<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 2, 1999.
REGISTRATION NO. 333-84175
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
JUPITER COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 8700 13-4069996
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
627 BROADWAY
NEW YORK, NY 10012
TELEPHONE: (212) 780-6060
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
GENE DEROSE
CHIEF EXECUTIVE OFFICER
JUPITER COMMUNICATIONS, INC.
627 BROADWAY
NEW YORK, NY 10012
TELEPHONE: (212) 780-6060
FACSIMILE: (212) 780-6075
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ALEXANDER D. LYNCH, ESQ. JOHN M. WESTCOTT, JR., ESQ.
KENNETH R. MCVAY, ESQ. HALE AND DORR LLP
BROBECK, PHLEGER & HARRISON LLP 60 STATE STREET
1633 BROADWAY, 47TH FLOOR BOSTON, MA 02109
NEW YORK, NY 10019 (617) 526-6000
(212) 581-1600
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
------------------------
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION -- SEPTEMBER 2, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
, 1999
[JUPITER COMMUNICATIONS LOGO]
3,125,000 SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
JUPITER COMMUNICATIONS, INC.:
- - We are a leading provider of research on Internet commerce.
PROPOSED SYMBOL & MARKET:
- - JPTR/Nasdaq National Market
THE OFFERING:
- - We are offering 3,125,000 shares of our common stock.
- - The underwriters have an option to purchase an additional 468,750 shares from
us to cover over-allotments.
- - We currently estimate that the price of the shares will be between $15.00 and
$17.00.
- - This is our initial public offering, and no public market currently exists for
our shares.
- - Closing: , 1999.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
PER SHARE TOTAL
- ---------------------------------------------------------------------------------
<S> <C> <C>
Public offering price: $ $
Underwriting fees:
Proceeds to Jupiter Communications:
- ---------------------------------------------------------------------------------
</TABLE>
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 8.
- --------------------------------------------------------------------------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. NOR HAVE THEY MADE, NOR WILL THEY MAKE, ANY
DETERMINATION AS TO WHETHER ANYONE SHOULD BUY THESE SECURITIES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
DEUTSCHE BANC ALEX. BROWN
THOMAS WEISEL PARTNERS LLC
DLJdirect Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY US FEDERAL SECURITIES LAWS TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR OFFER TO BUY THEM UNTIL THE
DOCUMENTATION FILED WITH THE SEC RELATING TO THESE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SEC. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 8
Forward-Looking Statements............. 16
Use of Proceeds........................ 17
Dividend Policy........................ 17
Capitalization......................... 18
Dilution............................... 19
Selected Financial and Operating
Data................................. 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 22
Business............................... 30
</TABLE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Management............................. 44
Transactions With Directors and
Principal Stockholders............... 51
Principal Stockholders................. 52
Description of Capital Stock........... 53
Shares Eligible for Future Sale........ 56
Underwriting........................... 58
Legal Matters.......................... 61
Experts................................ 61
Where You Can Find Additional
Information.......................... 61
Index to Financial Statements.......... F-1
</TABLE>
2
<PAGE> 4
PROSPECTUS SUMMARY
The information below is only a summary of more detailed information
included in other sections of this prospectus. This summary may not contain all
the information that is important to you or that you should consider before
buying shares in the offering. The other information is important, so please
read this entire prospectus carefully. Information contained on our Web site is
not part of this prospectus.
JUPITER COMMUNICATIONS, INC.
OUR BUSINESS
We are a leading provider of research on Internet commerce, as measured by
both revenue and number of clients. Senior executives at client companies
utilize our research to make informed business decisions in a complex and
rapidly changing Internet economy. Our research, which is focused solely on the
Internet economy, provides our clients with comprehensive views of industry
trends, forecasts and best practices. Our analysis, supported by proprietary
data, emphasizes specific, actionable findings.
Our research services are provided primarily through our continuous
subscription product, Strategic Planning Services, which we call SPS. SPS is a
combination of proprietary written analysis, supporting data and access to our
analysts. We typically bill clients annually in advance and deliver the products
and services over the term of the contract. We generate our research through
seven focused teams of research analysts and associates. Our proprietary
research is informed and supported by a dedicated data research group. We
increasingly deliver our products via the Internet.
We have a highly diversified client base, including companies in the
Internet, media, telecommunications, technology, financial services, retail,
travel, consumer products and professional services industries. We have
successfully increased the number of SPS clients and our total contract value,
which is the annualized value of all SPS contracts at a given point in time. As
of June 30, 1999, we had 654 SPS contracts, an increase from 421 on December 31,
1998 and 145 on December 31, 1997. Our total contract value has increased from
$2.5 million on December 31, 1997, to $11.7 million on December 31, 1998 and to
$22.1 million on June 30, 1999. In addition, approximately 73% of the SPS
contracts that expired during the 12 months prior to June 30, 1999 were renewed.
We also produce a wide range of conferences which offer senior executives
the opportunity to hear first-hand the insights of our analysts and the leading
decision makers in the Internet and technology industries. Because over 75% of
the attendees are not SPS clients, these conferences provide a unique
opportunity to promote our SPS research to potential clients. These conferences
also allow us to increase the public profile of our analysts, generate favorable
press and otherwise promote the Jupiter brand.
Our revenues have increased from $8.5 million in 1997 to $14.8 million in
1998, and from $5.9 million in the six months ended June 30, 1998 to $14.4
million in the six months ended June 30, 1999. We have a limited operating
history, however, and have incurred net losses since our formation. As of June
30, 1999, we had an accumulated deficit of $5.8 million.
MARKET OPPORTUNITY
We believe that the growth of the Internet, and the growth of Internet
commerce in particular, will continue to expand rapidly for the foreseeable
future both in the United States and abroad. A recent report by University of
Texas' Center for Research in Electronic Commerce estimated that the Internet
economy generated approximately $300 billion in U.S. revenue and was responsible
for 1.2 million jobs as of 1998. A recent study by the Organization for Economic
Cooperation and Development predicted that worldwide Internet commerce may grow
to $1 trillion by 2005. In addition, billion dollar markets are emerging on the
Internet for many different industry sectors. Specifically, for the U.S. we
project that by 2003 the online travel industry will grow to approximately $17
billion, online advertising will grow to approximately $12
3
<PAGE> 5
billion, overall consumer online shopping will grow to approximately $43 billion
and that total assets held in online brokerage accounts will grow to
approximately $3 trillion.
The rapid growth of Internet commerce and the related increase in
innovative products, services and technologies have made it difficult for
companies to understand and evaluate the steps they should take to engage in and
expand their Internet commerce activities, promote their online businesses and
compete effectively. Thus, demand is growing for timely and credible research to
assist companies in identifying revenue models and success criteria, analyzing
consumer adoption trends, developing effective sales and marketing strategies,
assessing market trends and analyzing the competitive landscape. Demand for
research, analysis and advice is also expected to increase as the growth in
Internet commerce and consumer use of new technologies impacts more industries
and expands into other geographic areas.
OUR STRATEGY
Our objective is to be the premier global research company focusing on
Internet commerce. Key elements of our business strategy include the following:
- Providing innovative research on Internet commerce;
- Increasing our client base in the United States and abroad;
- Increasing the level of sales to existing clients;
- Pursuing international opportunities;
- Continuing to strengthen the Jupiter brand;
- Increasing the number of conferences that we produce; and
- Enhancing our Web delivery platform.
OUR HISTORY
Our business was formed on December 1, 1994 with the creation of Jupiter
Communications, LLC, a New York limited liability company. Upon the closing of
this offering, Jupiter Communications, LLC will change its structure from a
limited liability company to a corporation. This change will be made by merging
Jupiter Communications, LLC with and into Jupiter Communications, Inc., a
Delaware corporation. Membership units in Jupiter Communications, LLC will be
exchanged in the merger for shares of common stock of Jupiter Communications,
Inc.
Our principal executive offices are located at 627 Broadway, New York, New
York 10012. Our telephone number is (212) 780-6060. Our Web site is www.jup.com.
References in this prospectus to "Jupiter," "Jupiter Communications," "we,"
"our" and "us" refer to Jupiter Communications, Inc. and its predecessor
entities.
We have applied for or received trademark and/or service mark registration
for, among others, the marks "Jupiter," "Jupiter Communications," "SPS" and
"Internet Business Report." Any other trademark, trade name or service mark of
any other company appearing in this prospectus belongs to its holder.
------------------------------
Unless otherwise indicated, all information in this prospectus:
- reflects the merger of Jupiter Communications, LLC with and into Jupiter
Communications, Inc., which will be completed upon the closing of this
offering; and
- assumes no exercise of the underwriters' over-allotment option.
4
<PAGE> 6
THE OFFERING
Common stock offered by Jupiter.... 3,125,000 shares
Common stock to be outstanding
after the offering................. 14,160,335 shares
Use of proceeds.................... We plan to use the proceeds from this
offering for product development,
international expansion, research, sales
and marketing expansion, leasehold and
technology improvements, potential
acquisitions and general corporate
purposes.
Proposed Nasdaq National Market
symbol............................. JPTR
The outstanding share information is based on our shares outstanding as of
August 31, 1999. This information excludes 2,523,731 shares of common stock
issuable upon the exercise of stock options outstanding under our option plan as
of August 31, 1999, with a weighted average exercise price of $3.02 per share.
In addition, this information excludes 174,492 shares of common stock issuable
upon the exercise of non-plan options, with a weighted average exercise price of
$0.85 per share.
5
<PAGE> 7
SUMMARY FINANCIAL AND OPERATING DATA
The following tables summarize financial and operating data for our
business. The summary financial and operating data set forth below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our financial statements and related
notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------- --------------------------
1995 1996 1997 1998 1998 1999
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Strategic Planning Services........... $ 237 $ 566 $ 1,850 $ 6,183 $ 1,995 $ 8,166
Conferences........................... 2,024 2,686 3,426 4,890 1,979 4,553
Other................................. 1,439 3,000 3,246 3,729 1,939 1,681
------ ------ ------- ----------- ----------- -----------
Total revenues...................... 3,700 6,252 8,522 14,802 5,913 14,400
Cost of services and fulfillment........ 2,893 4,687 6,259 9,676 4,282 6,854
------ ------ ------- ----------- ----------- -----------
Gross profit.......................... 807 1,565 2,263 5,126 1,631 7,546
Other operating expenses:
Sales and marketing................... 254 514 1,558 3,173 1,313 4,008
General and administrative............ 1,025 1,664 2,955 4,090 1,918 3,668
------ ------ ------- ----------- ----------- -----------
Total other operating expenses...... 1,279 2,178 4,513 7,263 3,231 7,676
------ ------ ------- ----------- ----------- -----------
Net loss................................ $ (472) $ (613) $(2,250) $ (2,137) $ (1,600) $ (130)
====== ====== ======= =========== =========== ===========
Pro forma basic and diluted net loss per
common share(1)....................... $ (0.21) $ (0.16) $ (0.01)
=========== =========== ===========
Pro forma weighted average common shares
outstanding(1)........................ 10,318,359 10,318,359 10,454,736
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
--------------------------------------- --------------------------
1995 1996 1997 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Number of SPS contracts................. 13 66 145 421 219 654
Total contract value (in thousands)..... $ 315 $ 923 $ 2,509 $ 11,666 $ 5,089 $ 22,138
Number of employees..................... 18 61 88 142 117 194
Capital expenditures (in thousands)..... $ 99 $ 199 $ 207 $ 838 $ 258 $ 2,263
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(2) AS ADJUSTED(3)
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 1,554 $ 1,554 $46,954
Working capital (4)................................... (4,972) (4,972) 40,428
Total assets.......................................... 15,051 15,051 60,451
Members'/stockholders' equity (deficiency)............ (1,884) (1,884) 43,516
</TABLE>
(Footnotes on following page)
6
<PAGE> 8
- ------------------------------
(1) Pro forma basic and diluted net loss per common share is computed by
dividing net loss by the pro forma weighted average number of shares of
common stock. Pro forma weighted average number of shares of common stock
gives effect to our reorganization from an LLC to a corporation as though
the reorganization had occurred as of the beginning of each period
indicated. Pro forma weighted average shares do not include any common stock
equivalents because inclusion of common stock equivalents would have been
anti-dilutive.
(2) The pro forma balance sheet data give effect to our reorganization from an
LLC to a corporation as though the reorganization had occurred as of June
30, 1999.
(3) Pro forma as adjusted amounts reflect the sale of 3,125,000 shares of common
stock in this offering, after deducting estimated underwriting discounts and
commissions and estimated offering expenses payable by us.
(4) Our working capital balances are typically negative because of the timing of
cash collections from clients. SPS contracts are typically annual and paid
in advance. Accordingly, a substantial portion of our billings is initially
recorded as deferred revenue and amortized into revenue during the term of
the contract to which such billings relate.
7
<PAGE> 9
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the other information contained in this prospectus, before you decide to
buy our common stock. If any of the following events actually occurs, our
business and financial results may suffer. In this case, the market price of our
common stock could decline, and you could lose all or part of your investment in
our common stock.
IF WE ARE UNABLE TO ATTRACT AND RETAIN EXPERIENCED PERSONNEL, THE QUALITY OF OUR
RESEARCH PRODUCTS AND SERVICES MAY DECLINE, AND OUR ABILITY TO SELL OUR PRODUCTS
AND SERVICES MAY BE HARMED.
Our success depends in large part on the continued contributions of our
senior management team, research analysts and sales representatives. As of June
30, 1999, we had 38 research analysts and 40 sales representatives. We expect to
increase our hiring of research analysts and sales representatives significantly
in the next few years. We face intense competition in hiring and retaining
personnel from, among others, technology and Internet companies, market research
and consulting firms, print and electronic publishing companies and financial
services companies. Many of these firms have substantially greater financial
resources than we do to attract and retain qualified personnel from a limited
pool of attractive candidates. In addition, some people that we may attempt to
hire could be subject to non-competition agreements that could impede our
recruitment efforts. To the extent that we are unable to retain our existing
management, research analysts or sales representatives or that we are unable to
increase the number of research analysts and sales representatives that we hire,
our business and financial results may suffer.
BECAUSE WE HAVE RECENTLY INTRODUCED MANY OF OUR PRODUCTS AND SERVICES, YOU HAVE
LIMITED INFORMATION UPON WHICH YOU CAN EVALUATE OUR BUSINESS.
We have recently launched many of the practices and market modules that we
offer. As a result, we have a limited operating history upon which you can
evaluate our business and the products and services that we offer. Due to our
limited operating history, it is difficult or impossible for us to predict
future results of operations. Moreover, due to our limited operating history,
any evaluation of our business and prospects must be made in light of the risks
and uncertainties frequently encountered by companies in new and rapidly
evolving markets such as ours. Many of these risks and uncertainties are
discussed elsewhere in this section. We cannot assure you that we will be
successful in addressing these risks and uncertainties. Our failure to do so
could cause our business and financial results to suffer.
RAPID GROWTH IN OUR BUSINESS COULD STRAIN OUR MANAGERIAL, OPERATIONAL AND
FINANCIAL RESOURCES.
The anticipated future growth of our business will place a significant
strain on our managerial, operational and financial resources. We had 61
employees at December 31, 1996, 88 employees at December 31, 1997, 142 employees
at December 31, 1998 and 194 employees at June 30, 1999. We anticipate hiring a
substantial number of research analysts, sales representatives and other
employees in the foreseeable future to expand our product and service offerings
and to expand our sales of such products and services. We may also decide to
open additional offices in the United States and abroad. As we expand, we expect
that we will need to continually improve our financial and managerial controls,
billing systems, reporting systems and procedures. In addition, as we expand we
will also need to increase our employee training efforts. If we are unable to
manage our growth effectively, our business and financial results may suffer.
WE HAVE A HISTORY OF OPERATING LOSSES WHICH MAY CONTINUE FOR THE FORESEEABLE
FUTURE.
We have incurred substantial costs to create, market and distribute our
products and services, to retain qualified personnel, including management,
research analysts and sales representatives, and to grow our business. As a
result, we incurred net losses of approximately $613,000 in 1996, $2.3 million
in 1997, $2.1 million in 1998 and $130,000 for the six month period ended June
30, 1999. As a percentage of total
8
<PAGE> 10
revenues, our net losses equaled 9.8% in 1996, 26.4% in 1997, 14.4% in 1998 and
0.9% for the six month period ended June 30, 1999. As of June 30, 1999, our
accumulated deficit totaled $5.8 million.
We intend to invest heavily in new products and services, leasehold and
technology improvements, new research and sales personnel and international
expansion. As a result, we will need to achieve significant revenue increases to
achieve and maintain profitability. The number of clients for our research
products and services, as well as the number of attendees to our conferences,
may grow more slowly than we anticipate or may even decrease in the future. In
addition, even if we become profitable, we may not sustain or increase our
profits on a quarterly or annual basis in the future.
OUR OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS, WHICH MAY CAUSE
VOLATILITY OR A DECLINE IN THE PRICE OF OUR STOCK.
Our revenues, expenses and operating results have varied in the past and
may fluctuate significantly in the future due to a variety of factors that are
outside of our control. These factors include, among others:
- the level and timing of new business and renewals of subscriptions to our
research products and services;
- changes in the market demand for research products or analysis regarding
Internet commerce;
- the levels of attendance at our Internet conferences; and
- the extent to which we experience increased competition.
The above factors could affect our quarterly as well as long-term financial
results. In particular, changes in the demand for our products, competition or
the levels of attendance at our Internet conferences each could have both
short-term and long-term adverse effects on our business.
Our revenues, expenses and operating results may also fluctuate
significantly in the future as a result of business decisions made by us. These
decisions include, among others:
- the timing of the introduction and marketing of our new research products
and services;
- the timing of our conferences;
- changes in operating expenses; and
- the timing of acquisitions and the impact on our operations and our
operating results.
The sales of our research products and services and the success of our
conferences are difficult to forecast accurately. If our revenues fall short of
expectations, we may not be able to adjust our fixed expenses, which represented
approximately 45% of our total expenses for the six months ended June 30, 1999,
to compensate for this shortfall on a timely basis. Further, as a strategy for
remaining competitive, we may have to make pricing, service or marketing
decisions that could cause our business and financial results to suffer.
