voting securities); or (iii) the
approval by the Company's stockholders of the sale or other
disposition of all or substantially all of the assets of the
Company, other than to a subsidiary of the Company
(b) Bonus. The Employee will be entitled for consideration of an annual
bonus each year based on a performance evaluation to be determined
at the discretion of the Company in December of each year.
Page 3 of 11
<PAGE> 4
(c) Vacation. Employee shall be entitled to paid vacation of four (4)
weeks during each year.
(d) Insurance. Employee shall receive all standard company insurance
coverage, e.g. long-term disability, medical insurance for the
employee and his dependents.
5. Disability. In the event that Employee shall be incapacitated by reason
of mental or physical disability or otherwise during the term of his employment
hereunder, such that he is prevented from performing the services required
hereunder for period of twelve (12) consecutive or non-consecutive weeks in any
period of six (6) consecutive months, the Company shall have the right, at its
option to terminate this Agreement as of the last day of such twelve (12) week
period by sending written notice of such termination to Employee in which event
the Company shall have no further obligations hereunder, other than the
obligation to pay Employee any accrued and unpaid compensation to which he is
entitled to the date of such termination.
6. Termination for Cause. The Company shall have the right to terminate
Employee's employment under this Agreement and any and all payments to be made
hereunder if Employee at any time during the term of his employment, commits any
of the following "Acts".
(a) Employee shall be convicted of any crime (whether or not involving the
Company) which (i) constitutes a felony in the jurisdiction involved or (ii) is
of such a nature as to affect adversely the reputation of the Company; or
(b) Employee shall commit an act of fraud, breach of loyalty or
malfeasance against the Company; or
(c) Employee shall cause the reputation and goodwill of the Company or its
affiliates to suffer substantial damage; or
(d) Employee shall violate any of the provisions of this Agreement; or
Page 4 of 11
<PAGE> 5
(e) Employee shall not perform his duties as directed by the Company. The
decision of the Board of Directors of the Company in such matter shall be final.
In the event that the Company elects to terminate Employee's employment
under this Agreement for cause as set forth above, the Company shall send
written notice of such termination to Employee and thereupon no further payments
of any type shall be made or shall be payable to Employee hereunder except for
any accrued and unpaid compensation earned by him or to which he is entitled
prior to the date of such termination.
7. Confidentiality; Noncompetition.
(a) The Company and the Employee acknowledge that the services to be
performed by the Employee under this Agreement are unique and extraordinary and,
as a result of such employment, the Employee will be in possession of
confidential information relating to the business practices of the Company. The
term "confidential information" shall mean any and all information (oral or
written) relating to the Company or any of its affiliates, or any of their
respective activities, other than such information which can be shown by the
Employee to be in the public domain (such information not being deemed to be in
the public domain merely because it is embraced by more general information
which is in the public domain) other than as the result of breach of the
provisions of this Section 7(a), including, but not limited to, information
relating to: trade secrets, proprietary information, personnel lists, financial
information, research projects, services used, pricing, customers, customer
lists and prospects, product sourcing, marketing and selling and servicing. The
Employee agrees that he will not, during his employment or subsequent to the
termination of employment, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any confidential information
regarding the clients, customers or business practices of the Company
Page 5 of 11
<PAGE> 6
acquired by the Employee during his employment by Company, without the prior
written consent of Company; provided, however, that the Employee understands
that he will be prohibited from misappropriating any trade secret at any time
during or after the termination of employment. At no time during the Employment
Term, or thereafter shall the Employee directly or indirectly, disparage the
commercial, business or financial reputation of the Company.
(b) In consideration of Company's hiring Employee, the payment by
the Company to the Employee of the compensation described herein and for other
good and valuable consideration, the Employee hereby agrees that he shall not,
during the Employment Term and for a period of one (1) year following such
employment (the "Restrictive Period"), directly or indirectly, take any action
which constitutes an interference with or a disruption of any of the Company's
business activities.
(c) For purposes of clarification, but not of limitation, the
Employee hereby acknowledges and agrees that the provisions of Section 7(b)
above shall serve as a prohibition against him, during the Restrictive Period :
(1) directly or indirectly, contacting, soliciting or
directing any person, firm, or corporation to contact or solicit,
any of the Company's customers, prospective customers, or business
partners for the purpose of selling or attempting to sell, any
products and/or services that are the same as or similar to the
products and services provided by the Company to its customers
during the Restrictive Period. In addition, the Employee will not
disclose the identity of any such business partners, customers, or
prospective customers, or any part thereof, to any person, firm,
corporation, association, or other entity for any reason or purpose
whatsoever; and
Page 6 of 11
<PAGE> 7
(2) directly or indirectly, engaging or carrying on in any
manner (including, without limitation, as principal, shareholder,
partner, lender, agent, employee, consultant, or investor (other
than a passive investor with less than a five percent (5%) interest)
trustee or through the agency of any corporation, partnership,
limited liability company, or association) in any business that is
in competition with the engaged in any business in competition with
the business of the Company; and
(3) soliciting on his own behalf or on behalf of any other
person, the services of any person who is an employee of the
Employer, and soliciting any of the Employer's employees to
terminate employment with the Employer.
(d) Upon the termination of the Employee's employment for any reason
whatsoever, all documents, records, notebooks, equipment, price lists,
specifications, programs, customer and prospective customer lists and other
materials which refer or relate to any aspect of the business of the Company
which are in the possession or under the control of the Employee including all
copies thereof, shall be promptly returned to the Company.
(e) The parties hereto hereby acknowledge and agree that (i) the
Company would be irreparably injured in the event of a breach by the Employee of
any of his obligations under this Section 7, (ii) monetary damages would not be
an adequate remedy for any such breach, and (iii) the Company shall be entitled
to injunctive relief, in addition to any other remedy which it may have, in the
event of any such breach .
Page 7 of 11
<PAGE> 8
(f) The rights and remedies enumerated in Section 7(e) shall be
independent of the other, and shall be enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
(g) If any provision contained in this Section 7 is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
(h) If any provision contained in this Section 7 is found to be
unenforceable by reason of the extent, duration or scope thereof, or otherwise,
then the court making such determination shall have the right to reduce such
extent, duration, scope or other provision and in its reduced form any such
restriction shall thereafter be enforceable as contemplated hereby.
(i) It is the intent of the parties hereto that the covenants
contained in this Section 7 shall be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is
sought (the Employee hereby acknowledging that said restrictions are reasonably
necessary for the protection of the Company). Accordingly, it is hereby agreed
that if any of the provisions of this Section 7 shall be adjudicated to be
invalid or unenforceable for any reason whatsoever, said provision shall be
(only with respect to the operation thereof in the particular jurisdiction in
which such adjudication is made) construed by limiting and reducing it so as to
be enforceable to the extent permissible, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of said
provision in any other jurisdiction
Page 8 of 11
<PAGE> 9
8. Severability. If any covenant of Employee set forth in this Agreement
shall be invalid or unenforceable in any jurisdiction because of its duration or
geographic area or both, as the case may be, such covenant shall reduce in
duration or geographic area, or both, as the case may be, to such extent as to
make it valid and enforceable in such jurisdiction and in all other respects it
shall remain in full force and effect.
9. Prior Agreements. This Agreement cancels and supersedes any and all
prior agreements and understandings between the parties hereto respecting the
employment of Employee by the Company.
10. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, to the other party
hereto at his or its address as set forth in the beginning of this Agreement.
Either party may change the address to which notices, requests, demands and
other communications hereunder shall be sent by sending written notice of such
change of address to the other party in the manner above provided.
11. Assignability and Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the executors, administrators, successors
and legal representatives of Employee and shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
12. Waiver. Waiver by either party hereto of any breach or default by the
other party in respect of any of the terms and conditions of this Agreement
shall not operate as a waiver of any other breach or default, whether similar to
or different from the breach or default waived.
13. Complete Understanding: Amendment and Termination. This Agreement
constitutes the complete understanding between the parties with respect to the
employment of
Page 9 of 11
<PAGE> 10
Employee hereunder and no statement, representation, warranty or covenant has
been made by either party with respect thereto except as expressly set froth
herein. This Agreement shall not be altered, modified, amended or terminated
except by written instrument signed by each of the parties hereto; provided,
however, that the waiver by either party hereto of compliance with any provision
hereof or of any breach or default by the other party hereto need be signed only
by the party waiving such provision, breach or default.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one and the same Agreement.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
16. Paragraph Headings. The paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Execution of Agreement. Employee shall execute this Agreement no later
than May 1, 1999. In the event said Agreement is not executed by Employee by
said date, the non-signing of the Agreement constitutes Employee's choice to
terminate his employment with the Company.
18. Consideration. Employee hereby acknowledges and agrees that the
employment opportunity encompassed in this Agreement is contingent upon the
execution of this Agreement and that such employment, in addition to the mutual
promises herein, constitutes adequate consideration for this Agreement.
Page 10 of 11
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
EDGAR ONLINE, INC.
By: /s/ Tom Vos
--------------------------
Its: President and Chief Operating Officer
Date: May 3, 1999
------------------------
/s/ David M. Trenck
- ------------------------------
David M. Trenck
Date: May 3, 1999
------------------------
Page 11 of 11
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
CYBERNET DATA SYSTEMS, INC.
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of the day of , 1998, by and between Cybernet Data Systems,
Inc., a Delaware corporation (the "Company"), and (the
"Holder").
W I T N E S S E T H:
WHEREAS, the Holder has agreed to purchase the (as such
terms are defined that certain Securities Purchase Agreement of even date
herewith between the Company and the Holder (the "Purchase Agreement")); and
WHEREAS, as additional consideration for the purchase of the by
the Holder, the Company desires to grant to the Holder registration rights with
respect to the Registrable Securities (as hereinafter defined);
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the Common Stock issuable
or issued upon conversion of the or upon exercise of the ; and
(ii) any Common Stock of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, the Common Stock, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which such person's
registration rights are not assigned; provided, however, that as to any
particular securities that are included in Registrable Securities, such
securities shall cease to be Registrable Securities when (i) such shares shall
have been sold to the public pursuant to a registered public offering or (ii)
such securities shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act of 1933, as amended (the "1933 Act").
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are exercisable or convertible into,
Registrable Securities;
1
<PAGE> 3
2. Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holder) its Common Stock under
the 1933 Act in connection with the public offering of such securities solely or
substantially for cash (other than a registration relating solely to a Company
stock plan or a registration on Form S-4 or on any other form which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities),
the Company shall, at such time, promptly give the Holder written notice of such
registration in accordance with subparagraph 12(c) hereof. Upon the written
request of the Holder given within thirty (30) days after mailing of such notice
by the Company, the Company shall use its best efforts, subject to the
provisions of Paragraph 6, to cause to be registered under the Securities Act
all of the Registrable Securities that the Holder has requested to be
registered; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Paragraph 2 without
obligation to the Holder. Notwithstanding anything to the contrary contained in
this Agreement, the Company shall have the right to defer the initial filing or
effectiveness of the Registration Statement (A) for such reasonable period of
time until the Company receives or prepares financial statements for the fiscal
period most recently ended prior to such written request, if necessary to avoid
the use of stale financial statements, or (B) if the Company would be required
to divulge in such Registration Statement the existence of any fact relating to
a material business situation, transaction or negotiation not otherwise required
to be disclosed or if the Board of Directors of the Company shall determine in
good faith that the registration to be effected would not be in the best
interest of the Company. The Company may impose stop-transfer instructions with
respect to the Registrable Securities for any period of suspension of
effectiveness of the Registration Statement.
3. Obligations of the Company. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holder,
keep such registration statement effective until this Agreement is terminated
pursuant to Paragraph 11 hereunder.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders covered by such registration statement such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such other documents as
they may reasonably request in order to facilitate the disposition of such
Registrable Securities.
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<PAGE> 4
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders thereof,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. The Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify the Holder covered by such registration statement at any time
when a prospectus relating thereto is required to be delivered under the 1933
Act of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing. Upon such notification, the Holders shall
immediately cease making offers of Registered Securities and return all
prospectuses to the Company. The Company shall promptly provide the Holders with
revised prospectuses and, following receipt of the revised prospectuses, the
Holders shall be free to resume making offers of the Registered Securities.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
(h) Use its best efforts to list the Registrable Securities covered by
such registration statement with any securities exchange on which the Common
Stock is then listed.
4. Provision of Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of the
Registrable Securities.
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<PAGE> 5
5. Expenses of Company Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to
Paragraph 2 for the Holder thereof including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees
relating or apportionable thereto, but excluding the Holder's counsel fees,
underwriting discounts and commissions and to the extent appropriate a pro rata
portion of the nonaccountable expense allowance of underwriters relating to
Registrable Securities.
6. Underwriting Requirements. In connection with any offering involving an
underwriting of shares being issued by the Company, the Company shall not be
required under Paragraph 2 to include any of the Holder's securities in such
underwriting unless it accepts the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters reasonably believe compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder that is a holder of
Registrable Securities and that is a partnership or corporation, the partners,
retired partners and stockholders of the Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
7. Delay of Registration. The Holder shall have no right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
8. Indemnification. In the event any Registrable Securities are included
in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless the Holder of such Registrable Securities, the officers and directors
of each the Holder, any underwriter (as defined in the 1933 Act) for the Holder
and each person, if any, who controls the Holder or underwriter within the
meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended ("the
1934 Act"), against any losses, claims, damages or liabilities joint or several
to which they may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such losses,
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<PAGE> 6
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any
state securities law; and the Company will reimburse each the Holder, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subparagraph 8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any of the Holder, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, any underwriter and any other Holder selling
securities in such registration statement or any of its directors or officers or
any person who controls the Holder, against any losses, claims, damages or
liabilities joint or several) to which the Company or any such director, officer
or controlling person may become subject, under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by the Holder expressly for use in connection with such registration;
and each the Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or controlling person, other Holder, officer, director, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subparagraph 8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subparagraph 8(b) exceed the gross proceeds from the offering
received by the Holder.
(c) Promptly after receipt by an indemnified party under this Paragraph 8
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Paragraph 8, deliver to the indemnifying party
a written notice of the commencement thereof and the
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<PAGE> 7
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that any indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such actions, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Paragraph 8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Paragraph 8.
(d) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to subparagraph 8(a) or 8(b)
but it is found in a final judicial determination, not subject to further
appeal, that such indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the 1933 Act, the
1934 Act, or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any officer, director, employee, agent or
counsel of the Company, or any controlling person of the Company), on the one
hand, and the Holders (including for this purpose any contribution by or on
behalf of an indemnified party), on the other hand, shall contribute to the
losses, liabilities, claims, damages, and expenses to which any of them may be
subject, in such proportions as are appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Holders, on the other hand;
provided, however, that if applicable law does not permit such allocation, then
other relevant equitable considerations such as the relative fault of the
Company and the Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses shall also be considered. The
relative benefits received by the Company, on the one hand, and the Holders, on
the, other hand, shall be deemed to be in the same proportion as the total
proceeds from the offering received by each of the Company on the one hand and
the Holders, on the other hand.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by the Holders, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and Holders agree that it would be unjust and inequitable
if the respective obligations of the Company and the Holders for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses or by any other method of allocation
that does not reflect the equitable considerations referred to in this
subparagraph 8(d). No person guilty of a fraudulent misrepresentation (within
the meaning of subparagraph 11(f) of the 1933 Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this subparagraph 8(d), each person, if any,
who controls a Holder within the meaning
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<PAGE> 8
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act and each officer,
director, stockholder, employee, agent and counsel of the Holders shall have the
same rights of contribution as the Holder, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act and each officer, director, employee, agent and counsel of the
Company, shall have the same rights to contribution as the Company, subject in
each case to the provisions of this subparagraph 8(d). Anything in this
subparagraph 8(d) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This subparagraph 8(d) is intended to supersede any
right to contribution under the 1933 Act, the 1934 Act, or otherwise.
(e) The obligations of the Company and Holders under this Paragraph 8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
9. Reports Under the 1934 Act. With a view to making available to the
Holders the benefits of Rule 144 under the 1933 Act and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public; and
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act.
10. Market Stand-Off' Agreement. The Holder hereby agrees that it shall
not, to the extent requested by the Company and an underwriter of Common Stock
(or other securities) of the Company, sell or otherwise transfer or dispose
(other than to donees who agree to be similarly bound) of any Registrable
Securities during a reasonable and customary period of time, as agreed to by the
Company and the underwriters, not to exceed 180 days, following the effective
date of a registration statement of the Company filed under the 1933 Act;
provided, however, that:
(a) such agreement shall be applicable only to the first such registration
statement of the Company which covers shares (or securities) to be sold on its
behalf to the public in an underwritten offering; and
(b) Marc Strausberg, Susan Strausberg, all executive officers, directors,
and shareholders who own or are deemed to own Common Stock in an amount equal to
or in excess of that number of shares of Common Stock owned or deemed to be
owned by Globix Corporation and all other persons with registration rights
(whether or not pursuant to this Agreement) enter into similar agreements.
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<PAGE> 9
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder thereof until the end of such reasonable and customary period.
11. Termination of Registration Rights. The Company's obligations pursuant
to this Agreement shall terminate as to the Holder of Registrable Securities on
the earlier of (i) when the Holder can remove the restrictive legend on the
Holder's shares pursuant to Rule 144(k) under the 1933 Act (or any such
successor rule) at anytime after an initial public offering or (ii) on the fifth
anniversary of the date hereof.
12. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its obligations
under this Agreement, the Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
unless such amendment, modification or supplement is in writing and signed by
the parties hereto.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, initially to the address set forth below, and thereafter at
such other address, notice of which is given in accordance with the provisions
of this of this subparagraph 12(c):
(i) if to the Company:
Cybernet Data Systems, Inc.
50 Washington Street
Norwalk, CT 06854.
Copy to:
Mitchell C. Littman, Esq.
Littman Krooks Roth & Ball P.C.
655 Third Avenue
New York, NY 10017
(ii) if to the Holder:
At the address set forth in the Purchase Agreement
Copy to:
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<PAGE> 10
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; two business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
holders of the Registrable Shares subject to the terms hereof.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflicts of law provisions.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provisions contained herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are not restrictions, promises
warranties or undertakings, other than those set forth or referred to herein,
concerning the registration rights granted by the Company pursuant to this
Agreement.
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\
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
CYBERNET DATA SYSTEMS, INC.
By:
------------------------------------
Name: Marc Strausberg
Title: President and CEO
HOLDER:
By:
------------------------------------
Title:
Print Name:
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<PAGE> 1
EDGAR ONLINE, INC.
SUBSCRIPTION AGREEMENT
Edgar Online, Inc.
50 Washington Street
Norwalk, CT 06854
Gentlemen:
1. Subscription. The undersigned (the "Purchaser"), intending to be legally
bound, hereby irrevocably agrees to purchase from Edgar Online, Inc. (the
"Company") the number of units (the "Units") set forth on the signature page
hereof, at a purchase price of $45,000 per Unit. Each Unit consists of 10,000
shares of Common Stock, par value $.01 per share, of the Company (the "Common
Stock") and a Warrant to purchase 10,000 shares of the Common Stock during the
period commencing on January 1, 2000 and expiring on January 31, 2000, subject
to certain vesting conditions set forth therein (the "Warrants"). This
subscription is submitted to you in accordance with and subject to the terms and
conditions described in this Subscription Agreement and the Term Sheet of the
Company dated February 24, 1999, as amended or supplemented from time to time,
including all attachments, schedules and exhibits thereto (the "Term Sheet"),
relating to the offering by the Company of a minimum of 11 Units (the "Minimum
Amount") and a maximum of 22 Units (the "Offering").
The terms of the Offering are more completely described in the Term Sheet
and such terms are incorporated herein in their entirety. Certain terms used but
not otherwise defined herein shall have the respective meanings provided in the
Term Sheet.
2. Payment. The Purchaser encloses herewith a check payable to, or will
immediately make a wire transfer payment to, "Littman Krooks Roth & Ball P.C.,
Escrow Agent for Edgar Online, Inc." in the full amount of the purchase price of
the Units being subscribed for. To request wire transfer instructions, please
contact Ms. Susan Strausberg, telephone no. (203) 852- 5666. Such funds will be
held for the Purchaser's benefit, and will be returned promptly, without
interest, penalty, expense or deduction if this Subscription Agreement is not
accepted by the Company, the Offering is terminated pursuant to its terms or by
the Company, or the Minimum Amount of Units is not sold.
3. Deposit of Funds. All payments made as provided in Section 2 hereof shall be
deposited as soon as practicable with Littman Krooks Roth & Ball P.C., as escrow
agent (the "Escrow Agent"), in an escrow account (the "Escrow Account") until
the earliest to occur of (a) the closing of the sale of the Minimum Amount of
Units (the "First Closing"), (b) the rejection of such subscription or (c) the
termination of the Offering by the Company. The Company may continue to offer
and sell the Units and conduct additional closings (each, a "Closing") for the
sale of additional Units after the First Closing and until the termination of
the Offering.
4. Acceptance of Subscription. The Purchaser understands and agrees that the
Company in its sole discretion reserves the right to accept or reject this or
any other subscription for Units,
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<PAGE> 2
in whole or in part, notwithstanding prior receipt by the Purchaser of notice of
acceptance of this subscription. The Company shall have no obligation hereunder
until the Company shall execute and deliver to the Purchaser an executed copy of
this Subscription Agreement. If this subscription is rejected in whole or the
Offering is terminated or the Minimum Amount is not raised, all funds received
from the Purchaser will be returned without interest, penalty, expense or
deduction, and this Subscription Agreement shall thereafter be of no further
force or effect. If this subscription is rejected in part, the funds for the
rejected portion of this subscription will be returned without interest,
penalty, expense or deduction, and this Subscription Agreement will continue in
full force and effect to the extent this subscription was accepted.
5. Representations and Warranties. The Purchaser hereby acknowledges,
represents, warrants and agrees as follows:
(a) None of the shares of Common Stock or the Warrants contained in the Units or
the shares of Common Stock underlying the Warrants contained in the Units and
offered pursuant to the Term Sheet are registered under the Securities Act of
1933, as amended (the "Securities Act") or any state securities laws. The
Purchaser understands that the offering and sale of the Units is intended to be
exempt from registration under the Securities Act, by virtue of Section 4(2)
thereof based, in part, upon the representations, warranties and agreements of
the Purchaser contained in this Subscription Agreement;
(b) The Purchaser and the Purchaser's attorney, accountant, purchaser
representative and/or tax advisor, if any (collectively, the "Advisors") have
received the Term Sheet and all other documents requested by the Purchaser, have
carefully reviewed them and understand the information contained therein, and
the Purchaser and the Advisors, if any, prior to the execution of this
Subscription Agreement, have had access to the same kind of information which
would be available in a registration statement filed by the Company under the
Securities Act;
(c) Neither the Securities and Exchange Commission nor any state securities
commission has approved the Units, the shares of Common Stock, the Warrants or
any of the shares of Common Stock underlying the Warrants, or passed upon or
endorsed the merits of the Offering or confirmed the accuracy or determined the
adequacy of the Term Sheet. The Term Sheet has not been reviewed by any Federal,
state or other regulatory authority;
(d) All documents, records, and books pertaining to the investment in the Units
(including, without limitation, the Term Sheet) have been made available for
inspection by the Purchaser and the Advisors, if any;
(e) The Purchaser and the Advisors, if any, have had a reasonable opportunity to
ask questions of and receive answers from a person or persons acting on behalf
of the Company concerning the offering of the Units and the business, financial
condition, results of operations and prospects of the Company, and all such
questions have been answered to the full satisfaction of the Purchaser and the
Advisors, if any;
(f) In evaluating the suitability of an investment in the Company, the Purchaser
has not relied upon any representation or other information (oral or written)
other than as stated in the Term Sheet or as contained in documents or answers
to questions so furnished to the Purchaser or the Advisors, if any, by the
Company;
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<PAGE> 3
(g) The Purchaser is unaware of, is no way relying on, and did not become aware
of the offering of the Units through or as a result of, any form of general
solicitation or general advertising including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio, in connection
with the offering and sale of the Units and is not subscribing for Units and did
not become aware of the offering of the Units through or as a result of any
seminar or meeting to which the Purchaser was invited by, or any solicitation of
a subscription by, a person not previously known to the Purchaser in connection
with investments in securities generally;
(h) The Purchaser has taken no action which would give rise to any claim by any
person for brokerage commissions, finders' fees or the like relating to this
Subscription Agreement or the transactions contemplated hereby (other than
commissions and warrants to be paid by the Company to VM Equity Partners);
(i) The Purchaser, together with the Advisors, if any, have such knowledge and
experience in financial, tax and business matters, and, in particular,
investments in securities, so as to enable them to utilize the information made
available to them in connection with the offering of the Units to evaluate the
merits and risks of an investment in the Units and the Company and to make an
informed investment decision with respect thereto;
(j) The Purchaser is not relying on the Company or any of its employees or
agents with respect to the legal, tax, economic and related considerations of an
investment in the Units, and the Purchaser has relied on the advice of, or has
consulted with, only his own Advisors;
(k) The Purchaser is acquiring the Units solely for such Purchaser's own account
for investment and not with a view to resale or distribution thereof, in whole
or in part. The Purchaser has no agreement or arrangement, formal or informal,
with any person to sell or transfer all or any part of the Units, the Warrants
or the shares of Common Stock issuable upon conversion of the Warrants contained
in the Units; and the Purchaser has no plans to enter into any such agreement or
arrangement;
(l) The Purchaser must bear the substantial economic risks of the investment in
the Units indefinitely because none of the securities included in the Units may
be sold, hypothecated or otherwise disposed of unless subsequently registered
under the Securities Act and applicable state securities laws or an exemption
from such registration is available. Legends shall be placed on the securities
included in the Units to the effect that they have not been registered under the
Securities Act or applicable state securities laws and appropriate notations
thereof will be made in the Company's stock books. Stop transfer instructions
will be placed with the transfer agent of the securities constituting the Units.
The Company has agreed that purchasers of the Units will have, with respect to
the shares of Common Stock underlying the Warrants included in the Units, the
registration rights described in Section 6 described herein. Notwithstanding
such registration rights, it is not anticipated that there will be any market
for resale of the Units, Warrants or Common Stock and such securities will not
be freely transferable at any time in the foreseeable future;
(m) The Purchaser has adequate means of providing for such Purchaser's current
financial needs and foreseeable contingencies and has no need for liquidity of
the investment in the Units for an indefinite period of time;
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<PAGE> 4
(n) The Purchaser is aware that an investment in the Units involves a number of
very significant risks and, in particular, acknowledges that the Company has had
a limited operating history and is not profitable;
(o) The Purchaser meets the requirements of at least one of the suitability
standards for an "accredited investor" as set forth on the Accredited Investor
Certification contained herein;
(p) The Purchaser: (i) if a natural person represents that the Purchaser has
reached the age of 21 and has full power and authority to execute and deliver
this Subscription Agreement and all other related agreements or certificates and
to carry out the provisions hereof and thereof; (ii) if a corporation,
partnership, limited liability company, association, joint stock company, trust,
unincorporated organization or other entity, such entity was not formed for the
specific purpose of acquiring the Units, such entity is duly organized, validly
existing and in good standing under the laws of the state of its organization,
the consummation of the transactions contemplated hereby is authorized by, and
will not result in a violation of state law or its charter or other
organizational documents, such entity has full power and authority to execute
and deliver this Subscription Agreement and all other related agreements or
certificates and to carry out the provisions hereof and thereof and to purchase
and hold the securities constituting the Units, the execution and delivery of
this Subscription Agreement has been duly authorized by all necessary action,
this Subscription Agreement has been duly executed and delivered on behalf of
such entity and is a legal, valid and binding obligation of such entity; and
(iii) if executing this Subscription Agreement in a representative or fiduciary
capacity, it has full power and authority to execute and deliver this
Subscription Agreement in such capacity and on behalf of the subscribing
individual, ward, partnership, trust, estate, corporation, limited liability
company or other entity for whom the Purchaser is executing this Subscription
Agreement, and such individual, ward, partnership, trust, estate, corporation,
limited liability company or other entity has full right and power to perform
pursuant to this Subscription Agreement and make an investment in the Company,
and that this Subscription Agreement constitutes a legal, valid and binding
obligation of such entity. The execution and delivery of this Subscription
Agreement will not violate or be in conflict with any order, judgment,
injunction, agreement or controlling document to which the Purchaser is a party
or by which it is bound;
(q) The Purchaser and the Advisors, if any, had the opportunity to obtain any
additional information, to the extent the Company had such information in its
possession or could acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information contained in the Term Sheet and all
documents received or reviewed in connection with the purchase of the Units and
have had the opportunity to have representatives of the Company provide them
with such additional information regarding the terms and conditions of this
particular investment and the financial condition, results of operations,
business and prospects of the Company deemed relevant by the Purchaser or the
Advisors, if any, and all such requested information, to the extent the Company
had such information in its possession or could acquire it without unreasonable
effort or expense, has been provided to its full satisfaction;
(r) The Purchaser represents to the Company that any information which the
undersigned has heretofore furnished or furnishes herewith to the Company is
complete and accurate and may be relied upon by the Company in determining the
availability of an exemption from registration under Federal and state
securities laws in connection with the offering of securities as described in
the Term Sheet. The Purchaser further represents and warrants that it will
notify and supply corrective information to the Company immediately upon the
occurrence of any change therein occurring prior to the Company's issuance of
the securities contained in the Units;
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<PAGE> 5
(s) The Purchaser has significant prior investment experience, including
investment in non-listed and non-registered securities. The Purchaser is
knowledgeable about investment considerations in development-stage companies.
The Purchaser has a sufficient net worth to sustain a loss of its entire
investment in the Company in the event such a loss should occur. The Purchaser's
overall commitment to investments which are not readily marketable is not exces
sive in view of its net worth and financial circumstances and the purchase of
the Units will not cause such commitment to become excessive. The investment is
a suitable one for the Purchaser;
(t) The Purchaser is satisfied that it has received adequate information with
respect to all matters which it or the Advisors, if any, consider material to
its decision to make this investment;
(u) No oral or written representations have been made, or oral or written
information furnished, to the Purchaser or the Advisors, if any, in connection
with the offering of the Units which are in any way inconsistent with the
information contained in the Term Sheet;
(v) Within five days after receipt of a request from the Company, the Purchaser
will provide such information and deliver such documents as may reasonably be
necessary to comply with any and all laws and ordinances to which the Company is
subject;
(w) THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR
ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE TERM
SHEET. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL; and
(z) (For ERISA plans only)The fiduciary of the ERISA plan represents that he has
been informed of and understands the Company's investment objectives, policies
and strategies, and that the decision to invest "plan assets" (as such term is
defined in ERISA) in the Company is consistent with the provisions of ERISA that
require diversification of plan assets and impose other fiduciary
responsibilities. The Purchaser fiduciary or Plan (a) is responsible for the
decision to invest in the Company; (b) is independent of the Company or any of
its affiliates; (c) is qualified to make such investment decision, and (d) in
making such decision, the Purchaser fiduciary or Plan has not relied primarily
on any advice or recommendation of the Company or any of its affiliates.
6. Registration Rights.
(a) In the event that the Company seeks to effect a public offering of its
securities and, in such regard, the Company shall determine to proceed with the
actual preparation and filing of a registration statement under the Securities
Act in connection with the proposed offer and sale of any of its securities by
it or any of its security holders (other than a registration statement on Form
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<PAGE> 6
S-4, S-8 or other limited purpose form), then the Company will give written
notice of such determination to all holders of Units ("Holders"). Upon the
written request of the Holders (the "Responding Holders"), within twenty (20)
days after receipt of any such notice from the Company, the Company will, except
as provided herein, cause all, or any portion so requested, of the shares of
Common Stock contained in the Units and the shares of Common Stock underlying
the Warrants contained in the Units (collectively the "Registrable Securities")
owned by the Responding Holders to be included in such registration statement,
all to the extent requisite to permit the sale or other disposition by the
prospective seller or sellers of the Registrable Securities to be so registered;
provided, however, that nothing provided herein shall either (i) require the
Company to file any registration statement at any time or (ii) prevent the
Company from, at any time, abandoning or delaying any such registration. If any
registration pursuant to this Section 6(a) shall be underwritten, in whole or in
part, the Company shall require that the Registrable Securities requested for
inclusion pursuant to this Section 6(a) be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through the
underwriters. Notwithstanding the foregoing, if the managing underwriter
determines and advises in writing that the inclusion of all or any portion of
the Registrable Securities proposed to be included in the underwritten public
offering, together with any other issued and outstanding securities proposed to
be included therein by holders of securities other than the Responding Holders,
would interfere with the successful marketing of such securities, then the
number of such Registrable Securities that the managing underwriter believes may
be sold in such underwritten public offering shall be allocated for inclusion in
the registration statement in the following order of priority: (i) the
securities being offered by the Company: (ii) to the extent not in conflict with
prior agreements of the Company, the number of Registrable Securities then owned
by each Responding Holder, on a pro rata basis, based upon the number of
Registrable Securities sought to be registered by each such Responding Holder;
and (iii) the number of securities held by holders other than Responding
Holders, on a pro rata basis, based upon the number of securities sought to be
registered by each such other holder. The Registrable Securities that are
excluded from the underwritten public offering shall be withheld from the market
by the Responding Holders for a period that the managing underwriter reasonably
determines to be necessary to effect the underwritten public offering (the
"Holdback Period").
(b) When the Company is required by the provisions of Section 6(a) to
effect the registration of Registrable Securities under the Act, the Company
will:
1. prepare and file with the Securities and Exchange Commission ("SEC")
a registration statement with respect to such securities, and use
its best efforts to cause such registration statement to become and
remain effective until such time as all of the Registrable
Securities may be sold without regard to volume limitations under
Rule 144 under the Securities Act ("Rule 144");
2. prepare and file with the SEC such amendments to such registration
statement and supplements to the prospectus contained therein as may
be necessary to keep such registration statement effective such time
as all of the Registrable Securities may be sold without regard to
volume limitations under Rule 144;
3. furnish to the security holders participating in such registration
and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement,
preliminary prospectus, final
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<PAGE> 7
prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of
such securities;
4. use its best efforts to register or qualify the securities covered
by such registration statement under such state securities or blue
sky laws of such jurisdictions as such participating holders may
reasonably request in writing, except that the Company shall not for
any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign company in any
jurisdiction wherein it is not so qualified;
5. notify the security holders participating in such registration,
promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement to
any prospectus forming a part of such registration statement has
been filed;
6. notify such holders promptly of any request by the SEC for the
amending or supplementing of such registration statement or
prospectus or for additional information;
7. prepare and file with the SEC, promptly upon the request of any such
holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such
holders (and concurred with by counsel for the Company), is required
under the Securities Act or the rules and regulations thereunder in
connection with the distribution of Registrable Securities by such
holder;
8. prepare and promptly file with the SEC and promptly notify such
holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct
any statements or omissions if, at the time when a prospectus
relating to such securities is required to be delivered under the
Securities Act, any event shall have occurred as the result of which
any such prospectus would include an untrue statement of a material
fact or omit to state any material fact necessary to make the
statement therein, in light of the circumstances in which they were
made, not misleading; and;
9. advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
SEC suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be
issued.