Due to all the foregoing factors and other risks discussed in this section,
you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance. It is possible that in some
future periods our results of operations may be below the expectations of
investors. In this event, the price of our common stock is likely to fall.
BECAUSE OUR REVENUES ARE SUBSTANTIALLY DEPENDENT ON THE SALE OF OUR STRATEGIC
PLANNING SERVICES, OUR BUSINESS MAY SUFFER IF WE HAVE DIFFICULTY IN ACQUIRING OR
RETAINING SUBSCRIBERS TO THIS PROGRAM.
Our business and financial results are dependent on our ability to attract
and retain clients for our Strategic Planning Services. In addition, our
business model assumes that we will be able to increase the level of SPS sales
over time to our existing clients. Revenues from subscriptions to SPS, as a
percentage of our total revenues, were 41.8% in 1998 and 56.7% in the six months
ended June 30, 1999.
9
<PAGE> 11
Our ability to acquire and retain SPS clients and our ability to increase
sales to existing clients is subject to a number of risks, including the
following:
- We may be unsuccessful in delivering high-quality and timely research
analysis to our clients;
- We may be unsuccessful in anticipating and understanding market trends
and the changing needs of our clients;
- The use of the Internet as a medium for commerce, both in the United
States and abroad, may not continue to grow as we currently anticipate;
- Our marketing programs designed to attract and retain clients may not
succeed; and
- We may not be able to hire and retain a sufficiently large number of
research and sales personnel in a very competitive job market.
If we are unable to retain existing clients, increase sales to existing
clients or attract a significant number of new SPS clients, our business and
financial results may suffer.
OUR BUSINESS MAY SUFFER IF WE PROVE UNABLE TO ANTICIPATE MARKET TRENDS OR IF WE
FAIL TO PROVIDE INFORMATION THAT IS USEFUL TO OUR CLIENTS.
Our success depends in large part on our ability to anticipate, research
and analyze rapidly changing technologies and industries and on our ability to
provide this information in a timely and cost-effective manner. If we are unable
to continue to provide credible and reliable information that is useful to
companies engaged in online commerce, our business and financial results may
suffer.
Our research products and services, as well as our conferences, focus on
Internet commerce. Internet commerce is relatively new and is undergoing
frequent and dramatic changes, including the introduction of new products and
the obsolescence of others, shifting business strategies and revenue models, the
formation of numerous new companies and high rates of growth. Because of these
rapid and continuous changes in the Internet commerce markets, we face
significant challenges in providing timely analysis and advice. Many of the
industries and areas on which we focus are relatively new, and it is very
difficult to provide predictions and projections as to the future marketplace,
revenue models and competitive factors. In addition, many companies have not
embraced the use of the Internet as a medium for commerce and are unclear as to
how to allocate corporate resources effectively. As a result, some companies may
conclude that our research products are not useful to their businesses. Further,
the need to continually update our research requires the commitment of
substantial financial and personnel resources.
If our predictions or projections prove to be wrong, or if we are unable to
continually update our information, our reputation may suffer and demand for our
research products and services may decline. In addition, if companies do not
agree with our analysis of market trends and the areas on which we choose to
focus our efforts, our business and financial results may suffer.
WE FACE INTENSE COMPETITION IN PROVIDING OUR RESEARCH PRODUCTS AND SERVICES, AS
WELL AS IN PRODUCING CONFERENCES, AND SUCH COMPETITION IS LIKELY TO INCREASE IN
THE FUTURE.
We may not be able to compete successfully against current or future
competitors, and the competitive pressures that we face may cause our business
and financial results to suffer. Our principal current competitor is Forrester
Research, Inc. Recently Gartner Group, Inc. announced its intention to compete
directly in providing research products related to Internet commerce. A number
of other companies compete with us in providing research and analysis related to
a specific industry or geographic area. In addition, our competitors include
information technology research firms, business consulting and accounting firms,
electronic and print publishing companies and equity analysts employed by
financial services companies.
Our ability to compete both in the United States and abroad depends upon
many factors, many of which are outside of our control. We believe that the
primary competitive factors determining success in
10
<PAGE> 12
our markets include the quality and timeliness of our research and analysis, our
ability to offer products and services that meet the changing needs of our
customers, the prices we charge for our various research products and general
economic conditions.
We expect competition to increase because of the business opportunities
presented by the growth of Internet commerce around the world. Competition may
also intensify as a result of industry consolidation, because the markets in
which we operate face few substantial barriers to entry or because some of our
competitors may provide additional or complementary services, such as consulting
services. Increased competition may result in reduced operating margins, loss of
market share and diminished value in our products and services, as well as
different pricing, service or marketing decisions.
Our current and potential competitors include many companies that have
substantially greater financial, information gathering and marketing resources
than we have. This may allow them to devote greater resources than we can to the
promotion of their brand and to the development and sale of their products and
services. We cannot assure you that we will be able to compete successfully
against current and future competitors.
WE EXPECT GARTNER GROUP, OUR LARGEST SHAREHOLDER, WHICH HAS BEEN PROVIDED WITH
CONFIDENTIAL AND PROPRIETARY INFORMATION, TO COMPETE DIRECTLY WITH US AND
POSSIBLY TO USE ITS VOTING POWER IN A WAY THAT WOULD NEGATIVELY AFFECT OUR
ABILITY TO OPERATE OUR BUSINESS.
Gartner Group, which historically has focused on information technology
research, has recently announced its intention to begin offering broader
research products and services related to Internet commerce. These products and
services are likely to compete directly with the products and services that we
offer. Under the operating agreement governing Jupiter Communications, LLC,
Gartner Group has the right to appoint two of the five representatives of the
board of members and has the right to consent to various actions taken by us.
Following the closing of this offering, Gartner Group will not retain the right
to appoint a member of our board of directors or any other specific rights,
other than piggyback registration rights and limited indemnification rights.
Following this offering, Gartner Group will be our largest shareholder, owning
approximately 28.4% of our outstanding common stock. However, for a period of
one year following the closing of this offering, Gartner Group and its
affiliates may not acquire, directly or indirectly, any additional common stock,
if the acquisition would cause Gartner Group and its affiliates to own more than
32% of our common stock.
Although Gartner Group has not been actively involved in our day-to-day
operations since it first invested in our company in October 1997, it has been
provided with our confidential and proprietary data during most of this period.
As a result, Gartner Group could use our confidential and proprietary data in
developing and marketing competing products and services. Gartner Group could
also use its voting power in a way that would negatively affect our ability to
operate our business or have the effect of delaying, deterring or preventing a
change in control, or impeding a merger, consolidation, takeover or other
business combination. Gartner Group has substantially greater financial
resources than we do, which may allow it to devote greater resources than we can
to the development and sale of their Internet commerce research.
IF INTERNET USAGE DOES NOT CONTINUE TO GROW, OUR BUSINESS AND FINANCIAL RESULTS
MAY SUFFER.
Our future success depends on continued growth in the use of the Internet.
We cannot be certain that Internet usage will continue to grow at or above its
historical rates. Internet usage may be inhibited for a number of reasons,
including:
- inadequate network infrastructure;
- inconsistent quality of service; and
- lack of availability of cost-effective, high-speed service.
11
<PAGE> 13
OUR BUSINESS MAY SUFFER IF THE USE OF THE INTERNET AS A COMMERCIAL MARKETPLACE
DOES NOT CONTINUE TO GROW.
Because our company focuses solely on Internet commerce, our future success
depends on the continued development and acceptance of the Internet as a viable
commercial medium. However, the continued development and acceptance of the
Internet as a widely-used medium for commerce and communication is uncertain. A
number of factors could prevent such continued development and acceptance,
including the following:
- unwillingness of companies and consumers to shift their purchasing from
traditional vendors to online vendors;
- security and authentication concerns with respect to the transmission of
confidential information, such as credit card numbers, over the Internet;
- privacy concerns, including those related to the ability of Web sites to
gather user information without the user's knowledge or consent; and
- significant uncertainty about the demand and market acceptance for
Internet advertising and the lack of standards to measure the
effectiveness of Internet advertising.
LAWS AND REGULATIONS COULD SLOW THE GROWTH OF THE INTERNET AND NEGATIVELY AFFECT
THE ACCEPTANCE OF THE INTERNET AS A COMMERCIAL MEDIUM.
Laws and regulations regarding Internet companies and commercial
transactions conducted over the Internet could slow the growth in use of the
Internet generally and decrease the acceptance of the Internet as a commercial
medium. For example, as the popularity and use of the Internet increases, it is
possible that a number of laws and regulations may be adopted in the United
States or in other countries covering issues such as taxation, intellectual
property matters, advertising and other areas. We cannot predict the impact, if
any, that future laws or regulations may have on our business.
WE COULD FACE ADDITIONAL RISKS AND CHALLENGES IF WE CONTINUE TO EXPAND
INTERNATIONALLY.
Our business plan calls for increased international growth. Expansion into
new geographic territories requires considerable management and financial
resources and may negatively impact our near-term results of operations.
Our current international operations, as well as any future international
operations, are subject to numerous challenges and risks, including, but not
limited to, the following:
- political and economic conditions in various jurisdictions;
- fluctuations in currency exchange rates;
- tariffs and other trade barriers;
- adverse tax consequences; and
- difficulties in protecting intellectual property rights in international
jurisdictions.
We cannot assure you that one or more of these factors would not harm any
current or future international operations.
OUR BUSINESS MAY SUFFER IF WE ARE UNABLE TO MAINTAIN OR ENHANCE AWARENESS OF THE
JUPITER BRAND OR IF WE INCUR EXCESSIVE EXPENSES ATTEMPTING TO PROMOTE THE
JUPITER BRAND.
We expect to use a portion of the proceeds of this offering to expand our
marketing activities to promote and strengthen the Jupiter brand. Promoting and
strengthening the Jupiter brand is critical to our efforts to attract and retain
clients for our research products, as well as to increase attendance at our
conferences. We believe that the importance of brand recognition will likely
increase due to the increasing
12
<PAGE> 14
number of competitors entering our markets. In order to promote the Jupiter
brand, in response to competitive pressures or otherwise, we may find it
necessary to increase our marketing budget, hire additional marketing and public
relations personnel or otherwise increase our financial commitment to creating
and maintaining brand loyalty among our clients. If we fail to effectively
promote and maintain the Jupiter brand, or incur excessive expenses attempting
to promote and maintain the Jupiter brand, our business and financial results
may suffer.
WE FACE POTENTIAL LIABILITY FOR INFORMATION THAT WE PUBLISH, PROVIDE AT
CONFERENCES OR DISSEMINATE THROUGH OUR RESEARCH ANALYSTS.
As a publisher and distributor of original research, market projections and
trend analyses, we face potential liability based on a variety of theories,
including defamation, negligence, copyright or trademark infringement or other
legal theories based on the nature, publication or distribution of this
information. Such claims, whether brought in the United States or abroad, would
likely divert management time and attention and result in significant cost to
investigate and defend, regardless of the merit of any such claims. The filing
of any such claims may also damage our reputation as a high-quality provider of
unbiased, timely analysis and result in client cancellations or overall
decreased demand for our products and services. In addition, if we become
subject to these types of claims and are not successful in our defense, we may
be forced to pay substantial damages. Our insurance may not adequately protect
us against these claims.
DISRUPTION OF OUR WEB SITE DUE TO SECURITY BREACHES AND SYSTEM FAILURES COULD
HARM OUR BUSINESS AND RESULT IN CLIENT CANCELLATIONS.
Our infrastructure and the infrastructure of our service providers are
vulnerable to security breaches, computer viruses or similar disruptive problems
and system failures. These systems are also subject to telecommunications
failures, power loss and various other events. Any of these events, whether
intentional or accidental, could lead to interruptions or disruptions in the
general operation of our business. In addition, any of these events could also
lead to interruptions, delays or cessation of operation of our Web site, which
provides access to and distribution of many of our research products and
services. For example, many of our SPS clients pay us so that their employees
can read our research solely on our Web site. As a result, providing unimpeded
access to our Web site is critical to servicing our clients and providing
superior customer service. Our inability to provide continuous access to our Web
site could cause some of our clients to discontinue purchasing our research
products and services, prevent or deter some people from purchasing our research
products and services and harm our business reputation.
WE ARE DEPENDENT ON KEY MANAGEMENT PERSONNEL FOR OUR FUTURE SUCCESS.
Our future success will depend in part on the continued service of a number
of key management personnel. We do not carry key person life insurance on any of
our management personnel. The loss of key management personnel, in particular
Gene DeRose, our Chief Executive Officer, or Kurt Abrahamson, our President and
Chief Operating Officer, could harm our business and financial results.
IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY OR FACE A CLAIM OF
INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE MAY LOSE OUR
INTELLECTUAL PROPERTY RIGHTS AND BE LIABLE FOR SIGNIFICANT DAMAGES.
We provide our proprietary research products to hundreds of different
companies throughout the world, including some companies that compete with us in
some manner. As a result, any protective steps we have taken may be inadequate
to protect our intellectual property and to deter misappropriation of the
original research and analysis that we develop. We also may be unable to detect
the unauthorized use of our intellectual property or take appropriate steps to
enforce our intellectual property rights. Moreover, effective trademark,
copyright and trade secret protection may not be available in every country in
which we offer our research products and services to the extent these
protections are available in the United States.
13
<PAGE> 15
Our failure to adequately protect our intellectual property, either in the
United States or abroad, could harm the Jupiter brand or our trademarks, devalue
our proprietary research and analysis and affect our ability to compete
effectively. Defending our intellectual property rights could result in the
expenditure of significant financial and managerial resources, which could harm
our financial results.
Furthermore, other parties may assert claims against us that we have
misappropriated a trade secret or infringed a patent, copyright, trademark or
other proprietary right belonging to them. Any infringement or related claims,
even if not meritorious, could be costly and time consuming to litigate, may
distract management from other tasks of operating the business and may result in
the loss of significant rights and the loss of our ability to operate our
business.
WE MAY NOT BE ABLE TO SUCCESSFULLY MAKE ACQUISITIONS OF OTHER COMPANIES,
SERVICES OR PRODUCTS.
We have limited experience in acquiring other companies, services or
products. Although we have no present understanding or agreement relating to any
acquisition, we do anticipate making acquisitions in the future. We cannot
assure you, however, that we will be able to complete future acquisitions
successfully or to integrate an acquired entity with our current business. In
addition, the key personnel of the acquired company may decide not to work for
us. If we make other types of acquisitions, we could have difficulty
assimilating the acquired services or products. These difficulties could disrupt
our current business, distract our management and employees, increase our
expenses and adversely affect our results of operations. Furthermore, we may
incur debt or issue equity securities to pay for any future acquisitions. The
issuance of equity securities could be dilutive to our existing shareholders.
OUR DIRECTORS, OFFICERS AND PRINCIPAL STOCKHOLDERS WILL EXERCISE SIGNIFICANT
CONTROL OVER US FOLLOWING THIS OFFERING.
Upon completion of this offering, our officers, directors and existing
stockholders who own greater than 5% of the outstanding common stock before this
offering, and entities affiliated with them, will, in the aggregate,
beneficially own approximately 74.2% of our common stock. In particular, Gartner
Group will own approximately 28.4% of our outstanding common stock. These
stockholders acting together will be able to exert substantial influence over
all matters requiring approval by our stockholders. These matters include the
election and removal of directors and any merger, consolidation or sale of all
or substantially all of our assets. In addition, they may dictate the management
of our business and affairs. This concentration of ownership could have the
effect of delaying, deferring or preventing a change in control, or impeding a
merger, consolidation, takeover or other business combination.
PROBLEMS RESULTING FROM THE YEAR 2000 PROBLEM COULD REQUIRE US TO INCUR
UNANTICIPATED EXPENSES AND COULD DIVERT MANAGEMENT'S TIME AND ATTENTION.
The Year 2000 problem could harm our business and financial results. 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
interpret the date code "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 or replaced to comply with Year 2000
requirements or risk system failure or miscalculations causing disruptions of
normal business activities. Our failure to correct a Year 2000 problem could
result in an interruption in, or a failure of, aspects of our normal business
activities or operations. Any significant Year 2000 problem could require us to
incur significant unanticipated expenses to remedy these problems and could
divert management's time and attention. We consider the reasonably likely
worst-case scenario to be interruptions in telecommunications networks,
including the Internet. Due to our reliance on the Internet and other
telecommunications networks to keep in contact with our clients and for general
business uses, these interruptions could cause our business to suffer. We have
not developed a contingency plan to address Year 2000 issues. Please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Year 2000 Compliance" for detailed information on our state of
readiness and potential risks regarding the Year 2000 issue.
14
<PAGE> 16
FUTURE SALES OF OUR COMMON STOCK MAY NEGATIVELY AFFECT OUR STOCK PRICE.
Following this offering, we will have a large number of shares of common
stock outstanding and available for resale beginning at various points of time
in the future. Our largest stockholder, Gartner Group, may be able to sell as
many as 3,515,624 shares of our common stock in the public market beginning 90
days after the date of this prospectus. The market price of our common stock
could decline as a result of sales of a large number of shares of our common
stock in the market following this offering, or the perception that such sales
could occur. In addition, these sales also might make it more difficult for us
to sell equity securities in the future at a price that we think is appropriate,
or at all. Please see "Shares Eligible for Future Sale."
THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON STOCK, AND OUR STOCK MAY
EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS.
The stock market has experienced extreme price and volume fluctuations. The
market prices of the securities of Internet-related companies have been
especially volatile. Prior to this offering, there has been no public market for
our common stock. We cannot predict the extent to which investor interest in
Jupiter will lead to the development of an active trading market or how liquid
that market might become. The market price of the common stock may decline below
the initial public offering price. The initial public offering price for the
shares will be determined by negotiations between us and the representatives of
the underwriters and may not be indicative of prices that will prevail in the
trading market. Please see "Underwriting."
In the past, companies that have experienced volatility in the market price
of their stock have been the object of securities class action litigation. If we
were the object of securities class action litigation, it could result in
substantial costs and a diversion of our management's attention and resources.
WE WILL HAVE BROAD DISCRETION AS TO THE USE OF THE PROCEEDS FROM THIS OFFERING,
WHICH WE MAY NOT USE EFFECTIVELY.
We intend to spend a significant portion of the net proceeds of this
offering for product development, international expansion, research, sales and
marketing expansion, leasehold and technology improvements, potential
acquisitions and general corporate purposes. Our management will have broad
discretion, however, over the allocation of a substantial portion of the net
proceeds from this offering as well as over the timing of our expenditures.
Investors may not agree with the way our management decides to spend these
proceeds. Please see "Use of Proceeds."
WE CANNOT PREDICT OUR FUTURE CAPITAL NEEDS, AND WE MAY NOT BE ABLE TO SECURE
ADDITIONAL FINANCING.
We currently anticipate that the net proceeds of this offering, together
with available funds, will be sufficient to meet our anticipated needs for the
next 12 months. We may need to raise additional funds in the future to fund our
operations, to expand or enhance the range of products and services we offer or
to respond to competitive pressures and/or perceived opportunities. We cannot be
sure that additional financing will be available on terms favorable to us, or at
all. If adequate funds are not available when required or on acceptable terms,
we may be forced to cease our operations, and even if we are able to continue
our operations, our business and financial results may suffer.
WE HAVE ANTI-TAKEOVER PROVISIONS WHICH MAY MAKE IT DIFFICULT FOR A THIRD PARTY
TO ACQUIRE US.
Provisions of our certificate of incorporation, our bylaws and Delaware law
could make it more difficult for a third party to acquire us, even if doing so
might be beneficial to our stockholders. Please see "Description of Capital
Stock."
15
<PAGE> 17
INVESTORS IN THIS OFFERING WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.
Investors purchasing shares in this offering will suffer immediate and
substantial dilution in net tangible book value per share. To the extent
outstanding options to purchase common stock are exercised, there will be
further dilution. Please see "Dilution."
WE DO NOT PLAN TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
We have not declared or paid any cash dividends on our capital stock since
inception. We intend to retain any future earnings to finance the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements which involve risks and
uncertainties. These forward-looking statements are usually accompanied by words
such as "believes," "anticipates," "plans," "expects" and similar expressions.
Our actual results could differ materially from those expressed or implied by
these forward-looking statements as a result of various factors, including the
risk factors described above and elsewhere in this prospectus.
16
<PAGE> 18
USE OF PROCEEDS
We estimate that we will receive net proceeds from the sale of the shares
of common stock in this offering of $45.4 million, assuming an initial public
offering price of $16.00 per share and after deducting estimated underwriting
discounts and commissions and estimated offering expenses. If the underwriters
exercise their over-allotment option in full, we estimate that our net proceeds
will be $52.4 million.
As of the date of this prospectus, we have not made any specific
expenditure plans with respect to the proceeds of this offering. Therefore, we
cannot specify with certainty the particular uses for the net proceeds to be
received upon completion of this offering. Accordingly, our management will have
significant flexibility in applying the net proceeds of the offering.
We currently intend to use the proceeds from this offering over time for
product development, international expansion, research, sales and marketing
expansion, leasehold and technology improvements, potential acquisitions and
general corporate purposes. We have no present commitments and are not currently
engaged in any negotiations with respect to such acquisitions. Pending any use,
we intend to invest the net proceeds of this offering in short-term,
interest-bearing securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently anticipate that we will retain any future earnings for the development
and operation of our business. Accordingly, we do not anticipate declaring or
paying any cash dividends in the foreseeable future.
17
<PAGE> 19
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 1999 on an
actual basis, on a pro forma basis to reflect our reorganization from an LLC to
a corporation and on a pro forma as adjusted basis to reflect the sale of
3,125,000 shares of common stock by us in this offering at an initial public
offering price of $16.00 per share, after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us. Please
see "Use of Proceeds."
The following table should be read in conjunction with our financial
statements and the notes to those statements included in this prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Members' equity (deficiency):
Additional paid-in capital............................. $ 3,881 -- --
Accumulated deficit.................................... (5,765) -- --
------- ------- --------
Total members' equity (deficiency)..................... $(1,884) -- --
Stockholders' equity (deficiency):
Common stock, $0.001 par value: 100,000,000 shares
authorized on a pro forma basis, 10,819,335 shares
outstanding on a pro forma basis, and 13,944,335
shares outstanding on a pro forma as adjusted
basis............................................... -- 11 14
Additional paid-in capital............................. -- (1,895) 43,502
Accumulated deficit.................................... -- -- --
------- ------- --------
Total stockholders' equity (deficiency)................ -- (1,884) 43,516
------- ------- --------
Total capitalization........................... $(1,884) $(1,884) $ 43,516
======= ======= ========
</TABLE>
The table above excludes 2,386,856 shares of common stock issuable upon the
exercise of stock options outstanding as of June 30, 1999, with a weighted
average exercise price of $2.41 per share. See "Management -- 1997 Option Plan."
In addition, this table excludes 174,492 shares of common stock issuable upon
the exercise of non-plan options, with a weighted average exercise price of
$0.85 per share.
18
<PAGE> 20
DILUTION
Our net tangible book value as of June 30, 1999 was approximately
$(1,924,060), or $(0.18) per share of common stock. Net tangible book value per
share is determined by dividing the amount of our total tangible assets less
total liabilities by the weighted average pro forma number of shares of common
stock outstanding at that date. The pro forma weighted average number of shares
of common stock outstanding gives effect to the Company's reorganization from an
LLC to a corporation as though the reorganization had occurred as of June 30,
1999. Dilution in net tangible book value per share represents the difference
between the amount per share paid by purchasers of shares of common stock in
this offering and the net tangible book value per share of common stock
immediately after the completion of this offering.
After giving effect to the issuance and sale of the shares of common stock
offered by us at an estimated initial public offering price of $16.00 per share
and after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by us, and the application of the estimated
net proceeds from this offering, our pro forma net tangible book value as of
June 30, 1999 would have been $43,475,940 or $3.12 per share. This represents an
immediate increase in pro forma net tangible book value to our existing
stockholders of $3.30 per share and an immediate dilution to purchasers in this
offering of $12.88 per share. If the initial public offering price is higher or
lower, the dilution to purchasers in this offering 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............. $16.00
Net tangible book value per share at June 30, 1999........ $(0.18)
Increase in pro forma net tangible book value per share
attributable to this offering.......................... 3.30
------
Pro forma net tangible book value per share after this
offering.................................................. 3.12
------
Dilution per share to new investors......................... $12.88
======
</TABLE>
Assuming the exercise in full of the underwriters' over-allotment option,
our adjusted pro forma net tangible book value at June 30, 1999 would have been
approximately $3.50 per share, representing an immediate increase in pro forma
net tangible book value of $3.68 per share to our existing stockholders and an
immediate dilution in pro forma net tangible book value of $12.50 per share to
purchasers in this offering.
The following table summarizes, on a pro forma basis, as of June 30, 1999,
the differences between the number of shares of common stock purchased from us,
the aggregate cash consideration paid to us and the average price per share paid
by existing stockholders and new investors purchasing shares of common stock in
this offering. The calculation below is based on an assumed initial public
offering price of $16.00 per share, before deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by us:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... 10,819,335 77.6% $ 4,179,067 7.7% $ 0.39
New investors.................. 3,125,000 22.4 50,000,000 92.3 16.00
---------- ----- ----------- ------ ------
Total.......................... 13,944,335 100.0% $54,179,067 100.0% $ 3.89
========== ===== =========== ====== ======
</TABLE>
This discussion and table assume no exercise of any stock options
outstanding as of June 30, 1999. As of June 30, 1999, there were options
outstanding to purchase a total of 2,386,856 shares of common stock with a
weighted average exercise price of $2.41 per share This discussion and table
also exclude 174,492 shares of common stock issuable upon the exercise of
non-plan options, with a weighted average exercise price of $0.85 per share. To
the extent that any of these options are exercised, there will be further
dilution to new investors. Please see "Capitalization."
19
<PAGE> 21
SELECTED FINANCIAL AND OPERATING DATA
The selected balance sheet data as of December 31, 1997 and 1998 and the
selected statement of operations data for the years ended December 31, 1996,
1997 and 1998 have been derived from our audited financial statements included
in this prospectus. The selected balance sheet data as of December 31, 1995 and
1996, and the statement of operations data for 1995, have been derived from our
audited financial statements not included in this prospectus. The selected
balance sheet data as of December 31, 1994 and selected statement of operations
data for the period from December 1, 1994 (inception) to December 31, 1994 have
not been presented as this information is considered to be immaterial. The
selected balance sheet data as of June 30, 1999 and the selected statement of
operations data for the six months ended June 30, 1998 and 1999 are derived from
unaudited financial statements included in this prospectus. In the opinion of
management, the interim data have been prepared on the same basis as the audited
financial statements appearing in this prospectus and include all necessary
adjustments, consisting only of normal recurring adjustments, we believe to be
necessary for a fair presentation of the data. You should read these selected
financial data in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," our financial statements and the
notes to those statements included in the prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------- -------------------------
1995 1996 1997 1998 1998 1999
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Strategic Planning Services... $ 237 $ 566 $ 1,850 $ 6,183 $ 1,995 $ 8,166
Conferences................... 2,024 2,686 3,426 4,890 1,979 4,553
Other......................... 1,439 3,000 3,246 3,729 1,939 1,681
------ ------ ------- ----------- ----------- -----------
Total revenues............. 3,700 6,252 8,522 14,802 5,913 14,400
Cost of services and
fulfillment................... 2,893 4,687 6,259 9,676 4,282 6,854
------ ------ ------- ----------- ----------- -----------
Gross profit............... 807 1,565 2,263 5,126 1,631 7,546
Other operating expenses:
Sales and marketing........... 254 514 1,558 3,173 1,313 4,008
General and administrative.... 1,025 1,664 2,955 4,090 1,918 3,668
------ ------ ------- ----------- ----------- -----------
Total other operating
expenses................. 1,279 2,178 4,513 7,263 3,231 7,676
------ ------ ------- ----------- ----------- -----------
Net loss........................ $ (472) $ (613) $(2,250) $ (2,137) $ (1,600) $ (130)
====== ====== ======= =========== =========== ===========
Pro forma basic and diluted net
loss per common share (1)..... $ (0.21) $ (0.16) $ (0.01)
=========== =========== ===========
Pro forma weighted average
common shares outstanding
(1)........................... 10,318,359 10,318,359 10,454,736
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
--------------------------------------- -------------------------
1995 1996 1997 1998 1998 1999
<S> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Number of SPS contracts......... 13 66 145 421 219 654
Total contract value (in
thousands).................... $ 315 $ 923 $ 2,509 $ 11,666 $ 5,089 $ 22,138
Number of employees............. 18 61 88 142 117 194
Capital expenditures (in
thousands).................... $ 99 $ 199 $ 207 $ 838 $ 258 $ 2,263
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
AS OF
AS OF DECEMBER 31, JUNE 30,
------------------------------------- ------------
1995 1996 1997 1998 1999
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 4 $ 8 $1,614 $ 216 $ 1,554
Working capital (2)........................... (572) (1,166) (553) (3,376) (4,972)
Total assets.................................. 907 1,474 3,463 6,867 15,051
Members'/stockholders' equity (deficiency).... (405) (714) 9 (2,129) (1,884)
</TABLE>
- ------------------------------
(1) Pro forma basic and diluted net loss per common share is computed by
dividing net loss by the pro forma weighted average number of shares of
common stock. Pro forma weighted average number of shares of common stock
gives effect to our reorganization from an LLC to a corporation as though
the reorganization had occurred as of the beginning of each period
indicated. Pro forma weighted average shares do not include any common stock
equivalents because inclusion of common stock equivalents would have been
anti-dilutive.
(2) Our working capital balances are typically negative because of the timing of
cash collections from clients. SPS contracts are typically annual and paid
in advance. Accordingly, a substantial portion of our billings is initially
recorded as deferred revenue and amortized into revenue during the term of
the contract to which such billings relate.
21
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and
results of operations together with our financial statements, the notes to those
statements and the other information in this prospectus. This discussion
contains forward-looking statements that involve risks and uncertainties. Please
see "Risk Factors."
OVERVIEW
We are a leading provider of research on Internet commerce, as measured by
both revenue and number of clients. Senior executives at our client companies
utilize our research to make informed business decisions in a complex and
rapidly changing Internet economy. Our research, which is focused solely on the
Internet economy, provides our clients with comprehensive views of industry
trends, forecasts and best practices. Our analysis, supported by proprietary
data, emphasizes specific, actionable findings.
Our revenues consist of SPS, conferences and other revenues. For the six
months ended June 30, 1999, SPS represented approximately 56.7% of our total
revenues. SPS is a combination of proprietary written analysis, supporting data
and access to our analysts. We typically bill clients annually in advance and
deliver the products and services over the term of the contract. We also produce
a wide range of conferences which offer senior executives the opportunity to
hear first-hand the insights of our analysts and the leading decision makers in
the Internet and technology industries. Conference revenues consist of revenues
from individual attendees, sponsors, which display their logo in our conference
program and/or host a reception, and exhibitors, which receive a booth to
promote their companies. For the six months ended June 30, 1999, conferences
represented approximately 31.6% of our total revenues. Other revenues, which
consist primarily of book-length studies, newsletters and custom research,
represented approximately 11.7% of our total revenues for the six months ended
June 30, 1999.
SPS contracts are renewable contracts, typically annual, and payable in
advance. Accordingly, a substantial portion of our billings is initially
recorded as deferred revenue and amortized into revenue over the term of the
contract. Commission expense related to SPS is also initially deferred and
amortized into expense over the contract period in which the related revenues
are earned and amortized to income. Our contracts are non-cancelable and
non-refundable. Billings attributable to our conferences and other products and
services are initially recorded as deferred revenue and recognized upon the
completion of the event or project.
We have experienced rapid growth since our organization, and particularly
since our decision in late 1996 to focus our business on SPS. Between 1995 and
1998, our total revenues have grown from $3.7 million to $14.8 million, a
compound annual growth rate of 59.2%. For the six months ended June 30, 1999,
our revenues were $14.4 million, representing an increase of 143.5% over
revenues of $5.9 million for the six months ended June 30, 1998. The number of
our SPS contracts has increased from 145 as of December 31, 1997 to 654 as of
June 30, 1999. Our total contract value has increased from $2.5 million on
December 31, 1997 to $22.1 million on June 30, 1999. We believe that total
contract value is a meaningful measure of the volume of our business. Total
contract value, however, does not necessarily correlate to deferred revenues.
Total contract value represents the annualized value of all outstanding SPS
contracts without regard to the remaining duration of such contracts, and
deferred revenue represents unamortized revenue remaining on all outstanding and
billed contracts.
To date, a substantial portion of expiring SPS contracts have been renewed
for an equal or higher amount. Approximately 73% of contracts expiring during
the 12 months ended June 30, 1999 were renewed. Approximately 95% of the
contracts that were renewed in the first six months of 1999 were for an equal or
larger dollar amount. With this high customer renewal rate, we believe we have a
growing base of recurring revenues from SPS. However, this renewal rate is not
necessarily indicative of the rate of future retention of our revenue base.
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<PAGE> 24
We have a highly diversified client base, including companies in the
Internet, media, telecommunications, technology, financial services, retail,
travel, consumer products and professional services industries. No client
accounts for more than 2% of our total annual revenues.
Cost of services and fulfillment represents the costs associated with
production and delivery of our products and services, including the costs of
salaries, bonuses and related benefits for our research and conference
personnel, all associated editorial, travel and support services, and the costs
of producing our conferences. Sales and marketing expenses include salaries,
bonuses, employee benefits, travel expenses, promotional costs, sales
commissions and other costs incurred in marketing and selling our products and
services. General and administrative expenses include the costs of our finance
and technology groups and other administrative functions.
We have incurred net losses since our formation. Our net loss was $613,000
in 1996, $2.3 million in 1997, $2.1 million in 1998 and $130,000 for the six
months ended June 30, 1999. We expect to incur a net loss for the full year
1999. As of June 30, 1999, we had an accumulated deficit of $5.8 million. We
expect to incur significant expenditures in the future associated with our
domestic and international expansion strategies. In particular, we intend to
continue to expand our research and sales personnel, and we intend to continue
to invest in technology, leasehold improvements and the development of
additional research practices and modules.
RESULTS OF OPERATIONS
The following table sets forth our results of operations for the years
ended December 31, 1996, 1997 and 1998 and the six months ended June 30, 1998
and 1999, expressed as a percentage of revenue:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- -----------------
1996 1997 1998 1998 1999
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Strategic Planning Services.................. 9.0% 21.7% 41.8% 33.7% 56.7%
Conferences.................................. 43.0 40.2 33.0 33.5 31.6
Other........................................ 48.0 38.1 25.2 32.8 11.7
----- ----- ----- ----- -----
Total revenues....................... 100.0 100.0 100.0 100.0 100.0
Cost of services and fulfillment............... 75.0 73.4 65.4 72.4 47.6
----- ----- ----- ----- -----
Gross profit................................. 25.0 26.6 34.6 27.6 52.4
Other operating expenses:
Sales and marketing.......................... 8.2 18.3 21.4 22.2 27.8
General and administrative................... 26.6 34.7 27.6 32.4 25.5
----- ----- ----- ----- -----
Total other operating expenses....... 34.8 53.0 49.0 54.6 53.3
----- ----- ----- ----- -----
Net loss....................................... (9.8)% (26.4)% (14.4)% (27.0)% (0.9)%
===== ===== ===== ===== =====
</TABLE>
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Revenues. Total revenues increased 143.5% to $14.4 million in the six
months ended June 30, 1999 from $5.9 million in the six months ended June 30,
1998. SPS revenues increased 309.3% to $8.2 million in the six months ended June
30, 1999 from $2.0 million in the six months ended June 30, 1998. This increase
is attributable primarily to an increase in the number of SPS contracts to 654
at June 30, 1999 from 219 at June 30, 1998 and an increase in average contract
value to $33,850 at June 30, 1999 from
23
<PAGE> 25
$23,235 at June 30, 1998. These increases reflect an increase in the number of
users at, and research services purchased by, our client companies. Total
contract value increased to $22.1 million at June 30, 1999 from $5.1 million at
June 30, 1998.
Conference revenues increased 130.1% to $4.6 million in the six months
ended June 30, 1999 from $2.0 million in the six months ended June 30, 1998.