(c) With respect to the registration, all fees, costs and expenses of and
incidental to such registration and public offering (as specified below) in
connection therewith shall be borne by the Company, provided, however, that any
security holders participating in such registration shall bear their pro rata
share of the underwriting discount and commission and transfer taxes. The fees,
costs and expenses of registration to be borne
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<PAGE> 8
by the Company as provided above shall include, without limitation, all
registration, filing and NASD fees, printing expenses, fees and disbursements of
counsel and accountants for the Company, and all legal fees and disbursements
and other expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered and
qualified. Fees and disbursements of counsel and accountants for the selling
security holders and any other expenses incurred by the selling security holders
not expressly included above shall be borne by the selling security holders; and
(d) 1. The Company will indemnify and hold harmless each holder of
Registrable Securities which are included in a registration statement pursuant
to the provisions of Section 6(a) hereof, its directors and officers, and any
underwriter (as defined in the Securities Act) for such holder and each person,
if any, who controls such holder or such underwriter within the meaning of the
Securities Act, from and against, and will reimburse such holder and each such
underwriter and controlling person with respect to, any and all loss, damage,
liability, cost and expense to which such holder or any such underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein 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, in light of the
circumstances in which they were made, not misleading; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by such holder, such underwriter
or such controlling person in writing specifically for use in the preparation
thereof.
2. Each holder of the Registrable Securities included in a registration
pursuant to the provisions of Section 6(a) will indemnify and hold harmless the
Company, its directors and officers, any controlling person and any underwriter
from and against, and will reimburse the Company, its directors and officers,
any controlling person and any underwriter with respect to, any and all loss,
damage, liability, cost or expense to which the Company or any controlling
person and/or any underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein 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 in light of the
circumstances in which they were made, 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 so made in reliance upon and in
strict conformity with written information furnished by or on behalf of such
holder specifically for use in the preparation thereof.
3. Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (1) or (2) of this Section 6(c) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(1) or (2), promptly notify the indemnifying party of the
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<PAGE> 9
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than hereunder. In case such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party, provided, however, if the defendants in any action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or in addition to
those available to the indemnifying party, or if there is a conflict of interest
which would prevent counsel for the indemnifying party from also representing
the indemnified party, the indemnified party or parties have the right to select
separate counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said paragraph (1) or (2) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation unless (i) the indemnified
party shall have employed counsel in accordance with the provisions of the
preceding sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after the notice of the commencement of the action or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
7. Intentionally deleted.
8. Indemnification. The Purchaser agrees to indemnify and hold harmless the
Company and its officers, directors, employees, agents, control persons and
affiliates against all losses, liabilities, claims, damages, and expenses
whatsoever (including, but not limited to, any and all expenses incurred in
investigating, preparing, or defending against any litigation commenced or
threatened) based upon or arising out of any actual or alleged false
acknowledgment, representation or warranty, or misrepresentation or omission to
state a material fact, or breach by the Purchaser of any covenant or agreement
made by the Purchaser herein or in any other document delivered in connection
with this Subscription Agreement.
9. Irrevocability; Binding Effect. The Purchaser hereby acknowledges and agrees
that the subscription hereunder is irrevocable by the Purchaser, except as
required by applicable law, and that this Subscription Agreement shall survive
the death or disability of the Purchaser and shall be binding upon and inure to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns. If the Purchaser is
more than one person, the obligations of the Purchaser hereunder shall be joint
and several and the agreements, representations, warranties, and acknowledgments
herein shall be deemed to be made by and be binding upon each such person and
such person's heirs, executors, administrators, successors, legal
representatives, and permitted assigns.
10. Modification. This Subscription Agreement shall not be modified or waived
except by an instrument in writing signed by the party against whom any such
modification or waiver is sought.
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<PAGE> 10
11. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or delivered against receipt to the party to whom it is to be
given (a) if to Company, at the address set forth above, or (b) if to the
Purchaser, at the address set forth on the signature page hereof (or, in either
case, to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 11). Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
12. Assignability. This Subscription Agreement and the rights, interests and
obligations hereunder are not transferable or assignable by the Purchaser and
the transfer or assignment of the Units, the Shares of Common Stock, the
Warrants and the shares of Common Stock issuable upon conversion of the Warrants
shall be made only in accordance with all applicable laws.
13. Applicable Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New York relating to
contracts entered into and to be performed wholly within such State. The
Purchaser hereby irrevocably submits to the exclusive jurisdiction of any New
York State court or United States Federal court sitting in New York County over
any action or proceeding arising out of or relating to this Subscription
Agreement or any agreement contemplated hereby, and the Purchaser hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined exclusively in such New York State or Federal court. The
Purchaser further waives any objection to venue in such State and any objection
to an action or proceeding in such State on the basis of a non-convenient forum.
The Purchaser further agrees that any action or proceeding brought against the
Company shall be brought only in New York State or United States Federal courts
sitting in New York County. THE PURCHASER AGREES TO WAIVE ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.
14. Blue Sky Qualification. The purchase of Units under this Subscription
Agreement is expressly conditioned upon the exemption from qualification of the
offer and sale of the Units from applicable Federal and state securities laws.
The Company shall not be required to qualify this transaction under the
securities laws of any jurisdiction and, should qualification be necessary, the
Company shall be released from any and all obligations to maintain its offer,
and may rescind any sale contracted, in the jurisdiction.
15. Use of Pronouns. All pronouns and any variations thereof used herein shall
be deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons referred to may require.
16. Confidentiality. The Purchaser acknowledges and agrees that any information
or data it has acquired from or about the Company, not otherwise properly in the
public domain, was received in confidence. The Purchaser agrees not to divulge,
communicate or disclose, except as may be required by law or for the performance
of this Agreement, or use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any confidential information
of the Company, including any scientific, technical, trade or business secrets
of the Company and any scientific, technical, trade or business materials that
are treated by the Company as confidential or proprietary, including, but not
limited to, ideas, discoveries, inventions,
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<PAGE> 11
developments and improvements belonging to the Company and confidential
information obtained by or given to the Company about or belonging to third
parties.
17. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the Purchaser and
the Company with respect to the subject matter hereof and supersedes all prior
oral or written agreements and understandings, if any, relating to the subject
matter hereof. The terms and provisions of this Agreement may be waived, or
consent for the departure therefrom granted, only by a written document executed
by the party entitled to the benefits of such terms or provisions.
(b) The Purchaser's representations and warranties made in this Agreement shall
survive the execution and delivery hereof and delivery of the Units.
(c) Each of the parties hereto shall pay its own fees and expenses (including
the fees of any attorneys, accountants, appraisers or others engaged by such
party) in connection with this Agreement and the transactions contemplated
hereby whether or not the transactions contemplated hereby are consummated.
(d) This Agreement may be executed in one or more counterparts each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument.
(e) Each provision of this Subscription Agreement shall be considered separable
and if for any reason any provision or provisions hereof are determined to be
invalid or contrary to applicable law, such invalidity or illegality shall not
impair the operation of or affect the remaining portions of this Subscription
Agreement.
(f) Paragraph titles are for descriptive purposes only and shall not control or
alter the meaning of this Subscription Agreement as set forth in the text.
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<PAGE> 12
Accredited Investor Certification
(Initial the appropriate box(es))
___ (i) I am a natural person who had individual income of more than $200,000
in each of the most recent two years or joint income with my spouse in
excess of $300,000 in each of the most recent two years and reasonably
expect to reach that same income level for the current year ("income", for
purposes hereof, should be computed as follows: individual adjusted gross
income, as reported (or to be reported) on a federal income tax return,
increased by (1) any deduction of long-term capital gains under section
1202 of the Internal Revenue Code of 1986 (the "Code"), (2) any deduction
for depletion under Section 611 et seq. of the Code, (3) any exclusion for
interest under Section 103 of the Code and (4) any losses of a partnership
as reported on Schedule E of Form 1040);
___ (ii) I am a natural person whose individual net worth (i.e., total assets
in excess of total liabilities), or joint net worth with my spouse, will
at the time of purchase of the Units be in excess of $1,000,000;
___ (iii) The Purchaser is an investor satisfying the requirements of Section
501(a)(1), (2) or (3) of Regulation D promulgated under the Securities
Act, which includes but is not limited to, a self-directed employee
benefit plan where investment decisions are made solely by persons who are
"accredited investors" as otherwise defined in Regulation D;
___ (iv) The Purchaser is a trust, which trust has total assets in excess of
$5,000,000, which is not formed for the specific purpose of acquiring the
Units offered hereby and whose purchase is directed by a sophisticated
person as described in Rule 506(b)(ii) of Regulation D and who has such
knowledge and experience in financial and business matters that he is
capable of evaluating the risks and merits of an investment in the Units;
___ (v) I am a director or executive officer of Edgar Online, Inc.; or
___ (vi) The Purchaser is an entity (other than a trust) in which all of the
equity owners meet the requirements of at least one of the above
subparagraphs.
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<PAGE> 13
If the purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS
IN COMMON, or as COMMUNITY PROPERTY:
___________________________________ ________________________________________
Print Name(s) Social Security Number(s)
___________________________________ ________________________________________
Signature(s) of Purchaser(s)
___________________________________ ________________________________________
Date Address
If the purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or
TRUST:
___________________________________ ________________________________________
Name of Partnership, Federal Taxpayer
Corporation, Limit Identification Number
Liability Company or
Trust
___________________________________
Date
By:________________________________ ________________________________________
Name: State of Organization
Title:_____________________________ ________________________________________
Address
Amount Subscribed: $______________
SUBSCRIPTION ACCEPTED AND AGREED TO
this day of 1999
Edgar Online, Inc.
By:________________________________
Authorized Officer
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<PAGE> 1
Exhibit 10.17
TRADEMARK LICENSE AGREEMENT
between
The U.S. Securities and Exchange Commission
and
EDGAR Online, Inc.
Whereas the U.S. Securities and Exchange Commission ("SEC") has adopted
and is using the mark EDGAR(R) (the "Mark"), and has filed and registered the
Mark, among other marks, with the U.S. Patent and Trademark Office as
trademarks; and
Whereas, EDGAR Online, Inc. ("EDGAR Online") desires to incorporate and
otherwise use the Mark in the production and promoting of its products and
services and in other specified activities;
Now, therefore, in consideration of the mutual promises herein contained,
it is agreed that:
1. Grant of License.
The SEC hereby grants to EDGAR Online a non-exclusive, non-assignable,
royalty-free right ("License") to use the Mark in connection with goods,
services and promotional activities related to provision of financial
information about filings made with the SEC, such License to be subject to the
terms of this Trademark License Agreement ("Agreement").
2. Quality Control.
The SEC shall have the right, at all reasonable times, to inspect EDGAR
Online's goods, services and promotional activities employing the Mark to ensure
that such use is of proper quality and otherwise consistent with this Agreement.
3. Duration, Termination and Renewal.
a. The initial term of this Agreement is ten years from the date of
execution. This Agreement may be renewed for subsequent ten-year terms by the
mutual consent of the parties and the execution of a valid Renewal Agreement.
Upon termination
<PAGE> 2
of this Agreement, all rights of EDGAR Online to use the Mark shall immediately
terminate.
b. In the event of a breach of any of the terms and conditions of
this License by EDGAR Online, the SEC shall give EDGAR Online written notice of
such breach. In the event EDGAR Online does not cure such breach within thirty
(30) days, the SEC may immediately terminate this License and shall notify EDGAR
Online in writing of such termination within five (5) days of such termination.
4. Sale, Dissolution, or Insolvency of EDGAR Online.
If EDGAR Online is sold or dissolved, or is the subject of bankruptcy
proceedings, the SEC shall have the right to terminate the License immediately.
5. Validity of Ownership of Mark.
EDGAR Online is prohibited from challenging or contesting in any way the
validity of the SEC's registration of the Mark with the U.S. Patent and
Trademark Office or the SEC's exclusive worldwide ownership of the Mark.
6. Use of the Mark.
Before EDGAR Online uses the Mark in production, promotions or other
publicly distributed materials, it shall send a copy of the representative item
showing each proposed use to, and obtain approval from, the Associate General
Counsel for Litigation and Administrative Practice, Securities and Exchange
Commission, 450 5th Street, N.W., Mail Stop 2-7, Washington, D.C. 20549. The
Associate General Counsel may from time to time thereafter request in writing
copies of additional representative items showing EDGAR Online's use. EDGAR
Online shall provide such items within ten days following such request. In
either case, the Associate General Counsel, or his or her designee, shall,
within twenty days of receipt, review said items to determine if they comply
with the terms and conditions of this Agreement. If the Associate General
Counsel or his or her designee has not objected in writing within twenty days
following receipt of any items provided as required herein, they shall be deemed
approved.
a. EDGAR Online acknowledges and agrees that (i) the Mark is a
trademark of the SEC and the SEC holds it out to the
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<PAGE> 3
public as such; and (ii) the Mark is registered as a trademark with the U.S.
Patent and Trademark Office (U.S. Registration No. 1,829,234).
b. In using the Mark, standing alone or as incorporated in EDGAR
Online, EDGAR Online shall clearly indicate that the Mark is federally
registered with the U.S. Patent and Trademark Office and that it is the property
of the SEC. Such indication of registration shall be in the form of the (R)
designation, including, where possible, but at a minimum on EDGAR Online's
letterhead, on any other media by which the corporation's name is displayed in
the marketplace, and in conjunction with EDGAR Online's initial use of the Mark
within each of its products, services, or promotion materials (e.g., on the
first or welcome screen of any EDGAR Online on-line computer service, on the
cover or first page of any user manual or promotion material, and after the
first reference to the Mark in any advertisement), the following words:
"EDGAR(R) is a federally registered trademark
of the U.S. Securities and Exchange
Commission. EDGAR Online is not affiliated
with or approved by the U.S. Securities and
Exchange Commission."
c. EDGAR Online's use of the Mark shall not be portrayed as an
endorsement or recommendation by the SEC of any of EDGAR Online's products or
services.
d. The SEC makes no ownership claim to any of EDGAR Online's product
designations, other than as provided in this Agreement.
7. Infringement.
EDGAR Online shall notify the SEC of any potential infringement of the
Mark of which EDGAR Online is aware.
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<PAGE> 4
8. Governing Law.
This Agreement shall be interpreted and implemented in accordance with the
federal common law as interpreted by the U.S. District Court for the District of
Columbia. EDGAR Online shall comply with all applicable legal requirements
governing trademark use.
9. Indemnification.
EDGAR Online agrees to indemnify and hold the SEC harmless from any and
all claims, damages and attorney's fees arising from the use of the Mark by
EDGAR Online in its operations under the Agreement, except to the extent such
claims, damages and fees arose in connection with any act or failure to act by
the SEC.
10. Amendment.
This Agreement may be amended only through a written instrument executed
by a duly authorized representative of each of the parties hereto.
In witness whereof, the SEC and EDGAR Online have executed this Agreement
as of the 26th day of March, 1999.
U.S. SECURITIES AND EDGAR ONLINE, INC.
EXCHANGE COMMISSION
/s/ Richard D. Heroux By: /s/ Marc Strausberg
___________________________________ ___________________________________
RICHARD D. HEROUX Marc Strausberg
Office of Information Technology Title: President
DATED: March 26, 1999 DATED: March 1, 1999
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<PAGE> 5
CERTIFICATE
I, Susan Strausberg, certify that I am the CEO of EDGAR Online, Inc.; that
Marc Strausberg, who signed this Agreement for the corporation, was then
President of the corporation; and that the Agreement was duly signed for and on
behalf of the corporation by authority of its board of directors and within the
scope of its corporate powers.
Witness my hand and the seal of the corporation this 1st day of March,
1999.
5
<PAGE> 1
Exhibit 10.18
AGREEMENT
THIS AGREEMENT is effective March 1, 1998 and is by and between
CYBERNET DATA SYSTEMS, INC., a Delaware corporation with offices at 50
Washington Street, Norwalk, Connecticut 06854, ("Cybernet"), and PEQUOT SYSTEMS,
INC., a Connecticut corporation with offices at 50 Washington Street, Norwalk,
Connecticut 06854, ("Pequot").
RECITALS
Cybernet desires to assure Pequot's ongoing availability to work on the Cybernet
system; Pequot desires certain assurances in connection with fulfilling
Cybernet's needs; and Pequot desires certain assurances respecting receivables
due from Cybernet and is willing to take shares in Cybernet in partial
satisfaction of such debts.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. WORK FOR CYBERNET
1.1 Pequot shall be available to perform up to $14,500.00 worth of work on the
Cybernet system per month. Pequot shall have the option, but not the obligation,
to do further work.