These revenues reflect the results of four conferences in the six months ended
June 30, 1998 and five conferences in the six months ended June 30, 1999. The
increase is attributable to an increase in attendee, sponsor and exhibitor
revenues and the production of an additional conference in the six months ended
June 30, 1999.
Other revenues decreased 13.3% to $1.7 million in the six months ended June
30, 1999 from $1.9 million in the six months ended June 30, 1998. This decrease
reflects our decision to focus our business on SPS.
Cost of Services and Fulfillment. Cost of services and fulfillment
increased 60.1% to $6.9 million in the six months ended June 30, 1999 from $4.3
million in the six months ended June 30, 1998. The increase in this period was
attributable to the overall growth of our business, in particular the increased
research staffing for new and existing research practices. Gross margin
increased to 52.4% in the six months ended June 30, 1999 from 27.6% in the six
months ended June 30, 1998 because the growth in our client base and new
business exceeded the growth in the cost of providing our research services and
conferences.
Sales and Marketing. Sales and marketing expenses increased 205.2% to $4.0
million in the six months ended June 30, 1999 from $1.3 million in the six
months ended June 30, 1998. As a percentage of total revenues, these expenses
increased to 27.8% in the six months ended June 30, 1999 from 22.2% in the six
months ended June 30, 1998. The increase in this period was primarily
attributable to an increased number of sales personnel and the corresponding
commission costs associated with increased revenues.
General and Administrative. General and administrative expenses increased
91.2% to $3.7 million in the six months ended June 30, 1999 from $1.9 million in
the six months ended June 30, 1998. As a percentage of total revenues, these
expenses decreased to 25.5% in the six months ended June 30, 1999 from 32.4% in
the six months ended June 30, 1998. The increase in this period was primarily
attributable to increased personnel for the finance, human resources and
operations areas, as well as costs associated with our new London office and
higher costs for staff travel and professional fees.
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Revenues. Total revenues increased 73.7% to $14.8 million in 1998 from
$8.5 million in 1997 and 36.3% to $8.5 million in 1997 from $6.3 million in
1996. SPS revenues increased by 234.2% to $6.2 million in 1998 from $1.9 million
in 1997. This increase is attributable primarily to an increase in the number of
SPS contracts to 421 at December 31, 1998 from 145 at December 31, 1997 and an
increase in average contract value to $27,700 at December 31, 1998 from $17,300
at December 31, 1997. SPS revenues increased by 227.1% to $1.9 million in 1997
from $566,000 in 1996. This increase is attributable primarily to an increase in
the number of SPS contracts to 145 at December 31, 1997 from 66 at December 31,
1996 and an increase in average contract value to $17,300 at December 31, 1997
from $14,000 at December 31, 1996.
The increase in SPS revenues in these periods reflects an increase in the
number of users at, and research services purchased by, our client companies.
Total contract value increased to $11.7 million at December 31, 1998 from $2.5
million at December 31, 1997 and $923,000 at December 31, 1996.
Conference revenues increased 42.7% to $4.9 million in 1998 from $3.4
million in 1997 and 27.6% to $3.4 million in 1997 from $2.7 million in 1996.
These increases are attributable to an increase both in the number of
conferences and in average attendee, sponsor and exhibitor revenues.
24
<PAGE> 26
Other revenues increased 14.9% to $3.7 million in 1998 from $3.2 million in
1997. This increase reflects an increase in revenues from custom research and
book-length studies, offset in part by a small decrease in newsletter revenues.
Other revenues increased 8.2% to $3.2 million in 1997 from $3.0 million in 1996.
This increase reflects an increase in revenues from book-length studies and
newsletter subscriptions, offset in part by a decrease in custom research.
Cost of Services and Fulfillment. Cost of services and fulfillment
increased 54.6% to $9.7 million in 1998 from $6.3 million in 1997. The increase
in this period was attributable to the overall growth of our business, in
particular the increased research staffing for new and existing research
practices. These expenses increased 33.5% to $6.3 million in 1997 from $4.7
million in 1996. The increase in this period was attributable to increased costs
for producing conferences and other direct products, and for increases in
research staffing. Gross margin increased to 34.6% in 1998 from 26.6% in 1997
and increased to 26.6% in 1997 from 25.0% in 1996 because the growth in our
client base and new business exceeded the growth in the cost of providing our
research services and conferences.
Sales and Marketing. Sales and marketing expenses increased 103.7% to $3.2
million in 1998 from $1.6 million in 1997. The increase in this period was
primarily attributable to an increased number of sales personnel and the
corresponding commission costs associated with increased revenues. Sales and
marketing expenses increased 202.7% to $1.6 million in 1997 from $514,000 in
1996. The expense increase in this period was primarily attributable to
increased personnel in the marketing area to support an increased direct mail
effort. As a percentage of total revenues, these expenses increased to 21.4% in
1998 from 18.3% in 1997 and increased to 18.3% in 1997 from 8.2% in 1996.
General and Administrative. General and administrative expenses increased
38.4% to $4.1 million in 1998 from $3.0 million in 1997 and 77.7% to $3.0
million in 1997 from $1.7 million in 1996. The increase in these periods was
primarily attributable to increased staffing for the finance, human resources
and operations areas, as well as increased expenses associated with basic office
operations, including rent, utilities, travel and printing. As a percentage of
total revenues, these expenses decreased to 27.6% in 1998 from 34.7% in 1997 and
increased to 34.7% in 1997 from 26.6% in 1996.
INCOME TAXES
No provision or benefit for federal or state income taxes, actual or pro
forma, has been recorded for the net operating losses we incurred in the years
ended December 31, 1996, 1997 and 1998. In addition, no net operating losses
incurred in 1999 prior to the closing of this offering will be recorded on our
federal or state tax returns. Because our company was a limited liability
company for tax purposes during these periods, and will continue to be until the
closing of this offering, all taxable losses were, and will be, allocated to the
members for reporting on their income tax returns. As a result, we will not be
able to offset future taxable income, if any, against losses incurred prior to
the closing of this offering.
QUARTERLY RESULTS OF OPERATIONS DATA
The following tables sets forth unaudited quarterly statement of operations
data for each of the six quarters ended June 30, 1999 and such data expressed as
a percentage of total revenues. We believe that we have prepared these data on
the same basis as our audited financial statements in this prospectus, and have
included all necessary adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of our results of operations for
these interim periods. You should read these interim financial data together
with our audited financial statements and the notes to those statements in this
prospectus. Our historical results of operations do not necessarily indicate the
results of operations we will achieve in the future, and our results of
operations for interim periods do not necessarily indicate the results of
operations for any future period. Our results of operations may fluctuate
significantly in the future as a result of a variety of factors, many of which
are beyond our control. See "Risk Factors--Our
25
<PAGE> 27
operating results may fluctuate in future periods which may cause volatility or
a decline in the price of our stock."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1998 1998 1998 1998 1999 1999
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Strategic Planning
Services.................. $ 762 $1,233 $1,757 $2,431 $3,447 $4,719
Conferences.................. 888 1,091 2,354 557 1,724 2,829
Other........................ 959 980 1,014 776 848 833
------- ------ ------ ------ ------ ------
Total revenues....... 2,609 3,304 5,125 3,764 6,019 8,381
Cost of services and
fulfillment.................. 2,091 2,191 3,127 2,267 2,955 3,899
------- ------ ------ ------ ------ ------
Gross profit................. 518 1,113 1,998 1,497 3,064 4,482
Other operating expenses:
Sales and marketing.......... 611 702 842 1,018 1,750 2,258
General and administrative... 911 1,007 1,132 1,040 1,635 2,033
------- ------ ------ ------ ------ ------
Total other operating
expenses........... 1,522 1,709 1,974 2,058 3,385 4,291
------- ------ ------ ------ ------ ------
Net income (loss).............. $(1,004) $ (596) $ 24 $ (561) $ (321) $ 191
======= ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1998 1998 1998 1998 1999 1999
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Strategic Planning
Services.................. 29.2% 37.3% 34.3% 64.6% 57.3% 56.3%
Conferences.................. 34.0 33.0 45.9 14.8 28.6 33.7
Other........................ 36.8 29.7 19.8 20.6 14.1 10.0
------- ------ ------ ------ ------ ------
Total revenues....... 100.0 100.0 100.0 100.0 100.0 100.0
Cost of services and
fulfillment.................. 80.2 66.3 61.0 60.2 49.1 46.5
------- ------ ------ ------ ------ ------
Gross profit................. 19.8 33.7 39.0 39.8 50.9 53.5
Other operating expenses:
Sales and marketing.......... 23.4 21.2 16.4 27.1 29.0 26.9
General and administrative... 34.9 30.5 22.1 27.6 27.2 24.3
------- ------ ------ ------ ------ ------
Total other operating
expenses........... 58.3 51.7 38.5 54.7 56.2 51.2
------- ------ ------ ------ ------ ------
Net income (loss).............. (38.5)% (18.0)% 0.5% (14.9)% (5.3)% 2.3%
======= ====== ====== ====== ====== ======
</TABLE>
SEASONALITY
Our conference revenues historically have been strongest during the third
quarter of the year, in which the largest number of our events are held. We also
have experienced a significant increase in SPS sales during the fourth quarter
of the year due primarily to the budget cycles of our SPS clients, the renewal
dates of existing SPS contracts and the effect of our annual sales quotas.
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<PAGE> 28
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations since our organization on December 1, 1994
with a total of $4.2 million in member contributions. This includes $3.0 million
in private equity from Gartner Group in October 1997.
Net cash provided by (used in) operating activities was $14,000 for the
year ended December 31, 1996, $(1.1) million for the year ended December 31,
1997, $(557,000) for the year ended December 31, 1998 and $3.2 million for the
six months ended June 30, 1999.
Net cash used in investing activities was $257,000 in 1996, $232,000 in
1997, $838,000 in 1998 and $2.3 million for the six months ended June 30, 1999.
Investments were primarily in computer equipment, furniture and leasehold
improvements.
Net cash provided by (used in) financing activities was $246,000 for the
year ended December 31, 1996, $2.9 million for the year ended December 31, 1997,
$(3,000) for the year ended December 31, 1998 and $375,000 for the six months
ended June 30, 1999. Cash provided by financing activities for the year ended
December 31, 1997 primarily resulted from the placement of private equity with
Gartner Group. In addition, during the six months ended June 30, 1999 two equity
members exercised unit investment options for $375,000.
As of June 30, 1999, we had $1.6 million in cash and cash equivalents. We
have a $750,000 committed line of credit, secured by substantially all of our
assets, under which there were no outstanding balances as of June 30, 1999. We
have a commitment from our lender to increase this line to $3.0 million.
We expect to spend approximately $4 million in 1999 and $7 million in 2000
on technology, including Web site enhancements, leasehold improvements,
expansion of operations and telecommunications upgrades. We anticipate that we
will continue to increase our capital expenditures and lease commitments
consistent with our anticipated growth in operations, infrastructure and
personnel. We also anticipate that we will continue to experience growth in our
operating expenses to support our revenue growth, including the continued
introduction of new practices and modules. While we have sufficient cash to fund
our current operations for the foreseeable future, the proceeds of this offering
are necessary to fund our anticipated growth. We believe that the net proceeds
of this offering, together with the unused line of credit, will be sufficient to
fund our operations for the next 2 years.
YEAR 2000 COMPLIANCE
The Year 2000 problem is the result of computer programs being written
using two digits rather than four to identify a given year. Computer programs
that have time-sensitive software may interpret the date code "00" as the year
1900 rather than the year 2000. This could result in a disruption of operations
including a temporary inability to process transactions, send invoices or engage
in other normal business activities. We maintain a significant number of
computer software systems and operating systems across our entire organization
which are potentially subject to Year 2000 problems.
Our Year 2000 concerns cover internal and external application and database
production software, internal and external production hardware, internal
infrastructure and external agents.
Internal and external application and database production software includes
all software used either directly by our clients or indirectly in support of our
clients. We have upgraded or replaced all of these systems. All of the systems
are designed to pass Year 2000 compliance tests. System testing for Year 2000
compliance is anticipated to be completed by the end of the third quarter of
1999.
Internal and external production hardware includes the hardware that we use
to directly host our Web site, our internal servers and network hardware and our
desktop systems. We have upgraded or replaced all hardware in direct support of
our Web site. We will upgrade or replace all internal servers, network hardware
and desktop systems by the end of the third quarter of 1999.
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<PAGE> 29
Internal infrastructure consists of all hardware and software not described
above which is used in support of our internal staff. This includes all printers
and modems, the phone and voicemail systems and any common office automation
devices, including faxes and copiers. We upgraded the phone system in the second
quarter of 1999 and we will replace the voicemail system in the third quarter of
1999. We have upgraded or replaced all printers and modems. We will upgrade or
replace common office automation devices by the end of the third quarter of
1999.
External agents includes all critical hardware, software and related
systems provided by third parties. Beginning in the second quarter of 1999, we
identified critical suppliers and equipment that we depend on for our day to day
business and surveyed these external vendors as to their Year 2000 compliance.
All of our critical external vendors have responded to our Year 2000 compliance
inquiries. 85% of these external vendors have indicated that they are Year 2000
compliant, 10% have indicated that they are in the process of upgrading or
replacing their systems and 5% have indicated that they are in the process of
assessing whether their systems are Year 2000 compliant. We keep a copy of all
third party Year 2000 compliance statements that we obtain.
We expect that our employees will perform all significant work for the Year
2000 projects described above. We do not anticipate hiring any additional
employees nor do we anticipate incurring any significant consulting expenses for
the Year 2000 project. The cost of software tools and consulting expenses used
for detection of Year 2000 problems is not currently expected to exceed
$100,000.
Contingency planning has not yet begun for all categories. We believe that
all critical systems are Year 2000 compliant as of September 1, 1999.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, various normal business activities or
operations. Such failures could materially and adversely affect our results of
operations, liquidity and financial condition, and subject us to the risk of
litigation. Due to the general uncertainty inherent in the Year 2000 problem,
resulting in part from the uncertainty of the Year 2000 readiness of third-party
suppliers and customers, we are unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on our results of
operations, liquidity or financial condition.
In addition, we cannot assure you 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 those entities
to be Year 2000 compliant could result in a systematic failure beyond our
control, such as prolonged internet, telecommunications or electrical failure,
which could prevent us from providing our services or prevent users from
accessing our services.
RECENT ACCOUNTING PRONOUNCEMENTS
In April 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"), which 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. SOP 98-1 will be effective for our
fiscal year ending December 31, 1999. The adoption of SOP 98-1 is not expected
to have a material impact on our financial statements.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"), which provides guidance on the financial reporting of
start-up costs and organization costs. It requires costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 will be effective
for our fiscal year ending December 31, 1999. The adoption of SOP 98-5 is not
expected to have a material impact on our financial statements.
28
<PAGE> 30
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 131, "Disclosures About Segments
of an Enterprise and Related Information" ("SFAS No. 131"), which establishes
standards for the way that a public enterprise reports information about
operating segments in annual financial statements, and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. SFAS No. 131 is effective for fiscal years beginning after December
15, 1997, and requires restatement of earlier periods presented. In the initial
year of application, comparative information for earlier years must be restated.
We have determined that we do not have any separately reportable business
segments.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 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, 2000. This statement is not expected to affect us as we currently
do not engage or plan to engage in derivative instruments or hedging activities.
29
<PAGE> 31
BUSINESS
OVERVIEW
We are a leading provider of research on Internet commerce, as measured by
both revenue and number of clients. Senior executives at client companies
utilize our research to make informed business decisions in a complex and
rapidly changing Internet economy. Our research, which is focused solely on the
Internet economy, provides our clients with comprehensive views of industry
trends, forecasts and best practices. Our analysis, supported by proprietary
data, emphasizes specific, actionable findings. Our research services are
provided primarily through our continuous subscription product, Strategic
Planning Services, which we call SPS. SPS is a combination of proprietary
written analysis, supporting data and access to our analysts. We also produce a
wide range of conferences which offer senior executives the opportunity to hear
first-hand the insights of our analysts and the leading decision makers in the
Internet and technology industries.
MARKET OPPORTUNITY
The Growth of Internet Commerce
The Internet has emerged as a global medium that allows hundreds of
millions of people worldwide to obtain information, communicate and conduct
business electronically. The continued growth in Internet usage will be driven
by:
- the large and growing number of personal computers installed in homes and
offices;
- easier, faster, more reliable and less expensive access to the Internet;
- the availability of more and better content on the Internet;
- improvements in network infrastructure; and
- the increasing ability to access the Internet with devices like
television and telephones.
As the use of the Internet grows, businesses are increasing the breadth and
depth of their Internet products and services geared to consumers and other
businesses. Companies are also increasingly utilizing the Internet for functions
critical to their core business strategies and operations, such as sales and
marketing, customer service, supply chain management and overall project
coordination. As a result, numerous companies, including software development
firms, telecommunications and technology vendors and marketing and advertising
agencies, have developed products, services and technologies which support
consumers and businesses seeking to expand their use of the Internet or increase
their business efficiency.
The unique interactive nature of the Internet has also led to its rapid
emergence as a convenient vehicle to buy and sell products and services.
Internet commerce can be fast, inexpensive and convenient, and a growing number
of users have used the Internet to trade securities, purchase goods and services
and pay bills. Retailers, advertisers and marketers have embraced the Internet
because it offers them the ability to:
- reach broad, global audiences, thereby overcoming the limitations of
brick-and-mortar businesses;
- access new revenue streams;
- target and cost-effectively market to consumers with specific sets of
interests and desirable demographic characteristics; and
- improve efficiencies in global corporate communications, supply chain
management, technology implementation and overall operating expenses.
We believe that the growth of the Internet, and the growth of Internet
commerce in particular, will continue to expand rapidly for the foreseeable
future both in the United States and abroad. A recent report by University of
Texas' Center for Research in Electronic Commerce estimated that the Internet
economy generated approximately $300 billion in U.S. revenue and was responsible
for 1.2 million jobs as of 1998. A recent study by the Organization for Economic
Cooperation and Development predicted that worldwide Internet commerce may grow
to $1 trillion by 2005. In addition, billion dollar markets are emerging on the
Internet for many different industry sectors.
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<PAGE> 32
The graphs below illustrate our growth projections for various domestic
Internet markets. Our projections are based on a variety of research techniques,
including monthly tracking of online and non-online consumers, surveys of
leading executives at numerous Internet and technology companies, consumer
buying patterns in traditional retail markets and the historical development of
other markets and distribution channels.
EXPECTED GROWTH OF DOMESTIC INTERNET MARKETS
<TABLE>
<S> <C>
SELECTED INTERNET INDIVIDUAL ONLINE
COMMERCE MARKETS INVESTING MARKET
</TABLE>
[Expected Growth of Domestic Internet Markets Bar Graph]
Source: Jupiter Communications
The Need for Timely, Unbiased and Affordable Advice
The rapid growth of Internet commerce and the related increase of
innovative products, services and technologies have made it very difficult for
companies to keep pace with technological changes, to compete against new types
of companies and to generate research internally. Over the past few years,
numerous companies have been formed which focus solely on the delivery of
Internet access and online services, Internet commerce solutions and selling
products and services directly over the Internet. The emergence of these
Internet companies and the competitive challenges they pose have forced many
traditional companies, including financial services, telecommunications, media,
retail and consumer products companies, to make significant investments in
developing Internet-related businesses, services and strategies.
We recently conducted an e-mail survey of 27 executives responsible for
their companies' Web initiatives. As part of the survey, we asked these
executives to indicate the extent to which their Web development budgets,
including staffing, hardware and software, have increased for 1999. 55% of the
27 executives indicated that their Web development budgets increased by more
than 75% for 1999, and 36% of the 27 executives indicated that their budgets
increased by more than 200% for 1999. Our research indicates that companies
today are spending between $500,000 for entry level marketing and branding Web
sites to more than $30 million for the most sophisticated Internet commerce
sites. In addition, many companies with no prior experience with Internet
commerce and Internet technology are increasingly attempting to understand the
rapid technological changes and to evaluate what steps they should take to
promote their businesses and compete effectively.
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There is tremendous uncertainty and anxiety among all of these types of
companies as to the future growth of Internet commerce and how it will affect
day-to-day decision-making and business development efforts. This uncertainty
and anxiety is not limited to technology personnel but is increasingly shared by
marketing and sales personnel, business development staff, senior executives and
boards of directors. Many companies do not have the technological knowledge or
the financial resources or personnel to research these issues and developments
internally. In addition, the abundance of conflicting information and
predictions regarding the growth of the Internet and the future marketplace are
very difficult for even experienced executives to decipher. Consequently, demand
is growing for timely and credible advice to assist companies in identifying
revenue models and success criteria, analyzing consumer adoption trends and
activity, developing effective sales and marketing operations, assessing market
trends and analyzing the competitive landscape and industry outlook. We expect
that demand for timely and credible advice will increase as use of the Internet
impacts new industries and expands into other geographic areas.
THE JUPITER SOLUTION
We address the growing demand around the world for advisory research and
analysis on Internet commerce. All of our research is designed to help senior
executives at large and small companies in a wide range of industries make
difficult, complex and informed business decisions in the rapidly changing
Internet economy. Our research identifies revenue models and success criteria;
defines competitive landscapes; analyzes consumer demand for specific products
or Web sites; provides industry forecasts, markets projections and trend
analyses; and assesses the value of strategic partnerships and/or acquisitions.
Our Strategic Planning Services are provided on a subscription basis and
structured as a continuing information service for senior executives focused on
marketing, advertising, media and retail related to Internet commerce.
Our solution provides the following key advantages:
- OUR RESEARCH ENABLES SENIOR EXECUTIVES TO MAKE DIFFICULT AND COMPLEX
BUSINESS DECISIONS. Our research products and services enable companies
to understand the rapid changes related to the growth of Internet
commerce and to evaluate the steps they should take to promote their
businesses and compete effectively. Our primary goal is to provide
clients with prescriptive advice and practical business solutions. We
support our research and analysis with extensive proprietary data,
including market forecasts, executive surveys and surveys of Internet
users and households. Our clients also have access to our research
analysts to address specific business concerns, which enables them to
make more informed business decisions and allows us to better understand
and respond to their changing needs. We believe this interaction also
allows us to sustain a high client retention rate and identify new
research needs among our clients.
- WE FOCUS SOLELY ON THE RAPIDLY EVOLVING INTERNET ECONOMY. Our goal has
been to position our company as the definitive proprietary resource for
all Internet development efforts. Unlike many of our competitors which
focus on information technology research, our research addresses the
business and marketing strategies of companies grappling with Internet
commerce. We typically cover the impact of new technology on traditional
business models, the rate of return-on-investment and projections of
consumer spending, not vendor selection or cost of implementation alone.
As a result, our prospects and clients include chief executive officers
and other senior executives, including sales, marketing, business
development, operations and strategic planning executives.
- OUR RESEARCH ANALYSTS ARE EXPERTS ON INTERNET COMMERCE. Our analysts
have years of relevant experience and are recruited from a variety of
different industries, including management consulting and research firms,
financial services, publishing, entertainment and advertising. Our
analysts are frequently quoted in articles on the Internet and Internet
commerce that appear in major newspapers, magazines and industry
periodicals. In addition, our analysts are asked to speak at hundreds of
non-Jupiter industry and corporate events. Because of their expertise,
our analysts also have personal access to the leading decision makers in
the Internet economy. We believe that the experience and prominence of
our analysts allow us to provide original and prescriptive research which
is unavailable elsewhere.
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- WE SUPPLEMENT OUR CORE PRACTICES WITH SPECIALIZED MARKET MODULES. We
supplement our seven core practices, which offer broad prescriptive
advice relevant to all online ventures, with eleven market modules that
target specific industries or geographic areas. By addressing market
forecasts, competitive landscapes and business practices relating to
specific industries and geographic areas, we are able to offer
specialized insights to guide senior executives in their daily decision
making.
- WE PROVIDE DESKTOP ACCESS TO JUPITER RESEARCH THROUGH OUR WEB SITE. Our
Web site is an interactive platform that enables clients to access our
products and services in a customized, easy-to-use manner. Our Web site
allows users to search through our research and data libraries, send
e-mails to client service representatives, access special content
packages and register for conferences. In addition, our Web site offers
analyst presentations and audio archives of analyst conference calls
addressing the research reports that we publish.
OUR STRATEGY
Our objective is to be the premier global research company focusing on
Internet commerce. Key elements of our business strategy include the following:
- PROVIDING INNOVATIVE RESEARCH ON INTERNET COMMERCE. We intend to
continuously update, expand and refine our practices, market modules and
data research capabilities to anticipate and meet the changing needs of
business executives. We expect to add one practice and four market
modules by the end of 1999, significantly expanding our research
coverage. We also expect to continue to increase the number of our
analysts and other research professionals.
- INCREASING OUR CLIENT BASE IN THE UNITED STATES AND ABROAD. We are
committed to expanding our client base in the United States and abroad
even further by expanding our research products and services, increasing
our sales and marketing initiatives and personnel and focusing on client
service. We intend to hire additional sales representatives who will be
located in the targeted sales regions, as well as additional strategic
account managers who specifically focus on sales to multinational
companies. We also expect that the rapid changes in the Internet markets
and our increased international focus will enable us to attract
additional clients from new industries and geographic areas.
- INCREASING THE LEVEL OF SALES TO EXISTING CLIENTS. We are committed to
increasing the total sales to our existing clients, as well as increasing
the renewal rates for our SPS contracts. As Internet commerce continues
to expand around the world, we expect that our existing clients will
continue to need our research and advice and that they will purchase more
of our research products. In addition, we intend to actively market all
of our new practices and market modules to the executives already
purchasing our products and services and to other executives at our
current clients.
- PURSUING INTERNATIONAL OPPORTUNITIES. The growth of Internet commerce in
foreign countries will present numerous opportunities for us to expand
our international operations. We intend to add market modules and
conferences that focus on specific geographic markets. We also expect to
expand our London office which focuses on the European market, and we may
open additional offices in foreign cities. We expect to enter into
additional international distribution deals and strategic partnerships,
and we will consider acquisitions of research firms to extend our
international presence and research coverage.
- CONTINUING TO STRENGTHEN THE JUPITER BRAND. While we believe we have
developed a strong brand name, we intend to engage in extensive public
relations and marketing efforts to promote our business in the United
States and abroad. These efforts will include an advertising campaign,
continued enhancements to our Web site and an increase in the number of
marketing events we sponsor for potential clients. We will also focus on
expanding our press coverage and the exposure of our research analysts on
television and at industry events.
- INCREASING THE NUMBER OF CONFERENCES THAT WE PRODUCE. We expect to
expand the number of conferences that we produce, as well as update and
refine our topics as the marketplace changes.
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We are currently exploring adding four additional conferences in the
United States and abroad in 2000, including new events and regional
versions of existing conferences. Our conferences offer excellent
opportunities to showcase our research to potential clients, increase the
public profile of our analysts, generate favorable press and otherwise
promote the Jupiter brand.
- ENHANCING OUR WEB DELIVERY PLATFORM. We plan to continually upgrade our
Web site to enable users to more easily access data, increase
interactivity and enhance customization of delivery. In the fourth
quarter of 1999, we plan to upgrade our Web site on a new platform which
will enable clients to create more personalized views of their content
and to search across all services more effectively. Our enhanced Web site
will allow us to more effectively target specific research to clients,
measure demand for our research and improve our customer service
capabilities.
STRATEGIC PLANNING SERVICES
Strategic Planning Services provides our clients with a wide range of
proprietary research, data and advisory analysis and is structured as a
continuous information service. We have designed our SPS research to enable
companies to make intelligent business decisions about Internet commerce and
consumer use of the Internet and related technologies. The core components of
our Strategic Planning Services are seven practices, which focus on issues vital
to all online ventures, and eleven market modules, which focus on discrete
industries and geographic areas. SPS contracts are renewable on an annual basis.
We also recently introduced our MindShare Senior Executive Program which is
targeted at chief executive officers and other senior executives. MindShare is
structured to combine forward-looking, broad strategic advice with focused
strategy sessions with our analysts. These research products and services
identify revenue models and success criteria, analyze consumer adoption trends
and provide advice, forecasts and industry trends for senior executives focused
on technology, content, advertising, entertainment and merchandising related to
Internet commerce.
A key component of our Strategic Planning Services is access to our
research analysts for discussions and questions related to their published
reports. Our clients typically seek advice or have questions regarding new
business or marketing initiatives, best practices, new opportunities or
competitive threats, market forecasts and/or the value of mergers and strategic
partnerships. Clients submit inquiries to our dedicated client inquiry staff via
telephone, e-mail or our Web site. The client inquiry staff, which consists of
trained research professionals who are familiar with all of our products and
services, coordinates the responses and actively manages access to the analysts.
The size of our SPS contracts varies depending on the number of practices
and market modules that are purchased and the number and type of users at the
client company. Some users have interactive access to our research and analysts
and receive hard copies of our research reports while other users only have the
ability to read research reports by accessing our Web site. Each Strategic
Planning Services contract includes at least one practice and passes to our
conferences. Additional practices, market modules and conference passes can be
added at a graduated cost. Participation in our MindShare program is purchased
separately for an annual fee.
We have successfully expanded the number of clients for our Strategic
Planning Services, retained these clients when their contracts expire and
increased the level of sales to our clients. The number of SPS contracts has
increased from 145 on December 31, 1997, to 421 on December 31, 1998 and to 654
on June 30, 1999. In addition, 73% of the contracts that expired during the 12
months prior to June 30, 1999 were renewed. Approximately 95% of the contracts
that were renewed in the first six months of 1999 were for an equal or larger
dollar amount. Furthermore, the average size of our contracts with clients has
increased as well. Our average contract value was approximately $17,300 on
December 31, 1997, approximately $27,700 on December 31, 1998 and approximately
$33,850 on June 30, 1999. For our fifty largest clients, the average contract
value as of June 30, 1999 was $108,961.
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Practices
Our practices focus on broad issues, strategies and challenges facing all
companies engaged in Internet commerce. The following is a description of the
seven practices in our SPS program and a sampling of recent reports published by
each practice:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
PRACTICE RECENT REPORTS
- --------------------------------------------------------------------------------------------
<S> <C>
DIGITAL COMMERCE STRATEGIES: Generating - Determining the Value of Portal Tenancies
Consumer Transactions. Analyzes the - Auctions: From Bidding to Billing
business models of transaction-based sites - Minipayments: Implementing Transactions
and services, as well as their supporting for Small Purchases
technologies. Focusing on the impact that
interactivity will have on consumer
transactions, this practice provides
actionable advice concerning consumer
marketing, cost/revenue expectations and
competitive positioning.
- --------------------------------------------------------------------------------------------
CONSUMER CONTENT STRATEGIES: Programming - Online Distribution: Partnering with the
and Distributing Online Media. Analyzes AOL Behemoth
the integration of content, navigation, - Online Events: Exploiting Marquee Value
communications, community and utility for Audience Acquisition
features for maximum audience acquisition - Navigation: Creating an Intuitive
and retention. Analysts delve into Interface
programming and distribution strategies,
with a special focus on the transition of
traditional assets, e.g., text, audio,
video and commodity data, into the
interactive space.
- --------------------------------------------------------------------------------------------
ONLINE ADVERTISING STRATEGIES: Buying and - Emerging Ad Platforms: Anticipating the
Selling Interactive Media. Provides Next Generation of Advertising
analysis of both the business and practice - Mining the Clickstream for Competitive
of interactive advertising. Analysts Advantage
deliver insight and advice that help - Agency Relationships: Developing Cost-
advertisers maximize return on investment Effective Compensation
from their online efforts, publishers
generate ad revenues and technology
vendors and service providers best
position themselves to prospective
clients.
- --------------------------------------------------------------------------------------------
SITE OPERATION STRATEGIES: Managing the - Customer Support: Metrics for Cost and
New Media Enterprise. Analyzes the Performance
planning, development and management - Testing Tools and Methodologies for a
problems that plague all organizations Failure-Proof Site
running online businesses. The practice - Site Hosting: Evaluating Outsourcing
provides cost metrics, vendor evaluation Options
models, management strategies, best
practices and case studies. This research
is designed to help business managers
understand how technology and operations
affect the bottom line and solve the
problems that they face today.
- --------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
PRACTICE RECENT REPORTS
- --------------------------------------------------------------------------------------------
<S> <C>
WEB TECHNOLOGY STRATEGIES: Positioning for - The Net-Enabled PC: Evolving Features,
Advanced Digital Platforms. Examines Emerging Business Opportunities
consumer adoption of new technologies and - Browser Evolution: Developing Sites for
the advent of new development the Post-Browser-War World
architectures that directly impact the - Web Media: Serving Sizzle in the Bandwidth
consumer experience. Offering practical Drizzle
advice about where executives should focus
their investment dollars, this practice
features examples of how sites are
developing applications to leverage the
emergence of advanced technologies and
predicts which vendors stand to win the
standards and licensing wars.
- --------------------------------------------------------------------------------------------
BANDWIDTH & ACCESS STRATEGIES: Leveraging - Bandwidth: Consumer Access Implications of
Internet Communications Evolution. the Fight for Fiber
Analyzes the dynamics of the consumer - ISP Partnerships: Driving Value Through
market for enhanced, broadband Web-Based Services
communications, specifically as it is - Unified Messaging: Reducing Complexity to
impacted by the emergence of the Internet. Generate Mass-Market Demand
This practice also provides essential
advice for a range of online initiatives
affected by the evolving communications
landscape, as well as for traditional
telecommunications providers, vendors and
application developers.
- --------------------------------------------------------------------------------------------
EUROPEAN INTERNET STRATEGIES: Competing - Personalization: Confronting European
for Emerging Online Markets. Advises new Privacy Challenges
media players on responding to consumer - Digital Television: Preparing for the
interest in the Internet in Europe. Based Internet's Sister Medium
in London, our analysts provide - The Euro: Meeting the Challenges of a
perspectives on in-country and European Unified Currency
developments, from the implications of
set-top devices and emerging broadband
solutions to the potential for advertising
revenue and commerce transactions.
- --------------------------------------------------------------------------------------------
</TABLE>
We continually evaluate the market demand for additional practices and
expect to add one more practice by the end of 1999. We seek out and receive
input from our research analysts, the sales representatives that are in constant
contact with existing and potential clients and our marketing staff as to the
demand for specific research and our ability to provide coverage. We also
examine a variety of empirical data, including breadth of applicability,
uniqueness of the offering, competitive value and ease of communication.
The SPS program is designed to provide business executives with the most
up-to-date research and analysis. We provide written reports on a regular basis
as well as ongoing access to our research analysts in order to answer specific
questions or clarify information relating to the practice topic. Specifically,
clients in any of the seven practices receive the following:
- Monthly Analyst Reports. Each monthly report examines a different
industry, trend, product segment or business model relating to the
specific practice.
- Analyst Access. Clients have access to Jupiter's research analysts for
discussion, debate and additional advice. This service is available by
phone or e-mail.
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- Weekly Analyst Notes. Each week, clients receive a one-page briefing
that analyzes topical issues related to the practice.
- Digital Access. Clients have password-only access to current research
and a fully-searchable archive, which includes research, company profiles
and slides from analyst presentations. Digital access to our Web site
also includes a weekly "JupMail" e-mail that updates clients on recent
research and upcoming events.
- Monthly Teleconferences. Each month, the research analysts from each of
the practices conduct a "JupTel" telephone conference call that outlines
the key findings from a recent monthly analyst report.
- Conference Passes. Clients are entitled to a specified number of passes
to our conferences.
MARKET MODULES
In mid-1998, we began selling market modules which are designed to help
executives understand how the Internet is transforming the competitive landscape
and business practices in specific industries or geographic areas. As with our
practices, we provide subscribers with both written reports and access to our
research analysts for inquiries and insights. Specifically, subscribers to any
of the eleven market modules receive two semi-annual research reports, a
two-page monthly analyst note, access to our research analysts and digital
access to our Web site. The semi-annual research reports provide both an
overview of the key trends and business developments as well as comprehensive
reference materials, market forecasts, identification of key competitors and
information relating to strategic partnerships and acquisitions. The monthly
note highlights recent key trends or developments in the industry or country.