1.2 Cybernet and Pequot shall agree on the work to be done each month prior to
commencement of work. Such agreement shall be evidenced by some appropriate
writing acceptable to Cybernet and Pequot, including memoranda, schedule of
work, or the like.
2. RECURRING MONTHLY EXPENSES
2.2 Cybernet acknowledges that the arrangement between Cybernet and Pequot
includes payment to Pequot for certain out-of-pocket type expenses, including
shared office resources (copier, phone, etc.). Cybernet shall continue to pay
Pequot currently for such expenses. The parties acknowledge that Cybernet's
share of such expenses is approximately $8,000.00 per month, and varies from
time to time from such amount.
<PAGE> 2
3. SECURITY
3.1 Within 30 days of this Agreement, Cybernet shall execute and deliver to
Pequot a security agreement substantially in the form of the agreement attached
hereto and made a part hereof as Exhibit 1, as well as appropriate Forms UCC-1.
4. PAST DUE BALANCE
4.1 As of March 1, 1998, for past services provided by Pequot, Cybernet owes
Pequot $297,089.52 (the "Cybernet Debt"). Cybernet acknowledges the quality and
value of those services and agrees that there are no defenses to payment of the
Cybernet Debt. Notwithstanding the foregoing, and subject to Section 4.4, below,
Pequot hereby agrees to accept payment in installments and/or in kind as set
forth herein.
4.2 In satisfaction of $125,000.00 of the Cybernet Debt, Cybernet shall
transfer to Pequot and Pequot shall accept 100,000 shares of Cybernet common
stock.
4.3 Subject to Sections 4.4 and 4.5., below, Cybernet shall pay Pequot monthly
$7,500.00 toward the remainder of the Cybernet Debt, $172,089.52 (the "Adjusted
Cybernet Debt"), until the Adjusted Cybernet Debt is paid in full.
4.4 If Cybernet or a controlling interest therein is acquired, or if
substantially all of Cybernet's assets are sold, the then remaining balance of
the Adjusted Cybernet Debt shall immediately become due and payable.
4.5 The Adjusted Cybernet Debt shall include interest on the unpaid balance at
the prime rate of interest plus two (2%) percent per annum, such that interest
shall be added to the unpaid balance from time to time, and such unpaid balance
plus interest shall become the Adjusted Cybernet Debt.
4.6 Notwithstanding the Secured Obligations (as defined in the security
agreement, attached as Exhibit 1) are the Cybernet obligations referenced in
Sections 1 and 2, above, this Agreement and Pequot's rights in the Collateral
(as also defined in such security agreement) shall terminate upon payment in
full of the Adjusted Cybernet Debt.
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5. PAYMENT
5.1 All payments due monthly referenced in this agreement shall be made by
Cybernet on or before the tenth day of the month for which payment is due.
5.2 For the record, for the indicated months, the parties acknowledge payment by
Cybernet and receipt by Pequot of the following:
a) For February, 1998, $12,187.50 for work on the Cybernet System, $6,794.33
for shared office resource and out-of-pocket expenses, and $11,018.17
toward the Cybernet Debt.
b) For March, 1998, $14,500.00 for work on the Cybernet System, $8,000.00
toward shared office resource and out-of-pocket expenses, and $2,500.00
toward the Adjusted Cybernet Debt.
6. APPROVAL
6.1 Cybernet represents that this agreement has been approved and accepted by
Cybernet's Board of Directors. A copy of such Board's resolution is attached as
Exhibit 2.
7. GENERAL PROVISIONS
7.1 NOTICES. All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Cybernet:
Mr. Marc Strausberg with a copy to:
Cybernet Data Systems, Inc. Neal L. Moskow, Esquire
50 Washington Street Ury & Moskow
Norwalk, CT 06854 19 Ludlow Road - Suite 102
Facsimile No.: (203) 852-5667 Westport, CT 06880-3040
Facsimile No.: (203) 226-8437
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<PAGE> 4
Pequot:
Mr. Stefan Chopin with a copy to:
President James J. Brooks, Esquire
Pequot Systems, Inc. 101 Lake Place South
50 Washington Street Danbury, CT 06810
Norwalk, CT 06854 Facsimile No.: (203) 798-8185
Facsimile No.: (203) 852-5601
7.2 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of this Agreement
may be brought against any of the parties in the courts of the State of
Connecticut, County of Fairfield, or, if it has or can acquire jurisdiction, in
the United States District Court for the District of Connecticut, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
7.3 WAIVER. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
7.4 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all prior
discussions and agreements, if any, between the parties with respect to its
subject matter and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended
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<PAGE> 5
except by a written agreement executed by the party to be charged with the
amendment.
7.5 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party may assign
this Agreement or any of its rights or obligations under this Agreement. Subject
to the preceding sentence, this Agreement will apply to, be binding in all
respects upon, and inure to the benefit of the successors and permitted assigns
of the parties. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and permitted assigns.
7.6 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
7.7 SECTION HEADINGS, CONSTRUCTION. The headings and organization of this
Agreement are for convenience only and will not affect its construction or
interpretation. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms. In
addition, this Agreement and the agreement attached as Exhibit 1 may be executed
in one or more counterparts, each of which will be deemed to be an original
copy.
7.8 GOVERNING LAW. This Agreement is executed in and will be governed by the
laws of the State of Connecticut without regard to conflicts of laws principles.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of the date first written above.
CYBERNET DATA SYSTEMS, INC. PEQUOT SYSTEMS, INC.
By: /s/ Marc Strausberg BY: /s/ Stefan A. Chopin
---------------------- --------------------------
Marc Strausberg Stefan A. Chopin
President President
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<PAGE> 6
Exhibit 1
SECURITY AGREEMENT
CYBERNET DATA SYSTEMS, INC. ("Cybernet") has agreed to pay PEQUOT SYSTEMS, INC.
("Pequot") monthly for certain services and out-of-pocket expenses (the "Secured
Obligations") pursuant to a certain agreement dated March 1, 1998 (the "Related
Agreement"). With respect to the Secured Obligations, Cybernet and Pequot agree
as follows:
1. PAYMENTS, PROPERTY, AND SECURITY
As security for the payment of the Secured Obligations, Cybernet hereby pledges
and grants a security interest to Pequot in and to all of Cybernet's right,
title and interest in and to certain equipment ("Equipment"), contracts, and
accounts receivable (together the "Property"), together with all proceeds of any
and all of such Property (including, without limitation, all payments under
insurance or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the Property (all such Property
and proceeds collectively the "Collateral"). The Collateral is described on
Schedule A which is attached to and made part of this Agreement.
Cybernet has signed and delivered to Pequot duplicate original UCC-1's, suitable
for recording, describing the Collateral.
Cybernet warrants and represents that it owns the Collateral free and clear of
any lien, option, or other charge or encumbrance except the lien created by this
Agreement. No effective financing statement or other instrument similar in
effect covering all or any portion of the Collateral is on file in any recording
office, except those filed in favor of Pequot relating to this Agreement.
2. PRESERVATION AND MAINTENANCE OF EQUIPMENT
Cybernet shall not destroy, damage, or substantially change the Equipment, allow
the Equipment to deteriorate, or otherwise damage the Equipment. Cybernet shall
keep and maintain the Equipment in good and fully operational condition.
3. LIENS AND CHARGES
Cybernet shall keep the Collateral free of liens and charges, including tax and
materialmens, liens and charges. Cybernet shall defend the Collateral against
all claims or demands (other than by Pequot).
4. INSURANCE
Cybernet shall maintain insurance with respect to the Equipment of types and
amounts as would be maintained by a prudent owner of similar property in similar
<PAGE> 7
circumstances. Each policy of such insurance shall: (A) name Pequot as an
additional insured thereunder (without any representation or warranty by or
obligation upon Pequot); (B) contain an agreement by the insurer that any loss
thereunder shall be payable to Pequot notwithstanding any action, inaction or
breach of representation or warranty by Cybernet; (C) provide that there shall
be no recourse against Pequot for payment of premiums or other amounts with
respect thereto; and (D) provide that at least thirty days' prior written notice
of amendment to, cancellation of or lapse shall be given to Pequot by the
insurer. Cybernet shall, if so requested by Pequot, deliver to Pequot original
or duplicate policies of such insurance.
5. RESTRICTIONS ON TRANSFER
Cybernet may not, without the prior written consent of Pequot, move or remove
from its current location, further pledge, encumber, hypothecate, grant any
option with respect to, sell or otherwise dispose of, convey or assign all or
any part of the Collateral or permit any of the foregoing to occur by operation
of law or otherwise.
6. PEQUOT APPOINTED ATTORNEY-IN-FACT
Cybernet hereby irrevocably appoints Pequot as Cybernet's attorney-in-fact, with
full authority in the place and stead of Cybernet and in the name of Cybernet,
upon default by Cybernet to take any action and to execute any instrument which
Pequot may deem necessary or advisable to accomplish the purposes of this
Agreement.
Cybernet hereby ratifies and approves all acts of Pequot, as its
attorney-in-fact, pursuant to this Section 6, and Pequot, as its
attorney-in-fact, will not be liable for any acts of commission or omission, nor
for any error of judgment or mistake of fact or law. This power, being coupled
with an interest, is irrevocable so long as this Agreement remains in effect.
Cybernet also authorizes Pequot, at any time and from time to time, to
communicate in its own name with any party to any contract, agreement or
instrument included in the Collateral with regard to the assignment of such
contract, agreement or instrument and matters relating thereto.
7. REMEDIES
In the event of default occurring and continuing, Pequot may exercise in respect
of the Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all rights and remedies of a secured party on
default under the Uniform Commercial Code in effect in the State of Connecticut
and also, to the extent permitted or not barred by law, may (i) require Cybernet
to, and Cybernet agrees that it will at its expense and upon the request of
Pequot forthwith, assemble all or part of the Collateral as directed by Pequot
and make it available to Pequot at a place to be designated by Pequot, (ii)
peaceably and with prior notice enter where any of the Collateral is located and
take and carry away the same, by any if its representatives, with or without
legal process, to Pequot's place of storage, and (iii) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
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<PAGE> 8
at public or private sale, at any exchange, brokers board or at any of Pequot's
offices or elsewhere, for cash, on credit or for future delivery and upon such
other terms as Pequot may deem commercially reasonable. Cybernet agrees that, to
the extent notice of sale shall be required by law, at least ten (10) days'
notice to Cybernet of the time and place of any public or private sale is to be
made shall constitute reasonable notification. Pequot shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
Pequot may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place it was so adjourned. Pequot agrees that it shall
give Cybernet ten (10) days notice of the time and place of the sale of any
Collateral pursuant to this Agreement; provided, however, that the failure of
Pequot to deliver such notice shall not constitute a default hereunder by Pequot
and shall not prevent Pequot from conducting such sale at the time and place
scheduled therefor.
As used in this Agreement, default means (i) any facts or circumstances which,
with the giving of notice or the passage of time or both, would constitute a
default or breach by Cybernet of the Secured Obligations and (ii) the occurrence
of any default under this Agreement, the Related Agreement or any related
obligations.
If Cybernet defaults in performance of any of the terms set out in this
Agreement, or if there is a legal proceeding that may significantly affect
Pequot's rights to the Collateral, then Pequot may do and pay for whatever is
necessary to protect the value of the Collateral and Pequot's rights in the
Collateral. Pequot's actions may include paying any sums secured by a lien
against the Collateral, appearing in court, paying reasonable attorney's fees
and repairing the Equipment. Although Pequot may take action under this Section,
Pequot does not have to do so.
Cybernet shall pay all of Pequot's costs and expenses, including, but not
limited to, attorneys' fees and expenses, incurred in connection with
enforcement of this Agreement.
Any amounts disbursed by Pequot under this Section shall become additional debt
of Cybernet. Unless Cybernet and Pequot agree to other terms of payment, these
amounts shall bear interest from the date of disbursement at the maximum legal
rate and shall be payable, with interest, upon notice from Pequot to Cybernet
requesting payment.
Cybernet shall pay the premiums required to maintain the above-referenced
insurances until such time as the requirement for the insurance terminates;
i.e., all obligations due Pequot have been satisfied.
The powers conferred on Pequot hereunder are solely to protect its interests in
the Collateral and shall not impose any duty upon Pequot to exercise any such
powers. Pequot shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment
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<PAGE> 9
substantially equal to that which Pequot accords its own property, it being
understood that Pequot shall not have any responsibility for taking any
necessary steps to preserve rights against any parties with respect to any
Collateral.
8. INSPECTION
Pequot or its agent may make reasonable entries and inspections of the
Collateral. Pequot shall give Cybernet notice at the time or prior to an
inspection.
9. RELEASE
Upon payment or discharge of all Secured Obligations, the terms hereof shall
become null and void and Pequot shall release these terms without charge to
Cybernet. Cybernet shall pay any recording costs.
10. GENERAL PROVISIONS
This Agreement is in addition to and not in limitation of any other rights and
remedies Pequot may have by virtue of any other instrument or agreement
heretofore, contemporaneously herewith, or hereafter executed by Cybernet or by
law or otherwise. If any provision of this Agreement is contrary to applicable
law, such provision shall be deemed ineffective without invalidating the
remaining provisions hereof. If and to the extent that applicable law confers
any rights or imposes any duties inconsistent with or in addition to any of the
provisions of this Agreement, the affected provision shall be considered amended
to conform thereto.
Pequot shall not by any act, delay, omission or otherwise be deemed to have
waived any rights or remedies hereunder. A waiver by Pequot of any right or
remedy hereunder on any one occasion shall not be considered as a bar to or
waiver of any such right or remedy which Pequot would have had on any future
occasion nor shall Pequot be liable for exercising or failing to exercise any
such right or remedy.
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other party):
Cybernet: Mr. Marc Strausberg with a copy to:
Cybernet Data Systems, Inc. Neal L. Moskow, Esquire
50 Washington Street Ury & Moskow
Norwalk, CT 06854 19 Ludlow Road - Suite 102
Facsimile No.: (203) 852-5667 Westport, CT 06880-3040
Facsimile No.: (203) 226-8437
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<PAGE> 10
Pequot: Mr. Stefan A. Chopin with a copy to:
President James J. Brooks, Esquire
Pequot Systems, Inc. 101 Lake Place South
50 Washington Street Danbury, CT 06810
Norwalk, CT 06854 Facsimile No.: (203) 798-8185
Facsimile No.: (203) 852-5601
The headings and organization of this Agreement are for convenience only and
will not affect its construction or interpretation. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms. In addition, this Agreement may be executed
in one or more counterparts, each of which will be deemed to be an original copy
of this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
This Agreement is executed in and will be governed by the laws of the State of
Connecticut without regard to conflicts of laws principles.
No amendment or waiver of any provision of this Agreement nor consent to any
departure by Cybernet herefrom shall in any event be effective unless the same
shall be in writing and signed by Pequot and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
11. SECURITY AGREEMENT
Cybernet has executed and delivered this Security Agreement for the purpose of
pledging to Pequot its interest in the Collateral as security for payment and
performance, when due, of the Secured Obligations.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered by its representative there unto
duly authorized as of the day of March, 1998.
CYBERNET DATA SYSTEMS, INC. PEQUOT SYSTEMS, INC.
/s/ Marc Strausberg /s/ Stefan A. Chopin
- ----------------------------- ------------------------------
Marc Strausberg Stefan A. Chopin
President President
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<PAGE> 1
CONFIDENTIAL
CYBERNET DATA SYSTEMS INC.
CONTENT LICENSE AGREEMENT
Licensor: Cybernet Data Systems, Inc. doing business as EDGAR-ONLINE.COM
Licensee: CLIENTCOMPANY doing business as ______________________________
THIS CONTENT LICENSE AGREEMENT (the "Agreement") is made as of this _____ day of
________, 1998 (the "Effective Date") between Cybernet Data Systems, Inc., a
Delaware corporation, with offices at 50 Washington Street, South Norwalk CT
06854 ("CDS") and CLIENTCOMPANY, a ________________ corporation, with offices at
_____________________________________________.
In consideration of the mutual promises contained herein, the parties agree as
follows:
GRANT OF LICENSES
Subject to the terms and conditions of this Agreement, CDS hereby grants to
CLIENTCOMPANY, under CDS's Intellectual Property Rights:
(a) A non-exclusive, worldwide license to use, modify, reproduce, distribute,
display and transmit CDS Content in electronic form via the Internet, and
to permit users to download and print CDS Content from CLIENTCOMPANY's Web
site for personal, non-commercial use. Specifically excluded from this
License is the right for any user receiving CDS Content from CLIENTCOMPANY
to redistribute, reproduce, retransmit, disseminate, sell, publish,
broadcast or circulate the information contained in such CDS Content to
anyone without the express written consent of CDS. CLIENTCOMPANY agrees to
use its best efforts to restrict the uses of CDS Content by visitors to
its Web Pages to personal use of such Content and not for further
commercial redistribution.
(b) A non-exclusive, worldwide license to use, reproduce and display CDS's
Brand Features: (i) in connection with the presentation of the CDS Content
on CLIENTCOMPANY's Content Pages; and (ii) in connection with the
marketing and promotion of CLIENTCOMPANY's Web site. All reference to
CDS's Brand features must conform to the guidelines contained in Exhibit
A. The approved language on all hyperlinks covered by this License is
"EDGAR ONLINE SEC FILINGS". Any other language used in a link to any EDGAR
ONLINE Content Pages or any co-branded Page will require specific written
approval from CDS.