Our market modules provide us with an excellent opportunity to market our
research to new clients and industries, as well as the ability to market new
products to our existing clients. The following is a list of the eleven market
modules in our SPS program, eight of which relate to specific industries and
three of which relate to specific geographic areas:
<TABLE>
<CAPTION>
INDUSTRIES GEOGRAPHIC AREAS
---------- ----------------
<S> <C>
Consumer Goods France
Financial Services Germany
Health United Kingdom
Music
Shopping
Television
Travel
Classifieds
</TABLE>
As other industries and countries are affected by the growth of the
Internet, we anticipate expanding the number of our market modules which focus
on industries and geographic areas. Specifically, we expect to add four
additional geographic market modules by the end of 1999. As with our practices,
we examine on an ongoing basis the demand for new market modules.
MINDSHARE SENIOR EXECUTIVE PROGRAM
In February 1999, we launched our MindShare Senior Executive Program, which
is specifically targeted at chief executive officers and other senior executives
across all industries. This program combines forward-looking, broad strategic
advice with focused strategy sessions with our analysts. MindShare is designed
to enable these executives to better position and focus their companies,
prioritize business development opportunities, assess long-term competitive
threats and successfully integrate new technologies with Internet commerce.
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The cornerstone of our MindShare program is two half-day strategy sessions
with two research analysts per session at a location selected by the client. Our
MindShare clients also receive written reports that contain extensive
forward-looking research related to trends, changes and developments in the
Internet commerce marketplace. These quarterly reports are supplemented by
monthly briefings that focus on topical issues and major industry developments.
Furthermore, MindShare clients are invited to participate in our annual
executive forum, which is an invitation-only event targeted at a select group of
senior executive officers and technology leaders.
In addition to providing significant value for our clients, MindShare helps
us to establish strong relationships with top executives at client companies. We
expect MindShare to enable us to bolster retention rates for SPS and to
strengthen our relationships with clients. We expect that the number of
MindShare clients will increase as we continue to expand the marketing of this
program and as the value of the products and services becomes more widely known.
JUPITER CONFERENCES
We produce a wide range of conferences which provide comprehensive coverage
of issues relating to Internet commerce. These conferences offer senior
executives the opportunity to hear first-hand the insights of our analysts and
the leading decision makers in the Internet and technology industries. Our
events, which typically run for two to three days, provide an excellent
opportunity to showcase our research to current and potential clients, increase
the public profile of our research analysts, generate favorable press and
otherwise promote the Jupiter brand. Since over 75% of the attendees at our
conferences are not SPS clients, these events provide a unique opportunity to
promote our research products and services to potential customers. As a result,
our marketing staff and sales representatives attend each of our events and
conduct continuous promotional and direct sales efforts targeted at potential
clients. We believe that our events and the sales and marketing efforts at these
events have resulted in numerous SPS contracts.
Our conferences, located in the United States and in Europe, are notable
for the senior level of attendees from all sectors of the online and media
industries. We produced eight conferences in 1997 and nine conferences in 1998.
We have scheduled ten conferences for calendar year 1999, six of which are large
events and four of which are small events. Paid attendance at our large events
typically ranges from 800-1,200 participants, while paid attendance at our small
events typically ranges from 400-600 participants. We also solicit sponsors and
exhibitors for each of our events. Exhibitors receive a booth at the conference
to promote their companies and are also listed in the conference program.
Sponsors receive prominent display of their corporate logos in the conference
program and the main meeting hall of the conference, and may host a reception
during the conference. We typically have approximately 50-75 sponsors and
exhibitors at our large events and 25 sponsors and exhibitors at our small
events.
We have successfully increased attendance at our various conferences over
the past few years. For example, paid attendance at our seven conferences held
through August 1999 was 5,279, 95% above total paid attendance for all nine of
our conferences held in 1998. In addition, paid attendance at the six
conferences held so far in 1999 that were also held in 1998 has increased by
101%.
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The following is a list of the ten events scheduled for 1999, nine of which
are located in the United States and one of which will take place in London, and
the year the conference was first held:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CONFERENCE TOPIC
- -------------------------------------------------------------------------------- YEAR FIRST HELD
<S> <C> <C>
[Jupiter Consumer Online NYC Logo] Internet Strategies for Mainstream Media 1994
- --------------------------------------------------------------------------------
[Digital Kids Logo] Marketing to the Post-Modern Kid 1995
- --------------------------------------------------------------------------------
[Jupiter Consumer Online Europe
Logo] The European Internet Economy 1995
- --------------------------------------------------------------------------------
[Plug.In Logo] The Jupiter Music Forum 1996
- --------------------------------------------------------------------------------
[Jupiter Advertising Online] Online in the Media Mix 1996
- --------------------------------------------------------------------------------
[@ Travel Logo] Strategies for Destination-Based Commerce 1997
- --------------------------------------------------------------------------------
[Jupiter Shopping Logo] Reinventing Retail 1998
- --------------------------------------------------------------------------------
[Jupiter Financial Services Logo] Portals for Consumer Finance 1998
- --------------------------------------------------------------------------------
[Mindshare Logo] The Jupiter Executive Forum 1999
- --------------------------------------------------------------------------------
[Jupiter Entertainment Forum Logo] Hollywood and the Internet 1999
- --------------------------------------------------------------------------------
</TABLE>
As Internet commerce continues to grow, we anticipate that we will expand
the number of events that we produce as well as attract higher attendance at our
conferences. We also expect to devote more resources to promoting events outside
the United States or events with more of an international focus. Specifically,
in addition to the ten conferences described above, we plan to produce four
additional events during calendar year 2000, including conferences on health
care, European shopping and Latin America.
PUBLISHING AND CUSTOM RESEARCH
We also provide other research products and services to clients, including
book-length research reports and customized research.
We annually publish approximately fifteen book-length research studies that
are available for purchase through direct mail or on our Web site. Sales of
these studies are an important way to expose new companies and executives to our
research.
We also perform customized, client-focused research projects relating to
Internet commerce on a limited basis. These projects allow our clients to take
advantage of the knowledge and experience of our research analysts and to
develop structured, detailed responses to specific issues relevant to their
business. Custom studies often form the basis to explore a new practice or
market module and, like our book-length studies, are an effective way to expose
new companies and executives to our research products and services.
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<PAGE> 41
CLIENTS
Our client base has rapidly expanded since we launched SPS. In addition,
our client base has diversified from primarily technology and media companies to
include large and small companies in the Internet, media, telecommunications,
technology, financial services, consumer products, retail, travel and
professional services industries. Many of our clients have limited experience
with Internet commerce or operating an online business. The users of our
research products and services at our client companies hold diverse positions,
demonstrating the importance of Internet commerce to a company's overall
strategy and development. In addition to chief executive officers and
presidents, our users include marketing, business development, operations,
strategic planning and information technology executives.
As of June 30, 1999, our clients included 78 of the Fortune 1000 companies,
22 of the AdWeek Top 100 Megabrands, 10 of the Fortune 50 commercial banks and
29 of Media Metrix's top 50 Web properties. Approximately 88% of these customers
are headquartered in the United States and the remainder are located primarily
in Europe. We expect that our client base will continue to expand as we
introduce new practices and market modules and increase our sales and marketing
initiatives. We also believe there is significant opportunity to increase our
penetration of large corporate clients. In addition, we expect the number of our
international clients to increase significantly as the use of the Internet grows
in other parts of the world and as we introduce additional products and services
targeted to international markets.
To date, none of our clients have accounted for more than 2% of the total
annual revenues generated from SPS.
As of June 30, 1999, we had 654 contracts for our Strategic Planning
Services. The following is a representative list of our larger clients:
<TABLE>
<CAPTION>
PROFESSIONAL
CONSUMER BRANDS FINANCIAL SERVICES INTERNET MEDIA SERVICES
--------------- ------------------ -------- ----- ------------
<S> <C> <C> <C> <C>
Cross Pen Hartford Financial America Online BBC Agency.com
Encyclopedia Brittanica Services Inktomi Cablevision DoubleClick
Heineken J.P. Morgan MP3.com International Olympic iXL Enterprises
Johnson & Johnson Putnam Investments Sportsline USA Committee Rare Medium
Vitamin Shoppe Soundview Technology Virtual Communities Landmark Strategic Interactive
Visa Communications Group
Time Warner
</TABLE>
<TABLE>
<CAPTION>
RETAIL TECHNOLOGY TELECOM TRAVEL
------ ---------- ------- ------
<S> <C> <C> <C>
Amway Compaq AT&T American Airlines
Cybershop Dell British Continental Airlines
800.com Gateway Telecom Pacific Access
Boo.com IBM France Telecom Starwood Hotels
Value America Intel MediaOne Swiss Air
Sprint
</TABLE>
RESEARCH METHODOLOGY
Our research methodology enables us to deliver compelling, data-driven and
timely analysis across all seven practices and eleven market modules. Our
research products and services are generated by a growing team of research
professionals, including research analysts, an independent data research group
and a dedicated staff to handle client inquiries. These research professionals
are supported by in-house primary research tools and proprietary databases. In
addition, we have implemented a rigorous editorial and review process to ensure
that every report is accurate, well-written and useful to our clients.
As of June 30, 1999, we employed a total of 74 research professionals,
including 38 analysts. The knowledge and experience of our research
professionals, particularly our analysts, are the crucial elements in our
ability to provide high-quality, timely and original research. Our analysts have
extensive industry
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experience and varied backgrounds. We recruit them from a number of different
industries, including management consulting and research firms, financial
services, publishing, entertainment and advertising. We believe that the diverse
backgrounds and experiences of our analysts allow us to provide original and
prescriptive research and analysis which frequently challenges the conventional
wisdom and viewpoints promoted by others. We expect to significantly expand the
number of our research analysts as we grow the business and increase the number
of practices and market modules.
The reports published by our analysts are supplemented with primary
research, data gathering, interviews and surveys of high-level industry
executives. To assist our analysts and their research activities, we have a
dedicated data research group that conducts discrete research and survey
projects, develops and maintains a series of econometric forecast models and
works with the analysts to provide a statistical foundation for their findings.
Our analysts and our data research group have access to significant
proprietary data, including the following:
- HOUSEHOLD SURVEYS. Twice a year, we field a broad benchmarking survey of
a large representative sample of United States households, including
those that are not yet online. Data from these consumer surveys are
incorporated into the body of our proprietary research products.
- ONLINE USER SURVEYS. Each month, we conduct focused, in-depth surveys of
thousands of online consumers. As with the household surveys described
above, the data from these surveys are incorporated into the body of our
proprietary research products.
- MARKET FORECASTS. Our analysts forecast the future of various online
markets to help guide clients' strategies and investments. Complementing
our qualitative predictions, these forecasts measure the expected growth
of many industry indicators and market sectors.
- EXECUTIVE SURVEYS. We conduct phone and written surveys with top
industry executives to understand their strategies, attitudes and
intentions. These data provide our research analysts with systematic and
comprehensive insight into those leaders whose actions shape the online
marketplace.
We design the large-scale household and online user surveys described above
which are conducted through our arrangement with NFO Worldwide, one of the
largest worldwide research organizations. In exchange for these surveys, we pay
NFO Worldwide a fee and provide complementary sponsorships, exhibit booths and
speaking opportunities at many of our conferences. While NFO maintains the
panels, all of the questions and surveys that we prepare and provide NFO, as
well as all of the findings and results from these survey panels, remain our
proprietary data.
All of our research products are subject to a stringent editorial and
review process to ensure the highest quality. We maintain consistency among the
formats of our research reports across the practices and market modules so as to
ensure clarity and readability by all of our clients. Each research topic is
first subject to a series of discussions and meetings to define the scope of the
topic, assess the relevance and importance of the research and highlight key
themes and questions. Prior to publication, each research report is subject to
ongoing review and comment from other analysts and research management.
SALES AND MARKETING
We sell and market our research products and services primarily through our
direct sales force, which was comprised of 40 sales representatives as of June
30, 1999. This represents an increase from four sales representatives at the end
of 1997 and 21 sales representatives at the end of 1998. As with our research
analysts, our sales representatives have diverse backgrounds and experience in a
number of different industries. In addition, we have been very successful at
retaining our sales representatives. Of the 36 sales representatives hired
between January 1, 1998 and June 30, 1999, 35 are still employed with us.
Our sales representatives currently consist of strategic account managers,
who are each responsible for 20 to 30 multinational companies, and geographic
account managers, who are each responsible for specific
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<PAGE> 43
territories. Our strategic account managers are focused on selling a broad array
of products and services across a global enterprise. Unlike many of our direct
and indirect competitors, we try, to the extent possible, to locate our sales
representatives in the geographic territories that they cover. Specifically, as
of June 30, 1999, 34 of our 40 sales representatives were located in the
territories that they cover. We believe that this allows us to develop stronger
relationships with our current and potential clients and to better understand
the changing needs of our clients. We have implemented a training program for
all of our new sales representatives and believe that this program has been
effective in enabling our sales representatives to quickly and effectively
solicit new clients. Sales representatives receive a base salary and are
eligible for commissions based on new business and renewals.
We expect to significantly increase the number of our sales representatives
as we grow the business and increase our international operations. In addition
to our sales representatives, we use independent sales distributors to sell our
products and services in Australia and Israel. We are currently exploring
similar distribution arrangements in other countries and may enter into
additional agreements of this nature in the future.
We have developed a number of strategies and programs to build awareness of
the Jupiter name and to position the company as the definitive research resource
for Internet commerce. We employ an active press relations team, which responds
to hundreds of press inquiries on a weekly basis, and an in-house
promotions/advertising staff, which is responsible for developing sales
literature and direct mail campaigns and managing our advertising efforts. Our
analysts are frequently quoted in articles on the Internet and e-commerce that
appear in major newspapers, magazines and industry periodicals. In addition, we
actively encourage our research analysts to speak at non-Jupiter industry and
corporate events in order to enhance our reputation and promote our diverse
products. For example, in the first six months of 1999, our research analysts
appeared at approximately 80 non-Jupiter events, conferences and forums around
the world, and we intend to increase this activity in the future. We estimate
that our analysts addressed approximately 36,000 people at these functions. We
also host numerous breakfast forums around the world which are targeted at
potential customers and designed to enhance our visibility and reputation.
During the first six months of 1999, we hosted a total of 38 forums which
collectively had over 2,300 guests. We also devote significant resources to
promoting our numerous research products and services to the thousands of
individuals attending our conferences. Lastly, we use our Web site as a tool to
market the Jupiter name and expose potential customers to our products.
COMPETITION
We believe that the primary competitive factors determining success in our
markets include the quality and timeliness of our research and analysis, our
ability to offer products and services that meet the changing needs of our
customers, the prices we charge for our various research products and general
economic conditions. We believe that we compete favorably with respect to each
of these factors. In addition, we believe that we distinguish ourselves from our
competitors as a result of the depth and breadth of our Strategic Planning
Services, the extent to which we provide access to our research analysts, the
quality of our research analysts and sales representatives and the primary
research tools and proprietary databases that we have developed internally.
Our principal current competitor is Forrester Research. Recently Gartner
Group announced its intention to compete directly in providing research products
related to Internet commerce. A number of other companies compete with us in
providing research and analysis related to a specific industry or geographic
area. In addition, our competitors include information technology research
firms, business consulting and accounting firms, electronic and print publishing
companies and equity analysts employed by financial services companies.
We expect competition to increase because of the business opportunities
presented by the growth of Internet commerce around the world. Competition may
also intensify as a result of industry consolidation, because the markets in
which we operate face few substantial barriers to entry or because some of our
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<PAGE> 44
competitors may provide additional or complementary services, such as consulting
services. Our current and potential competitors include many companies that have
substantially greater financial, information gathering and marketing resources
than we have. This may allow them to devote greater resources than we can to the
promotion of their brand and to the development and sale of their products and
services. We cannot assure you that we will be able to compete successfully
against current and future competitors.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
To protect our rights to our intellectual property, we rely on a
combination of trademark and copyright law, trade secret protections and
confidentiality agreements and other contractual arrangements with our employees
and third parties. We have registered the Jupiter, Jupiter Communications and
Internet Business Report marks in the United States, and we have pending
trademark applications for certain other trademarks in the United States,
including SPS. We also have pending trademark applications for the Jupiter and
Jupiter Communications marks in various foreign jurisdictions. We provide our
proprietary research products to hundreds of different companies throughout the
world, including some companies that compete with us in some manner. As a
result, the protective steps we have taken may be inadequate to protect our
intellectual property and to deter misappropriation of the original research and
analysis that we develop. We also may be unable to detect the unauthorized use
of, or take appropriate steps to enforce, our intellectual property rights.
Moreover, effective trademark, copyright and trade secret protection may not be
available in every country in which we offer our research products and services
to the extent available in the United States.
Our failure to adequately protect our intellectual property, either in the
United States or abroad, could harm the Jupiter brand or our trademarks, devalue
our proprietary research and analysis and affect our ability to compete
effectively. Defending our intellectual property rights could result in the
expenditure of significant financial and managerial resources, which could harm
our financial results.
Furthermore, although we believe that our proprietary rights do not
infringe on the intellectual property rights of others, other parties may assert
claims against us that we have misappropriated a trade secret or infringed a
patent, copyright, trademark or other proprietary right belonging to them. Any
infringement or related claims, even if not meritorious, could be costly and
time consuming to litigate, may distract management from other tasks of
operating the business and may result in the loss of significant rights and the
loss of our ability to operate our business.
EMPLOYEES
As of June 30, 1999, we had 194 full-time employees, including 40 sales
representatives and 74 research staff, of which 38 were analysts. Our
compensation policy promotes employee ownership, and we believe that this policy
contributes to the high retention rates of our research analysts and sales
representatives. Specifically, as of June 30, 1999, approximately 93% of our
employees, including all of our research analysts and sales representatives,
owned options to purchase our securities.
All of our research analysts and sales representatives, as well as all of
our executive officers, have entered into agreements that prohibit them from
being employed by a competitive company for a period of one year following their
termination of employment with us. None of our employees are represented under
collective bargaining agreements. We believe that our relations with our
employees are good.
FACILITIES
Our headquarters are located in a leased facility in New York, New York,
consisting of approximately 27,700 square feet of office space. We also lease
office space in London, England. We are in negotiations to lease additional
office space in New York, New York and in San Francisco, California.
LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
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<PAGE> 45
MANAGEMENT
OUR EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The executive officers, directors and key employees of Jupiter, and their
ages and positions, are:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS:
Gene DeRose............................... 36 Chairman of the Board of Directors and
Chief Executive Officer
Kurt Abrahamson........................... 38 President, Chief Operating Officer and
Director
Jean Robinson............................. 43 Chief Financial Officer
Peter Storck.............................. 39 Senior Vice President, Research
Ken Male.................................. 34 Vice President, Global Sales
Phil Whitney.............................. 35 Vice President, Marketing
Joy Cerequas.............................. 34 Vice President, Conferences
Robert Kavner............................. 56 Director
KEY EMPLOYEES:
Ross Rubin................................ 31 Vice President and Senior Analyst
Adam Schoenfeld........................... 35 Vice President and Senior Analyst
Nicole Vanderbilt......................... 26 Vice President and Senior Analyst
Tim DeBaun................................ 43 Chief Information Officer
Phil Dwyer................................ 43 Managing Director, Europe
Jack Foreman.............................. 34 Vice President, Strategic Development
</TABLE>
GENE DEROSE has served as Chief Executive Officer of Jupiter since November
1996 and served as President of Jupiter from its inception to November 1996. He
has served as Chairman of the Board of Directors of Jupiter Communications, Inc.
since its formation in July 1999. Throughout 1994, prior to the formation of
Jupiter, Mr. DeRose was the President of the sole proprietorship which pre-dated
the formation of Jupiter. Mr. DeRose is a board member of MOUSE, a nonprofit
organization that provides volunteer technical manpower to New York City's
public schools, and also serves on the Advisory Board of the Markle Foundation's
E-mail For All campaign, an initiative that encourages the use of new
communications technologies for socially beneficial purposes. Mr. DeRose
received his B.A. from the University of Virginia. Mr. DeRose is the son-in-law
of Robert Kavner.
KURT ABRAHAMSON has served as President and Chief Operating Officer of
Jupiter since its inception. He has served as a Director of Jupiter
Communications, Inc. since its formation in July 1999. Between October 1989 and
his joining Jupiter in 1994, Mr. Abrahamson served as Principal Analyst for the
Harvey M. Rose Corporation, a management consulting firm. Mr. Abrahamson
received a B.A. from Cornell University and an M.A. from the John F. Kennedy
School of Government at Harvard University.
JEAN ROBINSON has served as Chief Financial Officer of Jupiter since March
1999. From January 1983 to January 1999, Ms. Robinson held various corporate
finance positions at J.P. Morgan & Co. Incorporated, including Vice President,
Equity Capital Markets from June 1993 to January 1999. Ms. Robinson received her
B.A. from Smith College and an M.B.A. from Columbia University.
PETER STORCK has served as Senior Vice President, Research of Jupiter since
November 1998. From June 1998 to November 1998, Mr. Storck served as Vice
President, Research of Jupiter. From July 1996 to June 1998, he served as
Jupiter's Director, Online Advertising Strategies. From July 1995 to July 1996,
Mr. Storck served as a consultant to Jupiter. From January 1989 to July 1995,
Mr. Storck was simultaneously a novelist, a writing instructor at Columbia
University and a compensation specialist at Guy
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<PAGE> 46
Carpenter & Co., Inc., a reinsurance intermediary. Prior to that, he served as a
political advisor to various campaigns and officials. Mr. Storck received his
B.S. from Cornell University and an M.F.A. from Columbia University.
KEN MALE has served as Vice President, Global Sales of Jupiter since
January 1998. From December 1995 to January 1998, he served as an Account
Manager for Giga Information Group, Inc., an information technology research
firm, and developed that company's equities research product. From June 1995 to
December 1995, Mr. Male was involved in the formation and launch of Giga
Information Group, Inc. Prior to June 1995, Mr. Male was a private consultant
and held various account manager positions at Gartner Group, Inc., Digital
Equipment Corporation and EMC Corporation. Mr. Male received his B.S. from
Boston College.
PHIL WHITNEY has served as Vice President, Marketing of Jupiter since
December 1998. From April 1997 to December 1998 he served as Vice President,
Consumer Marketing at Money Magazine, a division of Time, Inc. From May 1992 to
April 1997, Mr. Whitney held various marketing positions at Money Magazine.
Prior to 1992, he held a number of circulation and consulting positions at
Audubon Magazine and Robert Cohen Associates, a publishing management and
consulting firm. Mr. Whitney received his B.A. from Tufts University.
JOY CEREQUAS has served as Vice President, Conferences of Jupiter since
August 1998. From May 1994 to August 1998, she served as Group Show Director for
SIGS Publications, Inc., a producer of magazines, books and conferences. Prior
to working at SIGS Publications, Inc., Ms. Cerequas managed conferences and
events for the International Trademark Association and Citicorp Investment Bank.
Ms. Cerequas received B.S. degrees from both the S.I. Newhouse School of Public
Communications and the School of Management of Syracuse University.
ROBERT KAVNER has served as a director of Jupiter Communications, Inc.
since its formation in July 1999. Since December 1998, Mr. Kavner has served as
a General Partner of idealab!, an incubator for starting and growing Internet
businesses. From September 1996 to December 1998, he was President and Chief
Executive Officer of On Command Corporation, a supplier of entertainment and
information services to the lodging industry. From June 1994 to September 1996,
he was an independent venture capitalist. From May 1984 to June 1994, he held a
number of senior level positions at AT&T Corporation, including CEO of the
Multimedia Products and Services Group and President of the Data Systems
Division. Prior to his work at AT&T, Mr. Kavner was a Partner at Coopers &
Lybrand, L.L.P. and was Co-Chairman of the firm's information industry practice.
Mr. Kavner serves on the Board of Directors of Fleet Financial Group, Inc.,
Earthlink Network, Inc., Ticketmaster Online Citysearch, Inc. and GoTo.Com, Inc.
He received his B.S. from Adelphi University and attended the Advanced
Management Program at Dartmouth University. Mr. Kavner is the father-in-law of
Mr. DeRose.
ROSS RUBIN has served as Vice President and Senior Analyst of Jupiter since
April 1999. From November 1998 to April 1999, Mr. Rubin served as Senior
Research Officer of Jupiter. From January 1998 to November 1998, he served as
Jupiter's Group Director, Telecom and Technology, and from August 1996 to
January 1998, he served as Jupiter's Group Director, Consumer Internet
Technologies. From May 1996 to August 1996, Mr. Rubin was a Senior Analyst for
Jupiter. From March 1994 to May 1996, Mr. Rubin served as a Technology Analyst
for Salomon Brothers. From September 1991 to March 1994, he served as an Analyst
for McKinsey & Company. Mr. Rubin received his B.S. from Cornell University.
ADAM SCHOENFELD has served as Vice President and Senior Analyst of Jupiter
since February 1995. From Jupiter's inception to February 1995, Mr. Schoenfeld
served as a news director for Jupiter. From March 1992 to June 1994, he worked
as a journalist for the Associated Press. Mr. Schoenfeld attended Cornell
University.
NICOLE VANDERBILT has served as Vice President and Senior Analyst of
Jupiter since January 1999. From October 1996 to January 1999, she served as an
analyst for Jupiter and later the Practice Director of Jupiter's Digital
Commerce Strategies practice. From July 1995 to October 1996, she was an
information
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<PAGE> 47
technology consultant at Deloitte & Touche, L.L.P. Ms. Vanderbilt received her
B.S. from Princeton University.
TIM DEBAUN has served as Chief Information Officer of Jupiter since January
1999. From October 1993 to January 1999, Mr. DeBaun served as Vice President,
Head of Global Telecommunications for D. E. Shaw & Co., L.P., a securities and
investment firm. Mr. DeBaun received his B.A. from Marist College and did
graduate work at both the School of Computer Science of Rutgers University and
the School of Engineering of Columbia University.
PHIL DWYER has served as Jupiter's Managing Director, European Internet
Strategies since February 1998. From January 1994 to February 1998, he was a
Publisher at Centaur Publications where he helped launch several publications,
including New Media Age. Mr. Dwyer received his B.A. from London University and
an M.A. from Brunel University.
JACK FOREMAN has served as Vice President, Strategic Development of Jupiter
since February 1998. From June 1992 to February 1998, Mr. Foreman held a number
of positions at Gartner Group, Inc., including Financial Director, Vice
President of Business Operations, Interactive Systems and Vice President of
Business Products. Previously, he was a Senior Accountant at Price Waterhouse.
Mr. Foreman received his B.S. from The Wharton School at the University of
Pennsylvania and an M.B.A. from the University of Michigan.
COMPOSITION OF THE BOARD
Upon the completion of this offering, we intend to file an amended and
restated certificate of incorporation pursuant to which our board of directors
will be divided into three classes, each of whose members will serve for a
staggered three-year term. Upon the expiration of the term of a class of
directors, directors in that class will be elected for three-year terms at the
annual meeting of stockholders in the year in which their term expires. Our
board of directors has resolved that will be a Class I Director
whose term expires at the 2000 annual meeting of stockholders,
will be a Class II Director whose term expires at the 2001 annual meeting of
stockholders and and will be Class III Directors
whose terms expire at the 2002 annual meeting of stockholders. With respect to
each class, a director's term will be subject to the election and
disqualification of their successors, or their earlier death, resignation or
removal.
BOARD COMMITTEES
The Audit Committee of the board of directors will be established prior to
the closing of this offering and will review, act on and report to the board of
directors with respect to various auditing and accounting matters, including the
recommendation of Jupiter's auditors, the scope of the annual audits, fees to be
paid to the auditors, the performance of Jupiter's independent auditors and the
accounting practices of Jupiter.
The Compensation Committee of the board of directors will be established
prior to the closing of this offering and will recommend, review and oversee the
salaries, benefits and stock option plans for Jupiter's employees, consultants,
directors and other individuals compensated by Jupiter. The Compensation
Committee will also administer Jupiter's compensation plans.
DIRECTOR COMPENSATION
Other than reimbursing directors for customary and reasonable expenses of
attending board of directors or committee meetings, Jupiter does not currently
compensate its directors. Under our 1999 Stock Incentive Plan, each individual
who first joins the Jupiter board after the effective date of this offering as a
non-employee board member will automatically receive a grant of an option on
that date to purchase shares of common stock at the time of his or her
commencement of board service. In addition, on the date of each annual
stockholders' meeting beginning in 2000, each non-employee member of the board
of directors who is to continue to serve as a non-employee board member will
automatically be granted an option to purchase shares of common stock.
Please see "--1999 Stock Incentive Plan."
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<PAGE> 48
EMPLOYMENT AGREEMENTS
We have entered into an employment agreement with Gene DeRose, dated
October 22, 1997. The initial term of this agreement expires on December 31,
1999, although Mr. DeRose has the option to renew the agreement for two
successive one-year terms. The agreement provides for Mr. DeRose to receive an
initial base salary of $165,000 and a bonus of $30,000 for the year ended
December 31, 1997. For each year thereafter, Mr. DeRose's salary is to be
increased within a specific range based on negotiations between Jupiter and Mr.
DeRose. For each calendar year after 1997, Mr. DeRose's annual bonus is based on
Jupiter's attainment of specified revenue targets. If Mr. DeRose's employment
agreement is terminated by us for any reason other than for cause or if he
voluntarily resigns under various circumstances, he is entitled to receive 50%
of the salary and bonus payments that would have been paid to him under his
employment agreement had he continued working for us for a period of eighteen
months following the date of termination.
We have entered into an employment agreement with Kurt Abrahamson, dated
October 22, 1997. The initial term of this agreement expires on December 31,
1999, although Mr. Abrahamson has the option to renew the agreement for two
successive one-year terms. The agreement provides for Mr. Abrahamson to receive
an initial base salary of $155,000 and a bonus of $30,000 for the year ended
December 31, 1997. For each year thereafter, Mr. Abrahamson's salary is to be
increased within a specific range based on negotiations between Jupiter and Mr.
Abrahamson. For each calendar year after 1997, Mr. Abrahamson's annual bonus is
based on Jupiter's attainment of specific revenue targets. If Mr. Abrahamson's
employment agreement is terminated by us for any reason other than for cause or
if he voluntarily resigns under various circumstances, he is entitled to 50% of
the salary and bonus payments that would have been paid to him under his
employment agreement had he continued working for us for a period of eighteen
months following the date of termination.
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned for all services
rendered to us in all capacities during 1998 by our Chief Executive Officer and
the other three most highly compensated executive officers, other than our Chief
Executive Officer, who earned more than $100,000 in 1998 and who were serving as
executive officers at the end of 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION AWARDS
------------------ SHARES UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS (#)
<S> <C> <C> <C>
Gene DeRose............................................. $165,000 $50,000 --
Chief Executive Officer
Kurt Abrahamson......................................... $155,000 $50,000 --
President and Chief Operating Officer
Peter Storck............................................ $116,750 $37,000 13,500
Senior Vice President, Research
Ken Male................................................ $105,000 $96,000 100,000
Vice President, Global Sales
</TABLE>
- ------------------------------
(1) The column for "Other Annual Compensation" has been omitted because there is
no compensation required to be reported in that column. The aggregate amount
of perquisites and other personal benefits provided to each executive
officer listed above is less than the lesser of $50,000 and 10% of his total
annual salary and bonus.
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<PAGE> 49
OPTION GRANTS IN LAST YEAR
The following table sets forth information concerning individual grants of
options made during 1998 to each of our executive officers named in the Summary
Compensation Table. In the year ended December 31, 1998, Jupiter Communications,
LLC granted options to purchase 563,000 units, which will convert into options
to purchase 563,000 shares of common stock following the merger with Jupiter
Communications, Inc. We have never granted any stock appreciation rights.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE VALUE
------------------------------------------------ AT ASSUMED ANNUAL RATES
% OF TOTAL OF STOCK PRICE APPRECIATION
NUMBER OF OPTIONS FOR OPTION TERM(2)
SHARES GRANTED TO ---------------------------
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE PER EXPIRATION
NAME GRANTED YEAR SHARE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Gene DeRose...................... -- -- -- -- -- --
Kurt Abrahamson.................. -- -- -- -- -- --
Peter Storck..................... 13,500 2.4% $1.75 06/01/05 $ 9,618 $ 22,413
Ken Male......................... 100,000 17.8 1.75 04/14/05 71,243 166,025
</TABLE>
- ------------------------------
(1) Each option represents the right to purchase one share of common stock. The
options shown in these columns, which were originally granted pursuant to
Jupiter Communications, LLC's 1997 Option Plan, vest at a rate of 25% after
one year from the date of grant and 6.25% each quarter thereafter.
(2) 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 rules of the Securities and Exchange Commission and do not represent our
estimate or projection of our future common stock prices. These amounts
represent certain assumed rates of appreciation in the value of our common
stock from the fair market value on the date of grant. Actual gains, if any,
on stock option exercise depend on the future performance of the common
stock. The amounts reflected in the table may not necessarily be achieved.
AGGREGATED OPTION EXERCISES IN THE YEAR ENDED DECEMBER 31, 1998 AND YEAR-END
OPTION VALUES
The following table sets forth information concerning the number and value
of unexercised options held by each of our executive officers named in the
Summary Compensation Table at December 31, 1998. None of these executive
officers exercised options during the year ended December 31, 1998. This table
assumes the conversion of Jupiter Communications, LLC to a corporate form of
organization as of December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS
1998 AT DECEMBER 31, 1998(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Gene DeRose...................................... -- -- -- --
Kurt Abrahamson.................................. 166,992 -- $375,976 --
Peter Storck..................................... 22,742 32,258 56,855 $ 63,770
Ken Male......................................... -- 100,000 -- 125,000
</TABLE>
- ------------------------------
(1) There was no public trading market for our common stock as of December 31,
1998. Accordingly, the values of the unexercised in-the-money options have
been calculated on the basis of the fair market value at December 31, 1998
of $3.00 per share, less the applicable exercise price, multiplied by the
number of shares acquired on exercise.
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<PAGE> 50
1997 OPTION PLAN
Jupiter Communications, LLC adopted the 1997 Option Plan in June 1997. A
total of 2,750,000 units have been reserved for issuance under this plan. As of
August 31, 1999, options to purchase a total of 2,523,731 units were outstanding
under the 1997 Option Plan. Upon the merger of Jupiter Communications, LLC with
and into Jupiter Communications, Inc., the plan and each outstanding option will
be assumed by Jupiter Communications, Inc. and no further options will be
granted under this plan.
Each option has a maximum term of seven years. The exercise price of each
option must be paid in cash. In the event of an acquisition of Jupiter, each
option may, at our discretion, be accelerated or assumed by the successor
corporation.
1999 STOCK INCENTIVE PLAN
The 1999 Stock Incentive Plan will be adopted by the board of directors and
approved by our stockholders prior to the date of this offering. The 1999 Stock
Incentive Plan will be administered by our compensation committee.
5,000,000 shares of common stock have been authorized for issuance under
the 1999 Stock Incentive Plan. However, in no event may one participant in the
1999 Stock Incentive Plan receive option grants or direct stock issuances for
more than shares in the aggregate per calendar year.
The 1999 Stock Incentive Plan will be divided into five separate programs:
- the discretionary option grant program under which eligible individuals
in the employ of Jupiter may be granted options to purchase shares of
common stock at an exercise price determined by the plan administrator;
- the stock issuance program under which eligible individuals may be issued
shares of common stock directly, through the purchase of these shares at
a price determined by the plan administrator or as a bonus tied to the
performance of services;
- the salary investment option grant program which may, at the plan
administrator's discretion, be activated for one or more calendar years
and, if so activated, will allow executive officers and other highly
compensated employees the opportunity to use a portion of their base
salary to acquire special below market stock option grants;
- the automatic option grant program under which option grants will
automatically be made at periodic intervals to eligible non-employee
board members to purchase shares of common stock at an exercise price
equal to 100% of the fair market value of those shares on the grant date;
and
- the director fee option grant program under which non-employee board
members may be given the opportunity to use a portion of any retainer fee
otherwise payable to them in cash for the year to acquire special below
market stock option grants.