NOTICES. CDS will not alter or impair any acknowledgment of copyright or other
Intellectual Property Rights of CLIENTCOMPANY that may appear in the CDS Content
and the CDS Brand
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 1 of 16
<PAGE> 2
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 2 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
Features, including all copyright, trademark and similar notices that
CLIENTCOMPANY may reasonably request.
All notices, requests, demands, reports or other communications under this
Agreement shall be in writing and may be sent by mail, facsimile, or authorized
electronic address to the offices specified below. Notices hereunder shall be
directed to: For CDS: Attention Vice President, Business Development, Cybernet
Data Systems, Inc., 50 Washington Street, 9th Floor, Norwalk, CT 06854, Phone
203-852-5666, Fax 203-852-5667, Email [email protected]. For
CLIENTCOMPANY, notices shall be sent to the attention of the first person listed
on Exhibit B.
DEFINITIONS. Terms are defined in Exhibit C.
DELIVERY OF CDS CONTENT AND SHARED REVENUE
CDS'S RESPONSIBILITIES. CDS will be responsible for the design, layout, posting,
and maintenance of the co-branded Content Pages residing on CDS's server.
CDS ASSISTANCE. CDS will provide on-going assistance to CLIENTCOMPANY with
regard to technical, administrative and service-oriented issues relating to the
utilization, transmission and maintenance of the CDS Content, as CLIENTCOMPANY
may reasonably request. CDS will use its reasonable best efforts to ensure that
the CDS Content is accurate, comprehensive and updated regularly.
During the term of this Agreement, CDS shall deliver updates of the CDS Content
to CLIENTCOMPANY. CDS also shall provide CLIENTCOMPANY with reasonable prior
notice of any significant Enhancements that generally affect the appearance,
updating, delivery or other elements of the CDS Content, and shall make such
Enhancements available to CLIENTCOMPANY upon commercially reasonable terms.
ADVERTISING RIGHTS. CDS shall have the sole right to sell or license all
Advertising Rights with respect to those Content Pages on its own site which are
"co-branded" with CLIENTCOMPANY. CDS shall use reasonable commercial efforts to
sell or license such Advertising Rights; provided, however, that CDS makes no
representation or warranty with respect to the amount of Advertising Revenue to
be received from such Advertising Rights.
PAYMENT TO CLIENTCOMPANY FOR ADVERTISING REVENUES. CDS will pay CLIENTCOMPANY a
fee of 20% of Net Advertising Revenues received by CDS for all advertising
rights sold on Content Pages co-branded with CLIENTCOMPANY that are hosted on
the EDGAR ONLINE server only when the total page views for all CLIENTCOMPANY
co-branded pages exceeds 300,000 in any month. In the event the total of
co-branded pages does not
<PAGE> 3
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 3 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
exceed 300,000 page views CDS will receive 100% of Revenues generated by the
sale of advertising rights on all of the Content Pages co-branded with
CLIENTCOMPANY and CLIENTCOMPANY will not be entitled to any payment for that
month.
CDS shall determine the number of Page Views using such software or other system
or method that it in good faith determines will result in a substantially
correct calculation, and such number will be final and binding on the parties.
Within 30 days of the end of each quarter during the term of this agreement, CDS
shall remit to CLIENTCOMPANY its share of such revenues.
SUBSCRIPTION REVENUE. CDS shall track and measure the number of times an
individual accessing the CLIENTCOMPANY Web Site uses such access to link to and
access the CDS Web Site and become a paid subscriber to CDS services ("Paid
Linked Subscriber") for a minimum period of ninety (90) days. For each Paid
Linked Subscriber, CDS agrees to pay CLIENTCOMPANY 20% of the subscription fees
actually collected from such Paid Linked Subscriber for the first year
commencing on the date such Paid Linked Subscriber first became a Paid Linked
Subscriber only when the total new gross subscription fees generated by
CLIENTCOMPANY exceed $250.00 in any month. In the event the total new gross
subscription fees do not exceed $250.00, CDS will receive 100% of Revenues
generated by the sale of these subscription fees and the CLIENTCOMPANY will not
be entitled to any payment for those Paid Link Subscribers initiating service
that month.
CDS shall determine the number of Paid Link Subscribers using such software or
other system or method that it in good faith determines will result in a
substantially correct calculation, and such number will be final and binding on
the parties.
Within 30 days of the end of each quarter during the term of this agreement, CDS
will provide CLIENTCOMPANY a statement showing Net Paid Linked Subscriber
revenues for that quarter and shall remit to CLIENTCOMPANY its share of such
revenues.
CONTENT PROVIDED TO CLIENTCOMPANY
CDS agrees to grant CLIENTCOMPANY a NON-EXCLUSIVE and NON-TRANSFERABLE license
to link to a page (or pages) located on CDS' server which:
(a) CO-BRANDED EDGAR ONLINE SEC FILINGS PAGE. Provides a listing of all
electronic SEC filings for a specific company whose ticker symbol or
company name is passed to EDGAR ONLINE by CLIENTCOMPANY. Free users of
this page will be allowed access to electronic SEC filings in HTML, the
Management's Discussion section of 10-Ks and 10-Qs (the EDGAR
<PAGE> 4
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 4 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
ONLINE GLIMPSE), Financial Data Schedules (the EDGAR ONLINE FDS) and other
searches, as long as the data is not premium data. Users seeking to access
premium data, including a "today's filing", 144 filing or other premium
data will be encouraged to join CDS's paid subscriber service.
AND
(b) CO-BRANDED EDGAR ONLINE PEOPLE PAGES. Provides a look-up function of all
individuals discussed in SEC filings. Free users of this page will be
allowed to look-up individuals identified in corporate proxy statements
(DEF 14A). Users seeking to access premium data, including the look-up
function covering other SEC filing types including IPO Filings, Insider
Filings, Quarterly Reports, and Annual Reports, will be encouraged to join
CDS's paid subscriber service.
INDEMNIFICATION
CDS, at its own expense, will indemnify, defend and hold harmless CLIENTCOMPANY,
its Affiliates and their employees, representatives, agents and affiliates,
against any claim, suit, action, or other proceeding brought against
CLIENTCOMPANY or an Affiliate based on or arising from a claim that CDS Content
as delivered to CLIENTCOMPANY or any CDS 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 injury, damage or harm to any person; provided, however, that in any such
case: (x) CLIENTCOMPANY provides CDS with prompt notice of any such claim; (y)
CDS permits CLIENTCOMPANY to assume and control the defense of such action,
with counsel chosen by CDS (who shall be reasonably acceptable to
CLIENTCOMPANY); and (z) CLIENTCOMPANY does not enter into any settlement or
compromise of any such claim without CDS's prior written consent. CDS 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
CLIENTCOMPANY or an Affiliate in connection with or arising from any such claim,
suit, action or proceeding.
TERM AND TERMINATION
INITIAL TERM AND RENEWALS. This Agreement will become effective as of the last
date of signature (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 CDS
Content on a Content Page within a CLIENTCOMPANY Property (the "Initial Term").
After the Initial Term, this Agreement will be automatically renewed for
successive
<PAGE> 5
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 5 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
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).
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 following written notice to such party.
EFFECT OF TERMINATION. Any termination 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 relating to property rights
and confidentiality shall survive any termination or expiration of this
Agreement. All revenue sharing ceases with the termination of this Agreement.
CONFIDENTIALITY
CDS and CLIENTCOMPANY hereby acknowledge that each of them may have access to
confidential and proprietary information, which relates to the other party's
business (the "Confidential Information"). Such information shall be identified
as confidential at the time of disclosure. Each party agrees to preserve and
protect the confidentiality of the Confidential Information and not to disclose
or use any applicable Confidential Information without the prior written consent
of the other party; provided, however, that any party hereto may disclose to any
other party or use any information which is: (i) already publicly known; (ii)
discovered or created independently of any involvement with such party; (iii)
otherwise learned through legitimate means other than from such party; or (iv)
independently created by the receiving party without reference to the other
party's confidential information. Moreover, any party hereto may disclose any
Confidential Information hereunder to such party's agents, attorneys and other
representatives or any court or competent jurisdiction or any other party
empowered hereunder as reasonably required to resolve any dispute between the
parties hereto. Both parties agree all aspects of this contract are confidential
and shall not be disclosed to any third party.
OWNERSHIP
BY CDS. CLIENTCOMPANY acknowledges and agrees that: (i) as between CDS on the
one hand, and CLIENTCOMPANY and its Affiliates on the other, CDS owns all right,
title and interest in the CDS Content and the CDS Brand Features; (ii) nothing
in this Agreement shall confer in CLIENTCOMPANY or an Affiliate of ownership in
the CDS Content or the CDS Brand Features; and (iii) neither CLIENTCOMPANY or
its Affiliates shall now or in the future contest the validity
<PAGE> 6
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 6 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
of the CDS Brand Features. No licenses are granted by either party except for
those expressly set forth in this Agreement.
BY CLIENTCOMPANY. CDS acknowledges and agrees that: (i) as between CDS on the
one hand, and CLIENTCOMPANY and its Affiliates on the other, CLIENTCOMPANY owns
all right, title and interest in any CLIENTCOMPANY Property and the
CLIENTCOMPANY Brand Features; (ii) nothing in this Agreement shall confer in CDS
any license or right of ownership in the CLIENTCOMPANY Brand Features; and (iii)
CDS shall not now or in the future contest the validity of the CLIENTCOMPANY
Brand Features.
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 announcement regarding the existence or content of
this Agreement without the other party's prior written approval and consent.
CLIENTCOMPANY will, when appropriate, mention availability of CDS content in
relevant advertising including but not limited to print, television, radio and
online; promotion and public relations. CLIENTCOMPANY will mention CDS content
when other third party providers of data to CLIENTCOMPANY are mentioned in
relevant advertising, promotion and public relations.
FUTURE COOPERATION. CLIENTCOMPANY and CDS will keep each other apprised of
product and other developments that may enhance the relationship between
CLIENTCOMPANY and CDS; including but not limited to new product development by
CLIENTCOMPANY that may be valuable to CDS. CDS and CLIENTCOMPANY agree that
future cooperation may be valuable to both parties, and that the parties will
discuss such future cooperation each quarter or as warranted. CLIENTCOMPANY will
provide contact information for key staff as outlined in Exhibit B.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the Effective Date first written
above.
CYBERNET DATA SYSTEMS, INC. CLIENTCOMPANY
(Licensor) (Licensee)
A Delaware Corporation A ____________ corporation
Signed_____________________________ _______________________________
Name: Jay Sears ___________________ _______________________________
<PAGE> 7
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 7 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
Title: Vice President, Marketing & _________________________________
Business Development
Date:_____________________________ _________________________________
Phone: 203-852-5666_______________ _________________________________
Fax: 203-852-5667_________________ _________________________________
Email: [email protected]_____ _________________________________
<PAGE> 8
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 8 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
EXHIBIT A
TO
CYBERNET DATA SYSTEMS, INC. CONTENT LICENSE AGREEMENT
CYBERNET DATA SYSTEMS, INC. MARK USAGE GUIDELINES
GUIDELINES FOR USE OF EDGAR(R) ONLINE(SM) LOGO AND WORD MARKS
SUMMARY
Cybernet Data Systems, Inc.'s (CDS) EDGAR ONLINE marks are of great importance
in helping the company compete in the highly competitive Internet industry.
CDS's legal rights in the marks can be defended only if they are consistently
used correctly in all forms of media. Therefore, it is critical that all
licensees familiarize themselves with and abide the following rules of trademark
use.
EDGAR ONLINE MARK USAGE GUIDELINES
1. The correct URL is http://www.edgar-online.com
2. Marks can be used as adjectives or nouns.
Correct: EDGAR ONLINE SEC Data, EDGAR ONLINE SEC Filings
Correct: EDGAR ONLINE
3. Always distinguish a mark (service mark, registered mark, trademark)
from surrounding text. Methods of distinguishing a mark include
printing it in CAPITALS, italicized text, using BOLD-FACED TEXT,
using superscript, Initial Capitalization or by putting the mark in
"quotation marks".
4. Never use the EDGAR ONLINE mark as a verb.
5. Never use the EDGAR ONLINE mark in plural form.
6. Do not place a hyphen in the EDGAR ONLINE mark, unless referring to
the URL
Correct: EDGAR ONLINE
<PAGE> 9
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 9 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
Correct: http://www.edgar-online.com
Incorrect: EDGAR ONLINE
Incorrect: EDGAR
Incorrect: http://www.edgaronline.com
7. Whenever possible, always place EDGAR ONLINE in BOLD italics
Correct: EDGAR ONLINE
Incorrect: EDGAR ONLINE
8. Never refer to EDGAR ONLINE as EDGAR
9. Do not combine the EDGAR ONLINE mark with other trademarks or other
words to form new marks.
10. The graphic design of the EDGAR ONLINE logo must be adhered to
strictly. Approved artwork must be used and the design cannot be
altered in any way. The EDGAR ONLINE logo must stand alone. It
cannot be combined with other marks and cannot be used in text.
11. The registered mark symbol, "(R)", must appear on the upper right
shoulder of the word "EDGAR" and the service mark logo "SM", must
always appear on the upper right shoulder of the word "Online" on
both the first use of the EDGAR ONLINE mark and on the most
prominent use of the mark.
12. There are several brands within EDGAR ONLINE and these include:
EDGAR ONLINE PEOPLE
EDGAR ONLINE GLIMPSE
EDGAR ONLINE FDS
EDGAR ONLINE WATCHLIST
13. This following wording must be centered at the bottom of the EDGAR
ONLINE SEARCH results page: "EDGAR is a federally
<PAGE> 10
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 10 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
registered trademark of the U.S. Securities and Exchange Commission
(SEC). EDGAR ONLINE is a product of Cybernet Data Systems, Inc. and
is neither approved by, nor affiliated with the SEC.
CYBERNET DATA SYSTEMS makes no claims concerning the validity of the
information provided by EDGAR ONLINE and will not be held liable for
any use of this information. The information ("Information")
provided herein may be displayed and printed for your personal,
non-commercial use only. You may not reproduce, retransmit,
distribute, disseminate, sell, publish, broadcast or circulate the
Information to anyone, without the express written consent of
Cybernet Data Systems, Inc.
(C) Copyright 1995-1998 Cybernet Data Systems, Inc. All rights
reserved."
This following phrase must be centered at the bottom of other EDGAR
ONLINE pages:
(C) Copyright 1995-1998 Cybernet Data Systems, Inc. All rights
reserved."
14. From time to time during the Term, CDS may modify the written
guidelines for the size, typeface, colors and other graphic
characteristics of the EDGAR ONLINE logo and word marks, which upon
delivery to Partner shall be deemed to be incorporated into the
"Guidelines for use of EDGAR ONLINE Logo and Word Marks" document
under this Agreement.
EDGAR ONLINE LOGO USAGE GUIDELINES
Complete artwork files are available in electronic media. This
artwork may not be edited or modified in any way by Partner.
COLOR PALETTES
The EDGAR ONLINE logos must be rendered in three colors for graphics
arts reproduction. The color palette is:
<PAGE> 11
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 11 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
- EDGAR ONLINE Blue
- EDGAR ONLINE Red
- EDGAR ONLINE Yellow
Artwork should be requested from CDS.
<PAGE> 12
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 12 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
EXHIBIT B
TO
CYBERNET DATA SYSTEMS, INC. CONTENT LICENSE AGREEMENT
CLIENTCOMPANY STAFF
Also, please provide the following data for CLIENTCOMPANY:
NAME OF RECIPIENT FOR ALL OFFICIAL AND LEGAL NOTICES:__________________________
Title:_____________________________ Email:__________________________________
Phone:_____________________________ Fax:____________________________________
Address (if different from above):_____________________________________________
NAME OF MAIN PROJECT MANAGER CONTACT:__________________________________________
Title:_____________________________ Email:__________________________________
Phone:_____________________________ Fax:____________________________________
Address (if different from above):_____________________________________________
NAME OF MAIN TECHNICAL CONTACT:________________________________________________
Title:_____________________________ Email:__________________________________
Phone:_____________________________ Fax:____________________________________
Address (if different from above):_____________________________________________
<PAGE> 13
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 13 of 16
Initialed CLIENTCOMPANY:
Initialed CDS:
NAME OF VP, BUSINESS DEVELOPMENT:______________________________________________
Title:_____________________________ Email:__________________________________
Phone:_____________________________ Fax:____________________________________
Address (if different from above):_____________________________________________
NAME OF VP, MARKETING:_________________________________________________________
Title:_____________________________ Email:__________________________________
Phone:_____________________________ Fax:____________________________________
Address (if different from above):_____________________________________________
NAME OF PUBLIC RELATIONS DIRECTOR:_____________________________________________
Title:_____________________________ Email:__________________________________
Phone:_____________________________ Fax:____________________________________
Address (if different from above):_____________________________________________
NAME OF INVESTOR RELATIONS DIRECTOR (IF APPLICABLE):___________________________
Company Ticker Symbol:_________________________________________________________
Title:_____________________________ Email:__________________________________
Phone:_____________________________ Fax:____________________________________
Address (if different from above):_____________________________________________
<PAGE> 14
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 14 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
NAME OF ACCOUNTS PAYABLE CONTACT (IF APPLICABLE):______________________________
Company Ticker Symbol:_________________________________________________________
Title:_____________________________ Email:__________________________________
Phone:_____________________________ Fax:____________________________________
Address (if different from above):_____________________________________________
<PAGE> 15
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 15 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
EXHIBIT C
TO
CYBERNET DATA SYSTEMS, INC. CONTENT LICENSE AGREEMENT
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 CDS owns at least a twenty percent ownership,
equity, or financial interest.
"CDS Brand Features" shall mean all trademarks, service marks, logos and other
distinctive brand features of CDS that are used in or relate to a CDS Property
or Content, including, without limitation, the trademarks, service marks and
logos described
"CDS Content" shall mean, collectively, all materials, data, and similar
information collected and owned by CDS, which is a collection of HTML files and
certain related scripts, including, without limitation, all Enhancements.
"CDS Properties" shall mean any CDS branded or co-branded media properties,
including, without limitation, Internet guides, developed in whole or in part by
CDS or its Affiliates and distributed or made available by CDS or its Affiliates
over the Internet or otherwise.
"Content Pages" shall mean those pages in the CDS Property that contain CDS
Content and that are co-branded with both CLIENTCOMPANY Brand Features and CDS
Brand Features.
"Enhancements" shall mean any updates, improvements or modifications made to, or
derivative works created from, the CDS Content by CDS.
"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.
<PAGE> 16
CDS Agreement with CLIENTCOMPANY
CONFIDENTIAL
Page 16 of 16
Initialed CLIENTCOMPANY:_________
Initialed CDS:_________
"Paid Linked Subscriber" shall mean a CDS subscriber with a Premium Service
Subscription.
"Premium Service Subscription" shall mean any Level One, Level Two, Level Three
or Student/Journalist subscription providing access to CDS, premium, paid
content.
<PAGE> 1
RESTATED EQUITY PURCHASE AGREEMENT
RESTATEMENT, dated as of March 30, 1999, of the Agreement, dated as
of August 15, 1996, as amended by the Amendment Agreement, dated as of July 23,
1998, by and among EDGAR ONLINE, INC. (F/K/A CYBERNET DATA SYSTEMS, INC.), a
Delaware corporation with principal executive offices at 50 Washington Street,
Norwalk, Connecticut ("EOI"); BOWNE & CO., INC., a Delaware (formerly a New
York) corporation with principal executive offices at 345 Hudson Street, New
York, New York ("Bowne"); GLOBIX CORPORATION, a Delaware corporation with
offices at 295 Lafayette Street, New York, New York ("Globix"); MARC STRAUSBERG
and SUSAN STRAUSBERG, individuals residing at 2 DeForest Road, Wilton,
Connecticut (respectively "Marc Strausberg" and "Susan Strausberg", or
collectively, the "Current Shareholders"); and MICHAEL HOROWITZ, an individual
residing at 355 West End Avenue, New York, New York ("Horowitz").
W I T N E S S E T H :
WHEREAS, EOI, Bowne, the Current Shareholders and Horowitz entered
into the August 15, 1996 Equity Purchase Agreement (the "Original Agreement"),
which provided for the purchase by Bowne of shares of EOI's capital stock from
EOI, the Current Shareholders and Horowitz and set forth certain rights and
obligations of the parties with respect to the ownership, purchase and
alienation of stock of EOI; and
WHEREAS, Globix entered into a Securities Purchase Agreement with
EOI on July 23, 1998 and, as a consequence thereof, the parties to the Original
Agreement and Globix entered into the Amendment Agreement of July 23, 1998 (the
"Amendment Agreement") which,
1
<PAGE> 2
among other things, deleted Horowitz as a party to the Original Agreement as
amended by the Amendment Agreement (except with respect to the provisions
relating to his sale of shares of EOI to Bowne), and added Globix as a party to
the Original Agreement as amended by the Amendment Agreement, effective July 23,
1998, and otherwise amended certain terms of the Original Agreement; and
WHEREAS, the parties desire to restate the Original Agreement as
amended by the Amendment Agreement into one document (hereinafter called this
"Agreement") and to extend the maturity of the New Notes (as hereinafter
defined);
NOW, THEREFORE, for and in consideration of their mutual promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties named above intending
to be bound hereby now mutually agree as follows:
1. Stock Purchases by Bowne. By means of the three (3) transactions
described below in Sections 1(A), (B) and (C), Bowne or its nominee will
simultaneously acquire an aggregate of two hundred fifty thousand (250,000)
shares of EOI's capital stock, which will cumulatively represent approximately
one sixth (1/6) of EOI's outstanding capital stock as of the consummation of
such transactions, and the total cost to Bowne for such 250,000 shares will not
exceed $850,000. The date upon which these three transactions will occur is
hereinafter called the "Closing Date," and the parties will use their best
efforts to consummate such transactions on August 15, 1996.
(A) On the Closing Date, EOI will issue one hundred thousand
(100,000) new shares of its capital stock (the "New Shares") to Bowne or to
Bowne's nominee, thereby raising to 1,521,989 the aggregate number of its shares
which on such date are either outstanding or
2
<PAGE> 3
issuable pursuant to outstanding warrants. On the date of the issuance of the
New Shares, Bowne will pay EOI an aggregate gross purchase-price of $500,000 for
the New Shares, representing the negotiated price of $5.00 per share. As
provided later in Section 2 of this Agreement, Bowne may apply its preexisting
credit of $112,500 towards the aforementioned purchase-price for the New Shares,
in which case Bowne's actual remittance to EOI for the New Shares will be in the
net amount of $387,500, payable on the Closing Date. Immediately upon payment of
this net purchase-price, all of the New Shares will be duly registered in the
name of Bowne or its nominee and will be deemed to be fully-paid and
non-assessable, with full voting power, and none of them will be restricted in
any way. If any transfer tax is applicable to the issuance of the New Shares,
the parties will each pay one half thereof within thirty (30) days after the
issuance of the New Shares. The proceeds EOI receives from this new issue will
be reinvested in its "EDGAR ONLINE" business described later herein.
(B) Secondly, again on the Closing Date, the Current Shareholders
will jointly and severally sell to Bowne or its nominee, and Bowne or its
nominee will purchase from the Current Shareholders, one hundred thousand
(100,000) shares of EOI capital stock from among the previously issued and
outstanding shares owned on such date by one or both of the Current Shareholders
personally (the "Strausberg Shares"). Upon the transfer of the Strausberg
Shares, Bowne or its nominee will pay the Current Shareholders an aggregate
purchase-price of $250,000 for them, representing the negotiated price of $2.50
per share. Unless otherwise agreed, the purchase-price will be paid in equal
halves to each of Marc Strausberg and Susan Strausberg. Immediately upon payment
of this purchase-price, all of the 100,000 Strausberg Shares will be duly
registered in the name of Bowne or its nominee and will be deemed to be
fully-paid and non-assessable, with full voting power. None of the Strausberg
Shares will be
3
<PAGE> 4
restricted in any way once they have been transferred to Bowne or its nominee,
and either EOI or one or both of the Current Shareholders will bear all the
costs of removing any restrictive legends or other limitations that may
currently apply to the Strausberg Shares. If any transfer tax is applicable to
the issuance of the Strausberg Shares, the Current Shareholders will bear one
half thereof and Bowne will bear the other half.
(C) Thirdly, also on the Closing Date, Horowitz will sell to Bowne
or its nominee, and Bowne or its nominee will purchase from Horowitz, fifty
thousand (50,000) shares of EOI capital stock (the "Horowitz Shares"). Upon such
transfer of the Horowitz Shares, Bowne or its nominee will pay Horowitz an
aggregate purchase price of $125,000 for them, representing the negotiated price
of $2.50 per share. As of August 1, 1996 the Horowitz Shares were authorized but
had not yet been issued, although Horowitz held warrants of EOI which were
convertible into more than that number of shares; therefore, in order to be able
to sell the Horowitz Shares to Bowne or its nominee, Horowitz will have
converted prior to the Closing Date the number of his warrants that will make
him the lawful and registered owner of at least 50,000 shares of EOI capital
stock on the Closing Date. Horowitz will bear for his own account all the costs
of such conversion, including the payment of the conversion price of five (5)
cents per share to EOI, and neither Bowne nor its nominee will be liable for any
of such expenses or for any payment to EOI relating thereto. Following the
acquisition of the Horowitz Shares by Bowne or its nominee, all the Horowitz
Shares will be duly registered in the name of Bowne or its nominee and will be
deemed to be fully-paid and non-assessable, with full voting power. None of the
Horowitz Shares will be restricted in any way once they have been transferred to
Bowne or its nominee, and EOI will bear all the costs of removing any
restrictive legends or other limitations that may currently apply to the
warrants or which may attach to the Horowitz
4
<PAGE> 5
Shares prior to or as a result of their acquisition by Bowne. If any transfer
tax is applicable to the issuance or transfer of the Horowitz Shares, Horowitz
will bear one half thereof and Bowne will bear the other half. No new warrants
will be issued by EOI to replace those converted by Horowitz without the prior
express consent of Bowne.
(D) The three distinct purchases of EOI stock referred to in
Sections 1(A), (B) and (C) above constitute integral parts of the same equity
acquisition, and Bowne or its nominee in its sole discretion may elect not to
complete any or all of these transactions if any one or more of them, for any
reason, cannot be or is not duly consummated simultaneously with the others on
the Closing Date in accordance with this Agreement.
(E) The Closing Date is scheduled for Thursday, August 15, 1996,
subject to postponement by mutual agreement if all the parties concur that such
postponement is necessary. In no event will the Closing Date occur later than
November 18, 1996, unless Bowne expressly consents to a postponement of the
Closing Date, and if it has not occurred by then, Bowne may, but need not,
terminate this Agreement and will have no further obligations hereunder to any
of the parties.
2. Cancellation of Promissory Notes. Prior to August 15, 1996, Bowne
has made two loans to EOI for use as operating capital. On May 22, 1996, Bowne
loaned EOI $50,000, while EOI in turn delivered its promissory note in like
amount to Bowne. On July 12, 1996, Bowne loaned an additional $25,000 to EOI,
and EOI again delivered its promissory note in like amount to Bowne. These two
promissory notes (the "Original Notes") provided among other things that if both
the principal amounts were repaid in full on or before November 18, 1996 (the
"Original Notes Maturity Date"), the Original Notes would not bear interest,
although interest will accrue thereafter if not repaid on the Original Notes
Maturity Date. Furthermore,
5
<PAGE> 6
letter agreements which accompanied the Original Notes, respectively dated May
21 and July 12, 1996, provided that if Bowne were to invest in any EOI stock
within 180 days after the delivery of the Original Notes, the Original Notes
need not be repaid but will be convertible into an aggregate credit of $112,500
applicable towards the purchase-price of EOI's capital stock. Therefore, if the
three simultaneous purchases of EOI stock described in Section 1 hereinabove are
duly consummated in accordance with this Agreement, then Bowne or its nominee
may surrender the Original Notes and receive a credit of $112,500 towards the
purchase-price of the New Shares. This is the credit referred to in Section 1(A)
above, which will reduce the purchase-price payable by Bowne for the New Shares
from $500,000 to $387,500. Upon the issuance of the New Shares, the Original
Notes will be deemed canceled and so marked. If, however, consummation of the
three stock purchases described in Section 1 should be delayed through no fault
of Bowne, and if, further, Bowne nevertheless elects to consummate such
purchases at a later date rather than terminating this Agreement, then the
aforementioned credit of $112,500 may still be applied towards the
purchase-price of the New Shares, and the Original Notes will be deemed canceled
as of the actual Closing Date. However, if the Closing Date occurs later than
the Original Notes Maturity Date, any interest which EOI will then owe Bowne on
the Original Notes may also be applied by Bowne or its nominee towards the
purchase-price of the New Shares.
3. Additional Loans. (A) As of July 23, 1998, Bowne has made various
loans to EOI aggregating $500,000 principal amount, evidenced by promissory
notes of EOI, dated January 7, 1997, February 6, 1997, March 4, 1997, April 1,
1997, April 17, 1997, June 24, 1997 and August 1, 1997 (collectively, the "New
Notes"), which New Notes have been unconditionally guaranteed by Marc Strausberg
(the "Guarantee"). The New Notes shall
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continue in full force and effect, except that the maturity date of each Note is
hereby extended to February 28, 2000 (the "Extended New Notes Maturity Date");
provided, however, that in the event an initial public offering of EOI (of the
type contemplated by Section 22 hereof) is consummated prior to the Extended New
Notes Maturity Date, then EOI, at the time such initial public offering is
closed, shall pay all the New Notes in full from the proceeds of such offering.
Marc Strausberg hereby consents to the Extended New Notes Maturity Date and
agrees and confirms that the Guarantee shall remain in full force and effect
until the payment in full of all amounts due under the New Notes.
(B) Bowne hereby irrevocably and unconditionally surrenders all
rights to convert the New Notes into shares of common stock of EOI, par value
$.01 per share (the "Common Stock").
4. Addition and Deletion of Parties. The parties hereby acknowledge
that Globix shall be made a party to this Agreement effective July 23, 1998 and
Globix specifically acknowledges and agrees to be bound by the terms of this
Agreement. The parties further acknowledge that Horowitz is to be deleted and
removed from this Agreement, effective July 23, 1998, except for Sections 1(C),
9(B) and 9(C) hereof. Each of the Current Shareholders consents and agrees that
each stock certificate evidencing his or her respective shares of Common Stock
shall bear the following legend (and each of Bowne and Globix agrees that each
stock certificate evidencing its respective shares of Common Stock shall bear
the second sentence of the following legend): "THE TRANSFER OR SALE OF THIS
SECURITY IS SUBJECT TO THE TERMS OF A RESTATED EQUITY PURCHASE AGREEMENT, DATED
AS OF MARCH __, 1999, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE COMPANY.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
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ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
SOLD UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE LAWS
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
5. Right of Inclusion. From and after July 23, 1998, Bowne and
Globix shall have the following rights in the event that the Current
Shareholders, or any one or more of them, wishes, directly or indirectly, to
sell, transfer, assign or otherwise dispose of any of his or her shares of
Common Stock (a "Transfer") to any third party other than to his or her spouse
or children who become a party to this Agreement and assume the Current
Shareholders' obligations hereunder. Such rights will apply to any shares of
Common Stock owned by the Current Shareholders on July 23, 1998 and any shares
they may acquire hereafter by way of a stock split, stock dividend, reverse
stock split, recapitalization, reorganization, merger, consolidation or the like
(the "Owned Securities"). Such rights shall be in addition to, and not in lieu
of, all other rights set forth in this Agreement and are on the following terms:
(A) Transfer Notice. Prior to any Transfer, the Current Shareholder
or Shareholders who have received an offer to purchase all or any part of his or
her shares of Owned Securities shall give written notice of the proposed
Transfer (the "Transfer Notice") to Bowne and Globix specifying the type and
number of Owned Securities which such Current Shareholders wish to Transfer (the
"Offered Securities"), the name of the buyer, the proposed purchase price
therefor (the "Price"), and all other material terms and conditions of the
proposed Transfer and setting forth a representation of such Current
Shareholders that the terms reflect an actual, bona fide, arm's-length offer
from an unaffiliated financially responsible person (such offer being herein
called a "Bona Fide Offer" and such prospective buyer being herein called the
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<PAGE> 9
"Buyer"), and an agreement from the Buyer to purchase from Bowne and/or Globix
within the time prescribed in said Bona Fide Offer, but not later than the
earlier of the purchase from any selling Current Shareholder or 60 days after
delivery of the Inclusion Notice, as defined below (the "Purchase Offer"), at
the option of Bowne and/or Globix, a Pro Rata (as defined below) number of
shares of Bowne's and/or Globix's Common Stock, on the same terms and conditions
as are applicable to the Offered Securities, all of which terms shall be
specified in the Purchase Offer, except that neither Bowne nor Globix shall be
required to provide any representation or warranty or other undertaking other
than with respect to its ownership of, and authority to transfer, such shares of
Common Stock free and clear of all liens. As used herein, "Pro Rata" shall mean
that percentage of the total number of shares of Common Stock owned or deemed to
be owned (through derivative securities or otherwise) by Bowne and Globix equal
to the proportion of the number of shares of Offered Securities to the total
number of shares of Owned Securities owned or deemed to be owned (through
derivative securities or otherwise) by such selling Current Shareholders.
(B) Bowne and Globix's Rights. For a period of thirty (30) days
following its receipt of the Transfer Notice, Bowne and Globix shall each have
the right to: (i) to accept the Purchase Offer from Buyer (the "Inclusion
Right"), which right shall be exercisable by delivery to such Current
Shareholders of a notice (the "Inclusion Notice") of acceptance, which right
shall expire if unexercised within such 30-day period; or (ii) to elect not to
accept the Purchase Offer. During such period EOI shall make available to Bowne
and Globix any information relating to EOI, financial or otherwise, as Bowne or
Globix may reasonable request in order to assist it in determining which of the
foregoing options to elect.
(C) Inclusion Right. If Bowne or Globix elects to exercise its
respective
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Inclusion Right and to accept the Purchase Offer, the Buyer shall purchase the
Common Stock with respect to which a Purchase Offer was accepted by Bowne and/or
Globix along with the shares of Offered Securities being sold to Buyer by the
Current Shareholders on the terms and for the consideration set forth in the
Purchase Offer within sixty (60) days after the delivery of the Inclusion Notice
(or any earlier time that shares are purchased from any selling Current
Shareholder); provided, however, if such sales are not consummated on or before
such date, the Current Shareholders shall not sell his or her shares thereafter
to Buyer or any other person without first delivering a Transfer Notice and
again offering Bowne and Globix the aforesaid Inclusion Right.
(D) When Bowne and/or Globix Declines to Exercise its Rights. If
Bowne or Globix does not deliver an Inclusion Notice within thirty (30) days
after receipt of a Transfer Notice, then such Current Shareholders shall have
the right, for a period of sixty (60) days from the earlier of (i) the
expiration of such period in which Bowne and Globix had to elect to deliver such
notices, or (ii) the date on which the selling holders have received notice from
Bowne and Globix that they will not exercise the Right of Inclusion, to sell to
the Buyer the Offered Securities under this Section 5 at a price not less than
the Price and on the other terms set forth in the Transfer Notice. If the
Offered Securities are not sold to the Buyer during such 60-day period, then the
Offered Securities and the rest of the Current Shareholders' shares of Owned
Securities will not thereafter be sold without first delivering a Transfer
Notice and again offering Bowne and Globix the aforesaid Inclusion Right.
6. Anti Dilution and Registration Rights. (A) In addition to all
other rights afforded Bowne and Globix under the terms of this Agreement, each
of Bowne and Globix shall have the right, but not the obligation, to participate
in any transaction in which EOI raises capital
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through the sale of Common Stock or derivative securities to bona fide third
parties, but exclusive of any bona fide options which may be issued after the
date hereof to directors, officers or employees of the Company pursuant to any
stock option plan(s) adopted by the Company ("Capital Transaction") to the
extent, and only to the extent, necessary to maintain the percentage ownership
in EOI (giving effect to any derivative securities owned by each of Bowne and
Globix) held by each immediately preceding the Capital Transaction. For purposes
of this Section 6, EOI will give written notice to Bowne and Globix of any
Capital Transaction, including the number of shares of Common Stock to be sold
to the third party, the number of shares that each of Bowne and Globix shall be
entitled to purchase to maintain their percentage ownership in EOI immediately
proceeding the Capital Transaction, the price for such share and such other
information relating to EOI that Bowne and/or Globix may reasonably request.
Each of Bowne and Globix shall have thirty days to elect to purchase some or all
of the shares of Common Stock they are entitled to purchase hereunder at the
price paid by the bonafide third party in the Capital Transaction, which payment
shall be made in United States currency against delivery to the purchaser of
certificates registered in its name for the Common Stock purchased. Such Common
Stock purchased shall be duly issued, fully paid and non-assessable and shall be
free and clear of all liens and restrictions on transfer except as provided by
applicable securities laws. Failure to exercise the foregoing right in the case
of one Capital Transaction shall not prevent its exercise in the event of any
subsequent Capital Transaction.
(B) In addition to all other rights afforded Bowne and Globix under
the terms of this Agreement, each of Bowne and Globix shall have the right to
piggy back registration, all as more particularly set forth in the Registration
Rights Agreement attached hereto as Exhibit A (the "Registration Rights
Agreement"). For this purpose, Bowne shall be considered a party to
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the Registration Rights Agreement, the term "Registerable Securities" shall
include any shares of Common Stock now owned or hereafter acquired by Bowne, and
Bowne shall be considered a "Holder" for all purposes of the Registration Rights
Agreement. No amendment to the Registration Rights Agreement shall serve to
diminish the rights given to Bowne hereunder but any improvement in such rights
shall be for the benefit of Bowne.
7. Board Membership. The parties hereto agree to vote their
respective shares of Common Stock to (i) authorize the expansion of the Board of
Directors to seven (7) members; and (ii) to elect (and re-elect from time to
time) one designee of Globix and one designee of Bowne as members of such Board.
Increase of the Board of Directors to a number greater than seven (7) shall
require the consent of Bowne and Globix, which consent shall not be unreasonably
withheld or delayed. In the event that the Current Shareholders should sell or
transfer some or all of their EOI stock, their shares will become restricted in
such a manner as to require the new holder or holders thereof to cause the
election (and reelection) of Bowne's and Globix's designees to the EOI Board of
Directors. Robert Johnson is hereby designated as the Bowne appointed director
on the EOI Board of Directors; provided, however, that if Mr. Johnson shall at
any time resign from the Board, Bowne may designate a replacement nominee by
written notice to EOI.
8. Representations and Warranties by EOI. As of both August 15, 1996
and the Closing Date, EOI represents and warrants to Bowne and its nominee as
follows:
(A) EOI is a Delaware corporation duly organized, validly existing
and in good standing, and that it has all requisite corporate power and legal
authority to own its properties, carry on its businesses as now conducted, issue
its securities, and perform its obligations hereunder, including the approval of
its shareholders and its board of directors to
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agree to such obligations; and EOI will deliver on the Closing Date a good
standing certificate from Delaware;
(B) EOI is duly qualified as a foreign corporation and in good
standing in Connecticut, where its only offices are located , and there is no
other jurisdiction where failure to be qualified, licensed or registered would
have a material adverse effect upon EOI; and EOI will deliver on the Closing
Date a good standing certificate from Connecticut;
(C) EOI is in compliance with all applicable laws and with all
applicable rules and regulations of governmental entities, noncompliance with
which would have a material adverse effect on EOI, on its businesses as now
conducted, or on its right to conduct such businesses or to have its securities
outstanding;
(D) EOI currently has 1,100,000 shares of a single class of Common
Stock issued and outstanding, out of a total authorized aggregate of 2,000,000
shares, which number includes 100,000 shares issued to Horowitz upon the
conversion of his warrants but does not include the New Shares; and EOI also has
outstanding 321,989 warrants convertible into a like number of additional shares
of the same Common Stock, regardless of whether such stock is referred to in any
particular instrument as having a par value of $.01 or of $.001; and all of such
shares have been duly issued or authorized for issue by EOI's Board of
Directors; all of them comply with any applicable federal or state securities
regulations; and none of the outstanding shares, including those to be issued
under this Agreement, are uncertified;
(E) The documents delivered herewith include true and complete
copies of EOI's certificate of incorporation and by-laws, as well as the full
provisions of its Common Stock and its warrants;
(F) The Board of Directors of EOI currently consists of three (3)
members and
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the maximum permissible size of the board under its by-laws is at least four (4)
members;
(G) All financial statements which EOI has supplied or made
available to Bowne on August 15, 1996 or at the Closing Date present fairly the
financial position of EOI as of the dates indicated therein;
(H) There is no suit, action, litigation, preliminary injunction or
administrative, arbitration or other proceeding or governmental investigation or
inquiry pending or, to EOI's knowledge, threatened against EOI which, if
adversely determined, would have a material adverse effect on EOI or on its
ability to perform its obligations hereunder;
(I) EOI has furnished Bowne with true and complete copies of all its
material contracts with customers and suppliers, and is not in default
respecting any thereof or, if any default exists or may with the passage of time
come into being, EOI will at or before the Closing Date cure such default,
including any default in the payment of its monetary obligations under, or in
the performance of any material covenant or obligation to be performed pursuant
to, any such contracts, nor is any third party in default in the payment of any
monetary obligation under, or in the performance of any material covenant or
obligation to be performed by it pursuant to, any of such contracts;
(J) EOI's service offerings "EDGAR ONLINE" and "Bowne EDGAR ONLINE"
have all necessary governmental approvals and do not violate the rights of any
third party;
(K) The trade name "EDGAR ONLINE" is a registered service mark of
EOI, and EOI is the successor in interest to Sindex, Inc. with respect to the
certain Trademark License Agreement between Sindex and the SEC dated September
15, 1995 relating to use of the
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"EDGAR ONLINE" service mark; and
(L) The Original Notes and the letter agreements which accompanied
the Original Notes represent binding legal obligations of EOI, until duly
canceled and surrendered by Bowne, having all been entered into with full
corporate power and legal authority.
9. Representations and Warranties by the Current Shareholders and
Horowitz. As of both August 15, 1996 and the Closing Date:
(A) The Current Shareholders jointly and severally warrant and
represent to Bowne and its nominee that they are the lawful owners of one
million (1,000,000) shares of EOI capital stock including the Strausberg Shares,
with full power to undertake their obligations in this Agreement, but they are
not the owners of any of the warrants of EOI;
(B) Horowitz warrants and represents to Bowne and its nominee that
he is the lawful owner of the 100,000 shares of EOI capital stock which include
the Horowitz Shares, with full power to undertake his obligations in this
Agreement, but he is not the owner of any warrants convertible into EOI capital;
and
(C) The Current Shareholders and Horowitz jointly and severally
warrant and represent to Bowne and its nominee that, to the best of their
knowledge and belief respectively, (i) the financial statements of EOI delivered
to Bowne present its financial position fairly as of the dates upon which they
were delivered; (ii) there is no litigation or other legal or governmental
process pending or threatened against EOI or against them individually which, if
adversely determined, would have a material adverse effect on EOI and its
businesses, on their respective equity interests in EOI, or on their ability to
perform their obligations under this Agreement; and (iii) EOI is in compliance
with all applicable laws and all rules and regulations of governmental entities,
noncompliance with which would have a material adverse effect on EOI and its
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businesses, on their respective equity interests in EOI, or on their ability to
perform their obligations under this Agreement.
10. Representations and Warranties by Bowne. Bowne represents and
warrants to EOI as of August 15, 1998 that it has all necessary corporate
authority to enter into this Agreement and to make the investments in EOI called
for by this Agreement. More specifically, Bowne is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
Furthermore, at a regular meeting on June 27, 1996, attended by all its members,
the Board of Directors of Bowne expressly authorized the purchases of EOI stock
contemplated by Section 1 of this Agreement and empowered Bowne's management to
negotiate and execute this Agreement and the License referred to hereinbelow in
Section 12. No shareholder action is required in order to make this Agreement a
fully binding obligation of Bowne and its nominee. In addition, Bowne represents
that it is purchasing EOI securities for investment purposes only and for its
own account and not with a view to distribution thereof. Bowne understands that
the securities purchased hereunder are restricted securities in that they have
not been registered under federal or state securities laws and, as such, no
securities purchased hereunder may be transferred or sold by Bowne or its
nominee, except as provided below in Section 13, unless Bowne furnishes EOI with
an opinion of counsel reasonably acceptable to EOI, which states that either the
securities have been registered under the Securities Act of 1933, as amended,
and all applicable state securities laws, or that such proposed transfer or sale
is exempt from registration under such securities laws. Bowne understands that
the purchase of EOI securities may involve a substantial degree of risk and that
such securities are suitable only for an investor of substantial means who has
no need for liquidity in this investment. There is currently no public market
for EOI's securities and none is currently
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anticipated. Finally, Bowne represents that it has had the opportunity to obtain
any and all information on EOI necessary in order for Bowne to make a decision
as to the advisability of purchasing EOI securities, and has also had the
opportunity to ask questions of EOI's officers regarding its businesses.
11. Approval by EOI Board and Shareholders. On or prior to the
Closing Date, the Board of Directors of EOI will have ratified and confirmed
both this Agreement and the License (defined hereinafter) as binding obligations
of EOI. Furthermore, to the extent that the corporate charter or by-laws of EOI
may render such action necessary or desirable, or applicable law may require the
same, EOI will obtain consent to and ratification of this Agreement and of the
License by its shareholders on or prior to the Closing Date. On the Closing
Date, EOI will supply Bowne with reasonably acceptable written evidence of such
actions by its board and its shareholders.
12. EDGAR ONLINE. One of the principal objectives of the
transactions outlined in this Agreement is to involve Bowne in the sponsorship
and future development and promotion of EOI's proprietary electronic service
offering known as "EDGAR ONLINE". It is the basic function of this Internet
service to disseminate in a convenient fashion to subscribers, with certain
value-added enhancements and the omission of headers and certain coding, most of
the growing volume of financial and corporate information that is being filed
electronically in the Securities and Exchange Commission's EDGAR System. EOI's
reasons for wishing to involve Bowne in the further development of this offering
include its recognition of the marketing value of the "Bowne" name in the realm
of financial and corporate reporting, as well as the considerable expertise
Bowne already has with electronic filings and data management generally, and the
financial resources that Bowne can bring to any such collaboration. EOI has also
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designed and developed, in collaboration with Bowne and its affiliates, a
special version or edition of EDGAR ONLINE to be licensed exclusively to Bowne,
to be known as "Bowne EDGAR ONLINE", with the following principal
characteristics:
(A) The SEC's real-time EDGAR database will be reformatted and
certain value-added subsets of information will be added for on-line browsing on
the World Wide Web using the EDGAR ONLINE proprietary software and will be
accessible at the Web site "http://www.Edgar-online.com/bowne".
(B) The Bowne name and proprietary logo will be prominently
displayed.
(C) If EOI upgrades EDGAR ONLINE at any time, the corresponding
upgrades and enhancements will be incorporated into the service offering.
(D) The E-mail watchlist function of EDGAR ONLINE will not be
included.
(E) Bowne and EOI will from time to time collaborate to improve the
service offering with particular emphasis on the ease of accessibility of the
EDGAR data and the effectiveness of the service offering as a marketing tool in
the promotion of EDGAR ONLINE itself.
(F) Bowne EDGAR ONLINE will be royalty-free and at no cost to Bowne
as long as Bowne holds an equity interest in EOI, but if Bowne ceases to hold
any equity interest in EOI a new royalty structure will be agreed upon through
good-faith, arms-length negotiations between EOI and Bowne which are based upon
the fair market value of such a service offering and which will properly reflect
the contributions which Bowne will already have made in the design, development
and promotion of EDGAR ONLINE and of Bowne EDGAR ONLINE.
(G) Bowne EDGAR ONLINE will become fully operational on the Closing
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Date, and Bowne and its corporate affiliates may begin making unlimited use of
it on that date.
(H) The License of the foregoing rights to EDGAR ONLINE, in
substantially the form annexed hereto as Exhibit B, will be executed by EOI and
Bowne no later than the Closing Date (the "License").
13. Assignment of Stock and Other Rights. Notwithstanding anything
to the contrary herein contained, Bowne or its nominee may at any time transfer
all or any part of its interest in EOI to a corporate parent, subsidiary,
affiliate or any other corporate or partnership entity owned or controlled by,
or under common ownership or control with, Bowne (collectively a "Bowne
Affiliate"). Bowne may also at any time assign its rights and/or obligations
under this Agreement, including the License, to a Bowne Affiliate. In any such
case, Bowne or its nominee will give written notice to EOI on or before the
effective date of such a transfer or assignment. However, except as stated
above, no other rights and obligations created by this Agreement may be assigned
or transferred.
14. Certain EOI Covenants. EOI, as of July 23, 1998 and thereafter,
covenants and agrees that:
(A) It will not adopt by written consent (as contrasted to adoption
at a meeting) any resolution or action of the directors or shareholders of EOI
unless Bowne receives notice thereof and has signed such consent.
(B) EOI shall deliver to Bowne and Globix within 30 days of the end
of each fiscal quarter and year-end a balance sheet, statement of operations and
statement of cash flow prepared in accordance with United States generally
accepted accounting principles consistently applied with prior periods. The
statements shall be certified by the chief financial officer of EOI as so
prepared; provided, however, that if the year end statement is audited by an
independent
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public accountant, such audited statement shall be delivered to Bowne and
Globix.
(C) EOI shall not grant or give, directly or indirectly, to any
present or future shareholders of EOI any greater rights as a shareholder,
whether by contract or otherwise, than those granted to Bowne and Globix in this
Agreement unless such rights are also concurrently offered to, and may at their
option be accepted by, Bowne and/or Globix and shall include Bowne and Globix on
the same terms and conditions.
(D) EOI represents, warrants, covenants and agrees that (i) so long
as the Debenture issued on July 23, 1998 to Globix (the "Debenture') is
outstanding (which for the purposes of this Section 14(D) shall mean the entire
term of the Debenture in the event that Globix converts the Debenture prior to
maturity as a result of EOI's proposed prepayment of the Debenture (a "Forced
Conversion")), EOI shall not, after July 23, 1998, issue or reserve for issuance
more than 800,000 shares of Common Stock for options for the benefit of
employees, directors, officers, consultants and agents without the prior written
consent of Globix and Bowne, which consent shall not be unreasonably withheld or
delayed and (ii) in the event Globix elects to convert the Debenture (other than
as a result of a Forced Conversion) and Globix or Bowne holds of record (i.e.,
not through derivative securities) five (5%) percent or more of the issued and
outstanding Common Stock (in such capacity, a "Principal Shareholder"), EOI
shall not, after the date of such conversion, issue or reserve for issuance more
than that number of shares of Common Stock for options which equals ten (10%)
percent of the issued and outstanding capital stock of EOI, on a fully diluted
basis, for the benefit of employees, directors, officers, consultants and agents
without the prior written consent of Globix and Bowne, which consent shall not
be unreasonably withheld or delayed; provided, however, that the rights of Bowne
and Globix under this clause (ii) shall expire upon the earlier of (x) with
respect to Globix and Bowne, at such time
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that Globix or Bowne, as the case may be, no longer is a Principal Shareholder,
(y) the termination of this Agreement or (z) July 23, 2003.
15. Additional EOI Representations and Warranties. EOI represents
and warrants to Bowne and Globix as of July 23, 1998 as follows, which
representations and warranties shall survive the execution of the Amendment
Agreement and any subsequent amendments to this Agreement:
(A) The execution, delivery and performance by EOI of the Amendment
Agreement and the Registration Rights Agreement are within EOI's corporate
powers and have been duly authorized by all necessary corporate action on the
part of EOI, including, without limitation, approval by the Board of Directors
and, if required, the shareholders of EOI. This Amendment and the Registration
Rights Agreement have been duly and validly executed by EOI and constitute the
legal, valid and binding agreement of EOI enforceable against it in accordance
with their respective terms.
(B) Attached hereto as Schedule A are the names of all the holders
of the issued and outstanding Common Stock of EOI on July 23, 1998 and the
number of shares held by them, and except as set forth in Schedule A, there is
not outstanding as of July 23, 1998 any securities, shares, rights,
subscriptions, warrants or options that gives any person the right to purchase
or otherwise receive or be issued any shares of capital stock or other equity
interest in EOI or any security of any kind convertible into or exchangeable or
exercisable for any shares of capital stock or other equity interest in EOI.
(C) All of the representations and warranties of EOI contained in
Section 8 hereof are hereby restated as though made on and as of July 23, 1998,
except to the extent of
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revising the same to reflect the issued and outstanding Common Stock as set
forth in Schedule A and to reflect that the Board of Directors currently
consists of four members, one of whom is a nominee of Bowne.
(D) True and correct copies of all the documents involved in the
purchase on July 23, 1998 by Globix of a Debenture of EOI in the principal
amount of $1,000,000 and a Warrant to purchase 666,667 shares of Common Stock
has been provided to Bowne.
16. Additional Representations and Warranties by the Current
Shareholders. The Current Shareholders, jointly and severally, restate their
representations and warranties contained in Section 9 of this Agreement as
though made on and as of July 23, 1998, which representations and warranties
shall survive the execution of the Amendment Agreement and any subsequent
amendments to this Agreement.
17. Additional Representations and Warranties of Bowne. Bowne
restates its representations and warranties contained in Section 10 of this
Agreement, other than the third sentence thereof, as though made on and as of
July 23, 1998, which representations and warranties shall survive the execution
of the Amendment Agreement and any subsequent amendments to this Agreement.
18. Merger. This Agreement supersedes any and all other written
agreements and understandings between the parties hereto except the Original
Notes, the New Notes, the Guarantee, the Registration Rights Agreement, the
License and the other documents specifically mentioned in this Agreement. The
Original Note and New Notes will continue to have full force and effect in
accordance with their respective terms, following the execution of this
Agreement until paid in full and canceled in accordance with Section 2 and 3
hereinabove.
19. Equitable Relief. The parties to this Agreement acknowledge
that, if any
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one of them should fail, refuse or be unable to perform his, her or its
obligations under this Agreement at the time specified for such performance, or
if such failure, refusal or inability is threatened, monetary damages may be an
inadequate remedy for the other party or parties who were entitled to the
benefit of such performance. The parties therefore stipulate and agree that such
aggrieved party or parties may at their sole option apply to a court of
competent jurisdiction for equitable relief, including injunction and specific
performance of the unperformed obligations. If the party or parties applying for
such relief are successful in obtaining some or all of the equitable relief
sought, then the parties who failed, refused or were unable to perform their
obligations as required by this Agreement will bear all the court costs involved
in obtaining such relief including the reasonable attorneys' fees of the
aggrieved party or parties. However, regardless of whether equitable relief is
in fact granted in such a case, the aggrieved party or parties will be entitled
to monetary damages representing his, her or its actual losses attributable to
the actual or threatened nonperformance together with reasonable legal fees and
other costs of collecting such monetary damages.
20. Notices. Any notices to be given in connection with this
Agreement must be in writing and will be deemed given when received by the party
for whom they are intended. Such notices shall be addressed to the respective
parties at their addresses first above given and, unless delivered by hand,
shall be sent by registered or certified mail with copies to each of the other
parties. Notices intended for EOI shall be marked to the attention of Marc
Strausberg, and those intended for Bowne shall be marked to the attention of
Robert Johnson.
21. Severability. If any one or more provisions or parts of any
provision contained in this Agreement, or in any related agreement, shall for
any reason be held to be invalid, illegal, unenforceable, or contrary to public
policy in any respect, such invalidity,
23
<PAGE> 24
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or part of a provision had been
limited or modified, consistent with its general intent, to the extent necessary
in order that it shall be valid, legal and enforceable, or if it shall not be
possible so to limit or modify such invalid, illegal or unenforceable provision
or part of a provision, the remaining provisions or part of such provision shall
remain in full force and effect as if such invalid, illegal or unenforceable
provision or part of a provision had never been contained herein.
22. Term. This Agreement shall automatically terminate upon the
happening of any of the following events: dissolution of EOI; the voluntary
agreement by all the parties hereto; the point in time when both Bowne and
Globix own no equity interest or derivative securities in EOI; or the
effectiveness of a registration statement filed under the Securities Act of
1933, as amended, covering a public offering of securities of EOI, provided that
such initial public offering is underwritten and as a result of which at least
25% of the then outstanding Common Stock is publicly held and listed on a
national securities exchange or on the NASDAQ National Market System.
23. Miscellaneous. This Agreement may not be altered or amended in
any way except in writing and signed by all the parties, but Horowitz shall not
be required to sign unless Sections 1(C), 9(B) or 9(C) are changed. This
Agreement may be executed in any number of identical counterparts, each of which
when executed and delivered will be deemed to be an original, but all such
counterparts will constitute one and the same instrument. This Agreement will be
governed by the laws of the State of New York, wherein it has been negotiated
and where Globix and Bowne are located, although it is understood that the
corporate powers of EOI and
24
<PAGE> 25
the legal characteristics of its securities will, to the extent necessary, be
construed in accordance with the laws of the State of Delaware, wherein it is
incorporated.
25
<PAGE> 26
IN WITNESS WHEREOF, the respective parties have duly executed this
Agreement at New York, New York, as of the date first above written.
(Seal) EDGAR ONLINE, INC. f/k/a Cybernet Data Systems, Inc.
By:
/s/ Tom Vos
--------------------------------------------
Tom Vos, President
(Seal) BOWNE & CO., INC.
By:
/s/ Bruce Bezpa
--------------------------------------------
Bruce Bezpa, Vice President
GLOBIX CORPORATION
By:
/s/ Marc Bell
--------------------------------------------
Marc Bell, President & CEO
/s/ Susan Strausberg
--------------------------------------------
Susan Strausberg
/s/ Marc Strausberg
--------------------------------------------
Marc Strausberg
/s/ Michael Horowitz
--------------------------------------------
Michael Horowitz
(Only as to Sections 1(C), 9(B) and 9(C))
27
<PAGE> 27
REGISTRATION RIGHTS AGREEMENT
CYBERNET DATA SYSTEMS, INC.
<PAGE> 28
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of the day of , 1998, by and between Cybernet Data Systems,
Inc., a Delaware corporation (the "Company"), and (the
"Holder").
W I T N E S S E T H:
WHEREAS, the Holder has agreed to purchase the (as such
terms are defined that certain Securities Purchase Agreement of even date
herewith between the Company and the Holder (the "Purchase Agreement")); and
WHEREAS, as additional consideration for the purchase of the by
the Holder, the Company desires to grant to the Holder registration rights with
respect to the Registrable Securities (as hereinafter defined);
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (i) the Common Stock issuable
or issued upon conversion of the or upon exercise of the ; and
(ii) any Common Stock of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, the Common Stock, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which such person's
registration rights are not assigned; provided, however, that as to any
particular securities that are included in Registrable Securities, such
securities shall cease to be Registrable Securities when (i) such shares shall
have been sold to the public pursuant to a registered public offering or (ii)
such securities shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act of 1933, as amended (the "1933 Act").
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are exercisable or convertible into,
Registrable Securities;
1
<PAGE> 29
2. Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holder) its Common Stock under
the 1933 Act in connection with the public offering of such securities solely or
substantially for cash (other than a registration relating solely to a Company
stock plan or a registration on Form S-4 or on any other form which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities),
the Company shall, at such time, promptly give the Holder written notice of such
registration in accordance with subparagraph 12(c) hereof. Upon the written
request of the Holder given within thirty (30) days after mailing of such notice
by the Company, the Company shall use its best efforts, subject to the
provisions of Paragraph 6, to cause to be registered under the Securities Act
all of the Registrable Securities that the Holder has requested to be
registered; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Paragraph 2 without
obligation to the Holder. Notwithstanding anything to the contrary contained in
this Agreement, the Company shall have the right to defer the initial filing or
effectiveness of the Registration Statement (A) for such reasonable period of
time until the Company receives or prepares financial statements for the fiscal
period most recently ended prior to such written request, if necessary to avoid
the use of stale financial statements, or (B) if the Company would be required
to divulge in such Registration Statement the existence of any fact relating to
a material business situation, transaction or negotiation not otherwise required
to be disclosed or if the Board of Directors of the Company shall determine in
good faith that the registration to be effected would not be in the best
interest of the Company. The Company may impose stop-transfer instructions with
respect to the Registrable Securities for any period of suspension of
effectiveness of the Registration Statement.
3. Obligations of the Company. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holder,
keep such registration statement effective until this Agreement is terminated
pursuant to Paragraph 11 hereunder.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders covered by such registration statement such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such other documents as
they may reasonably request in order to facilitate the disposition of such
Registrable Securities.
2
<PAGE> 30
(d) Use its best efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Holders thereof,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. The Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify the Holder covered by such registration statement at any time
when a prospectus relating thereto is required to be delivered under the 1933
Act of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing. Upon such notification, the Holders shall
immediately cease making offers of Registered Securities and return all
prospectuses to the Company. The Company shall promptly provide the Holders with
revised prospectuses and, following receipt of the revised prospectuses, the
Holders shall be free to resume making offers of the Registered Securities.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
(h) Use its best efforts to list the Registrable Securities covered by
such registration statement with any securities exchange on which the Common
Stock is then listed.
4. Provision of Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of the
Registrable Securities.
3
<PAGE> 31
5. Expenses of Company Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to
Paragraph 2 for the Holder thereof including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees
relating or apportionable thereto, but excluding the Holder's counsel fees,
underwriting discounts and commissions and to the extent appropriate a pro rata
portion of the nonaccountable expense allowance of underwriters relating to
Registrable Securities.
6. Underwriting Requirements. In connection with any offering involving an
underwriting of shares being issued by the Company, the Company shall not be
required under Paragraph 2 to include any of the Holder's securities in such
underwriting unless it accepts the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters reasonably believe compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder that is a holder of
Registrable Securities and that is a partnership or corporation, the partners,
retired partners and stockholders of the Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
7. Delay of Registration. The Holder shall have no right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
8. Indemnification. In the event any Registrable Securities are included
in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless the Holder of such Registrable Securities, the officers and directors
of each the Holder, any underwriter (as defined in the 1933 Act) for the Holder
and each person, if any, who controls the Holder or underwriter within the
meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended ("the
1934 Act"), against any losses, claims, damages or liabilities joint or several
to which they may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such losses,
4
<PAGE> 32
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any state securities law
or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any
state securities law; and the Company will reimburse each the Holder, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subparagraph 8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any of the Holder, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the 1933 Act, any underwriter and any other Holder selling
securities in such registration statement or any of its directors or officers or
any person who controls the Holder, against any losses, claims, damages or
liabilities joint or several) to which the Company or any such director, officer
or controlling person may become subject, under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by the Holder expressly for use in connection with such registration;
and each the Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or controlling person, other Holder, officer, director, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subparagraph 8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subparagraph 8(b) exceed the gross proceeds from the offering
received by the Holder.
(c) Promptly after receipt by an indemnified party under this Paragraph 8
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Paragraph 8, deliver to the indemnifying party
a written notice of the commencement thereof and the
5
<PAGE> 33
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that any indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such actions, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Paragraph 8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Paragraph 8.
(d) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to subparagraph 8(a) or 8(b)
but it is found in a final judicial determination, not subject to further
appeal, that such indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the 1933 Act, the
1934 Act, or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any officer, director, employee, agent or
counsel of the Company, or any controlling person of the Company), on the one
hand, and the Holders (including for this purpose any contribution by or on
behalf of an indemnified party), on the other hand, shall contribute to the
losses, liabilities, claims, damages, and expenses to which any of them may be
subject, in such proportions as are appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Holders, on the other hand;
provided, however, that if applicable law does not permit such allocation, then
other relevant equitable considerations such as the relative fault of the
Company and the Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses shall also be considered. The
relative benefits received by the Company, on the one hand, and the Holders, on
the, other hand, shall be deemed to be in the same proportion as the total
proceeds from the offering received by each of the Company on the one hand and
the Holders, on the other hand.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission, or alleged omission
relates to information supplied by the Company or by the Holders, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and Holders agree that it would be unjust and inequitable
if the respective obligations of the Company and the Holders for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses or by any other method of allocation
that does not reflect the equitable considerations referred to in this
subparagraph 8(d). No person guilty of a fraudulent misrepresentation (within
the meaning of subparagraph 11(f) of the 1933 Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this subparagraph 8(d), each person, if any,
who controls a Holder within the meaning
6
<PAGE> 34
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act and each officer,
director, stockholder, employee, agent and counsel of the Holders shall have the
same rights of contribution as the Holder, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the 1934 Act and each officer, director, employee, agent and counsel of the
Company, shall have the same rights to contribution as the Company, subject in
each case to the provisions of this subparagraph 8(d). Anything in this
subparagraph 8(d) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This subparagraph 8(d) is intended to supersede any
right to contribution under the 1933 Act, the 1934 Act, or otherwise.
(e) The obligations of the Company and Holders under this Paragraph 8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Agreement, and otherwise.
9. Reports Under the 1934 Act. With a view to making available to the
Holders the benefits of Rule 144 under the 1933 Act and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public; and
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act.
10. Market Stand-Off' Agreement. The Holder hereby agrees that it shall
not, to the extent requested by the Company and an underwriter of Common Stock
(or other securities) of the Company, sell or otherwise transfer or dispose
(other than to donees who agree to be similarly bound) of any Registrable
Securities during a reasonable and customary period of time, as agreed to by the
Company and the underwriters, not to exceed 180 days, following the effective
date of a registration statement of the Company filed under the 1933 Act;
provided, however, that:
(a) such agreement shall be applicable only to the first such registration
statement of the Company which covers shares (or securities) to be sold on its
behalf to the public in an underwritten offering; and
(b) Marc Strausberg, Susan Strausberg, all executive officers, directors,
and shareholders who own or are deemed to own Common Stock in an amount equal to
or in excess of that number of shares of Common Stock owned or deemed to be
owned by Globix Corporation and all other persons with registration rights
(whether or not pursuant to this Agreement) enter into similar agreements.
7
<PAGE> 35
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder thereof until the end of such reasonable and customary period.
11. Termination of Registration Rights. The Company's obligations pursuant
to this Agreement shall terminate as to the Holder of Registrable Securities on
the earlier of (i) when the Holder can remove the restrictive legend on the
Holder's shares pursuant to Rule 144(k) under the 1933 Act (or any such
successor rule) at anytime after an initial public offering or (ii) on the fifth
anniversary of the date hereof.
12. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its obligations
under this Agreement, the Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
unless such amendment, modification or supplement is in writing and signed by
the parties hereto.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, initially to the address set forth below, and thereafter at
such other address, notice of which is given in accordance with the provisions
of this of this subparagraph 12(c):
(i) if to the Company:
Cybernet Data Systems, Inc.
50 Washington Street
Norwalk, CT 06854.
Copy to:
Mitchell C. Littman, Esq.
Littman Krooks Roth & Ball P.C.
655 Third Avenue
New York, NY 10017
(ii) if to the Holder:
At the address set forth in the Purchase Agreement
Copy to:
8
<PAGE> 36
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; two business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
holders of the Registrable Shares subject to the terms hereof.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to its
conflicts of law provisions.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application hereof in any circumstance is held invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provisions contained herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are not restrictions, promises
warranties or undertakings, other than those set forth or referred to herein,
concerning the registration rights granted by the Company pursuant to this
Agreement.
9
<PAGE> 37
\
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
CYBERNET DATA SYSTEMS, INC.
By:
------------------------------------
Name: Marc Strausberg
Title: President and CEO
HOLDER:
By:
------------------------------------
Title:
Print Name:
10
<PAGE> 1
Report on Schedule and Consent of Independent Accountants
The Board of Directors
EDGAR Online, Inc.
The audits referred to in our report dated February 12, 1999, except for
note 13a, which is as of March 25, 1999 and notes 12 and 13b and c, which are
as of March 30, 1999, included the related financial statement schedule as of
December 31, 1997 and 1998 and for each of the years in the three-year period
ended December 31, 1998 included in the registration statement. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based or our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG LLP
Stamford, Connecticut
May 7, 1999
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 148
<SECURITIES> 0
<RECEIVABLES> 166
<ALLOWANCES> 31
<INVENTORY> 0
<CURRENT-ASSETS> 290
<PP&E> 600
<DEPRECIATION> 188
<TOTAL-ASSETS> 785
<CURRENT-LIABILITIES> 731
<BONDS> 0
0
0
<COMMON> 63
<OTHER-SE> (2,284)
<TOTAL-LIABILITY-AND-EQUITY> 785
<SALES> 2,003
<TOTAL-REVENUES> 2,003
<CGS> 1,046
<TOTAL-COSTS> 1,046
<OTHER-EXPENSES> 3,046
<LOSS-PROVISION> 62
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