The 1999 Stock Incentive Plan will include the following features:
- The exercise price for any options granted under the plan may be paid in
cash or in shares of our common stock valued at fair market value on the
exercise date. The option may also be exercised through a same-day sale
program without any cash outlay by the optionee.
- The compensation committee will have the authority to cancel outstanding
options under the discretionary option grant program in return for the
grant of new options for the same or different number of option shares
with an exercise price per share based upon the fair market value of
common stock on the new grant date.
- Stock appreciation rights may be issued under the discretionary option
grant program. Such rights will provide the holders with the election to
surrender their outstanding options for an appreciation distribution from
Jupiter equal to the fair market value of the vested shares of common
stock
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<PAGE> 51
subject to the surrendered option less the exercise price payable for
those shares. Jupiter may make the payment in cash or in shares of common
stock.
The 1999 Stock Incentive Plan will include change in control provisions
that may result in the accelerated vesting of outstanding option grants and
stock issuances:
- In the event that Jupiter is acquired by merger or asset sale or a
board-approved sale of more than 50% of Jupiter stock by its
stockholders, each outstanding option under the discretionary option
grant program that is not assumed or continued by the successor
corporation will immediately become exercisable for all the option
shares, and all unvested shares will immediately vest, except to the
extent our repurchase rights with respect to those shares are to be
assigned to the successor corporation.
- The plan administrator may grant options which vest immediately upon an
acquisition of Jupiter or upon a hostile change of control or upon the
individual's termination of service following an acquisition that results
in a change in control.
The board will be able to amend or modify the 1999 Stock Incentive Plan at
any time, subject to any required stockholder approval. The 1999 Stock Incentive
Plan will terminate no later than October , 2009.
1999 EMPLOYEE STOCK PURCHASE PLAN
The 1999 Employee Stock Purchase Plan will be adopted by the board of
directors and approved by the stockholders prior to the date of this offering.
The plan will become effective immediately upon the execution of the
underwriting agreement for this offering. The plan is designed to allow eligible
employees of Jupiter and its participating subsidiaries to purchase shares of
our common stock, at semi-annual intervals, through their periodic payroll
deductions. A total of 500,000 shares of common stock may be issued under the
plan.
The plan will have a series of successive offering periods, each with a
maximum duration of 24 months. However, the initial offering period will begin
on the day the underwriting agreement is executed in connection with this
offering and will end on the last business day in October 2001. The next
offering period will begin on the first business day in November 2001, and
subsequent offering periods will be set by our compensation committee.
A participant may contribute up to 15% of his or her cash earnings through
payroll deductions and the accumulated payroll deductions will be applied to the
purchase of shares on the participant's behalf on each semi-annual purchase date
(the last business day in April and October of each year). The purchase price
per share will be 85% of the lower of the fair market value of our common stock
on the participant's entry date into the offering period or the fair market
value on the semi-annual purchase date. The first purchase date will occur on
the last business day in April 2000. In no event, however, may any participant
purchase more than shares, nor may all participants in the aggregate
purchase more than shares on any one semi-annual purchase date.
Should the fair market value of the common stock on any semi-annual purchase
date be less than the fair market value on the first day of the offering period,
then the current offering period will automatically end and a new offering
period will begin, based on the lower fair market value.
The board will be able to amend or modify the plan at any time. The plan
will terminate no later than the last business day in October 2009.
50
<PAGE> 52
TRANSACTIONS WITH DIRECTORS AND PRINCIPAL STOCKHOLDERS
INVESTMENT BY GARTNER GROUP
In October 1997, Gartner Group purchased 1,318,359 units from Jupiter
Communications, LLC for a total of $3.0 million. In connection with this
investment, Gartner Group was granted various rights, including, among others,
piggyback registration rights and the ability to appoint two of the five
representatives on the board of members. In addition, Gartner Group was granted
the right to approve a number of corporate actions taken by Jupiter
Communications, LLC. Gartner Group has also purchased 2,710,144 units from other
members of Jupiter Communications, LLC in a series of transactions.
Upon the closing of this offering, all of the units owned by Gartner Group
will be exchanged for shares of common stock of Jupiter Communications, Inc. In
addition, except for piggyback registration rights and limited indemnification
rights, all of the specific rights granted to Gartner Group in connection with
its investment in the company will terminate upon the closing of this offering.
Furthermore, for a period of one year following the closing of this offering,
Gartner Group and its affiliates may not acquire, directly or indirectly, any
additional common stock, if the acquisition would cause Gartner Group and its
affiliates to own more than 32% of our common stock.
RELATIONSHIP WITH FLEET FINANCIAL GROUP, INC.
Robert Kavner, one of our directors, is also a director of Fleet Financial
Group, Inc. Two affiliates of Fleet Financial Group, Inc. have SPS contracts
with us.
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<PAGE> 53
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of the common stock as of August 31, 1999, and as adjusted to reflect
the sale of the shares of common stock offered hereby, by each person or group
of affiliated persons who is known by us to beneficially own 5% or more of our
common stock, each director, each executive officer named in the Summary
Compensation Table and all our directors and executive officers as a group. As
of August 31, 1999, there were 11,035,335 shares of common stock outstanding and
held of record by 26 stockholders, assuming the merger of Jupiter
Communications, LLC with and into Jupiter Communications, Inc. Unless otherwise
indicated, the address of each beneficial owner listed below is c/o Jupiter
Communications, Inc., 627 Broadway, New York, New York 10012.
The following table gives effect to the shares of common stock issuable
within 60 days of August 31, 1999 upon the exercise of all options and other
rights beneficially owned by the indicated stockholders on that date. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and includes voting and investment power with respect to
shares. Unless otherwise indicated, the persons named in the table have sole
voting and sole investment control with respect to all shares beneficially
owned.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED
NUMBER OF SHARES --------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER OWNED OFFERING OFFERING
<S> <C> <C> <C>
Gartner Group, Inc.(1).................................... 4,028,503 36.5% 28.4%
Gene DeRose(2)............................................ 2,393,478 21.7 16.9
Kurt Abrahamson(3)........................................ 1,171,713 10.5 8.2
Joshua Harris............................................. 1,070,595 9.7 7.6
Joshua A. Weinreich....................................... 971,221 8.8 6.9
Ernest Abrahamson......................................... 845,335 7.7 6.0
Robert Kavner............................................. 200,000 1.8 1.4
Peter Storck(4)........................................... 41,618 * *
Ken Male(5)............................................... 43,625 * *
All directors and executive officers as a group (8
persons)................................................ 3,856,684 34.1 26.7
</TABLE>
- ------------------------------
* Less than 1%.
(1) The address of Gartner Group, Inc. is 56 Top Gallant Road, P.O. Box 10212,
Stamford, CT 06904.
(2) This number does not include 50,000 shares issuable upon the exercise of
stock options that do not vest within 60 days of August 31, 1999.
(3) Includes 166,992 shares that are issuable upon the exercise of options. Mr.
Abrahamson is expected to exercise these options prior to the closing of
this offering. This number does not include 50,000 shares issuable upon the
exercise of stock options that do not vest within 60 days of August 31,
1999.
(4) All of these shares are issuable upon the exercise of options. This number
does not include 58,832 shares issuable upon the exercise of stock options
that do not vest within 60 days of August 31, 1999.
(5) All of these shares are issuable upon the exercise of options. This number
does not include 86,375 shares issuable upon the exercise of stock options
that do not vest within 60 days of August 31, 1999.
52
<PAGE> 54
DESCRIPTION OF CAPITAL STOCK
GENERAL
The following description of our common stock and preferred stock and the
relevant provisions of our amended and restated certificate of incorporation and
amended and restated bylaws as will be in effect upon the closing of this
offering are summaries thereof and are qualified by reference to our amended and
restated certificate of incorporation and the amended and restated bylaws,
copies of which have been filed with the Securities and Exchange Commission as
exhibits to our registration statement, of which this prospectus forms a part.
Upon the closing of this offering, our authorized capital stock will
consist of 100,000,000 shares of common stock, par value $0.001 per share, and
5,000,000 shares of preferred stock, par value $0.001 per share.
COMMON STOCK
Upon the closing of this offering, and giving effect to the issuance of
3,125,000 shares of common stock in this offering and the merger of Jupiter
Communications, LLC with and into Jupiter Communications, Inc., there will be
14,160,335 shares of common stock outstanding. Holders of common stock are
entitled to one vote for each share held on all matters submitted to a vote of
stockholders and do not have cumulative voting rights. Accordingly, holders of a
majority of the shares of common stock entitled to vote in any election of
directors may elect all of the directors standing for election. Holders of
common stock are entitled to receive ratably those dividends, if any, as may be
declared by the board of directors out of funds legally available therefor,
subject to any preferential dividend rights of any outstanding preferred stock.
Upon the liquidation, dissolution or winding up of Jupiter, the holders of
common stock are entitled to receive ratably the net assets of Jupiter available
after the payment of all debts and other liabilities and subject to the prior
rights of any outstanding preferred stock. Holders of the common stock have no
preemptive, subscription, redemption or conversion rights. The outstanding
shares of common stock are, and the shares offered by us in this offering will
be, when issued in consideration for payment thereof, fully paid and
nonassessable. The rights, preferences and privileges of holders of common stock
are subject to, and may be adversely affected by, the rights of the holders of
shares of any series of preferred stock which we may designate and issue in the
future. Upon the closing of this offering, there will be no shares of preferred
stock outstanding.
PREFERRED STOCK
Upon the closing of this offering, there will be no shares of preferred
stock outstanding. Upon the closing of this offering, the board of directors
will be authorized, without further stockholder approval, to issue from time to
time up to an aggregate of 5,000,000 shares of preferred stock in one or more
series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption, including sinking fund provisions,
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designation of series. We have no present plans to
issue any shares of preferred stock. See "--Anti-Takeover Effects of Various
Provisions of Delaware Law and Jupiter's Certificate of Incorporation and
Bylaws."
OPTIONS
Options to purchase a total of 7,750,000 shares of common stock may be
granted under the 1997 Option Plan and the 1999 Stock Incentive Plan. As of
August 31, 1999, there were outstanding options to purchase a total of 2,523,731
shares of common stock, of which options to purchase approximately 735,932 will
be exercisable upon the closing of this offering. In addition, there were
outstanding options to purchase a total of 174,992 shares of common stock upon
the exercise of non-plan options, of which options to purchase 166,992 shares
are currently exercisable. Since we intend to file a registration statement on
Form S-8 as soon as practicable following the closing of this offering, any
shares issued upon exercise of
53
<PAGE> 55
these options will be immediately available for sale in the public market,
subject to the terms of any lock-up agreements entered into with the
underwriters. See "Management--1997 Option Plan," "Management--1999 Stock
Incentive Plan" and "Shares Eligible for Future Sale."
REGISTRATION RIGHTS
Pursuant to the terms of a registration rights agreement, after the closing
of this offering the holders of 10,956,335 shares of common stock will be
entitled to piggyback registration rights with respect to the registration of
their shares under the Securities Act, subject to various limitations. These
registration rights are subject to specific conditions and limitations, among
them the right of the underwriters of an offering to limit the number of shares
of common stock held by security holders with registration rights to be included
in a registration. Registration of any shares of the shares of common stock held
by security holders with registration rights would result in shares becoming
freely tradable without restriction under the Securities Act immediately upon
effectiveness of such registration.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND JUPITER'S CERTIFICATE OF
INCORPORATION AND BYLAWS
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Subject to some exceptions, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
interested stockholder attained that status with the approval of the board of
directors or unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
various exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
the corporation's voting stock. This statute could prohibit or delay the
accomplishment of mergers or other takeover or change in control attempts with
respect to Jupiter and, accordingly, may discourage attempts to acquire Jupiter.
In addition, various provisions of our amended and restated certificate of
incorporation and our amended and restated bylaws, which provisions will be in
effect upon the closing of the offering and are summarized in the following
paragraphs, may be deemed to have an anti-takeover effect and may delay, defer
or prevent a tender offer or takeover attempt that a stockholder might consider
in its best interest, including those attempts that might result in a premium
over the market price for the shares held by stockholders.
BOARD OF DIRECTORS VACANCIES. Our amended and restated certificate of
incorporation authorizes the board of directors to fill vacant directorships or
increase the size of the board of directors. This may deter a stockholder from
removing incumbent directors and simultaneously gaining control of the board of
directors by filling the vacancies created by this removal with its own
nominees.
STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS. Our amended and
restated certificate of incorporation provides that stockholders may not take
action by written consent, but only at duly called annual or special meetings of
stockholders. The amended and restated certificate of incorporation further
provides that special meetings of stockholders of Jupiter may be called only by
the chairman of the board of directors, the chief executive officer or a
majority of the board of directors.
AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of
common stock and preferred stock are available for future issuance without
stockholder approval, subject to various limitations imposed by the Nasdaq
National Market. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued shares of common stock and preferred stock could make
more difficult or discourage an attempt to obtain control of us by means of a
proxy contest, tender offer, merger or otherwise.
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<PAGE> 56
The Delaware General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or bylaws, unless
a corporation's certificate of incorporation or bylaws, as the case may be,
requires a greater percentage.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company, New York, New York.
55
<PAGE> 57
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of our common stock in the public market could
adversely affect prevailing market prices of our common stock. Furthermore,
since no shares will be available for sale shortly after this offering because
of various contractual and legal restrictions on resale described below, sales
of substantial amounts of common stock in the public market after these
restrictions lapse could adversely affect the prevailing market price and our
ability to raise equity capital in the future.
Upon the closing of this offering, we will have outstanding an aggregate of
14,160,335 shares of our common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options. Of these shares,
all shares sold in this offering will be freely tradeable without restriction or
further registration under the Securities Act unless such shares are purchased
by "affiliates" as that term is defined in Rule 144 under the Securities Act.
This leaves 11,035,335 shares eligible for sale in the public market as follows:
<TABLE>
<CAPTION>
NUMBER OF
SHARES DATE
<S> <C>
After the date of this
0 prospectus.
After 90 days from the date of
this prospectus (subject, in some
3,863,957 cases, to volume limitations).
After 180 days from the date of
this prospectus (subject, in some
6,279,164 cases, to volume limitations).
At various times after 180 days
892,214 from the date of this prospectus.
</TABLE>
LOCK-UP AGREEMENTS
Stockholders holding an aggregate of shares of common stock
and substantially all of our option holders have signed lock-up agreements under
which they agreed not to transfer or dispose of, directly or indirectly, any
shares of our common stock or any securities convertible into or exercisable or
exchangeable for shares of our common stock for 180 days after the date of this
prospectus. Transfers can be made sooner with the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, in the case of some
transfers to affiliates, or if made as a bona fide gift.
Our largest stockholder, Gartner Group, has not signed a similar lock-up
agreement. The Company believes, however, that Gartner Group may be deemed an
"affiliate" as that term is defined in Rule 144 and therefore may not sell any
shares held by it until 90 days from the date of this prospectus and thereafter
may sell shares subject only to the Rule 144 volume limitations discussed below.
Gartner Group has advised us that it does not believe it will be an "affiliate"
following the closing of this offering. In the event Gartner Group is deemed not
to be an "affiliate" after this offering, it will be able to sell as many as
3,515,624 shares of our common stock in the public market without regard to
volume limitations beginning 90 days after the date of this prospectus, which
could adversely affect the price of our stock.
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the number of shares of common stock then outstanding, which will equal
approximately shares immediately after the 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 specific
manner-of-sale provisions, notice requirements and the availability of current
public information about us.
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<PAGE> 58
RULE 144(k)
Under Rule 144(k), a person who is not one of our affiliates at any time
during the 90 days preceding a sale and who has beneficially owned the shares
proposed to be sold for at least two years, including the holding period of any
prior owner other than an affiliate, is entitled to sell such shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144. Therefore, unless otherwise restricted, "144(k)"
shares may be sold immediately upon completion of this offering.
RULE 701
In general, under Rule 701 of the Securities Act as currently in effect,
each of our employees, consultants or advisors who purchases shares from us in
connection with a compensatory stock 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 various restrictions,
including the holding period, contained in Rule 144.
REGISTRATION RIGHTS
After this offering, the holders of at least 10,956,335 shares of our
common stock will be entitled to various rights with respect to the registration
of those shares under the Securities Act. See "Description of Capital
Stock -- Registration Rights." After such registration, these shares of our
common stock become freely tradeable without restriction under the Securities
Act. These sales could have a material adverse effect on the trading price of
our common stock.
STOCK PLANS
Immediately after this offering, we intend to file a registration statement
under the Securities Act covering 8,424,492 shares of common stock reserved for
issuance under our 1997 Option Plan, our 1999 Stock Incentive Plan, our Employee
Stock Purchase Plan and the shares reserved for issuance upon exercise of
outstanding non-plan options. We expect this registration statement to be filed
and to become effective as soon as practicable after the effective date of this
offering.
As of August 31, 1999, options to purchase 2,698,223 shares of common stock
were issued and outstanding. All of these shares will be eligible for sale in
the public market from time to time, subject to vesting provisions, Rule 144
volume limitations applicable to our affiliates and, in the case of some
options, the expiration of lock-up agreements.
57
<PAGE> 59
UNDERWRITING
Subject to the terms and conditions contained in an underwriting agreement,
dated , 1999, the underwriters named below, who are represented
by Donaldson, Lufkin & Jenrette Securities Corporation, Deutsche Bank Securities
Inc., Thomas Weisel Partners LLC and DLJdirect Inc., have severally agreed to
purchase from us the number of shares set forth opposite their names below.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS: OF SHARES
------------- ---------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Deutsche Bank Securities Inc................................
Thomas Weisel Partners LLC..................................
DLJdirect Inc. .............................................
-----
Total.............................................
=====
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares included in this
offering are subject to approval of specific legal matters by their counsel and
to various other conditions. The underwriters are obligated to purchase and
accept delivery of all the shares, other than those covered by the
over-allotment option described below, if they purchase any of the shares.
The underwriters propose to initially offer some of the shares directly to
the public at the public offering price set forth on the cover page of this
prospectus and some of the shares to various dealers at the public offering
price less a concession not in excess of $ per share. The underwriters may
allow, and such dealers may re-allow, a concession not in excess of $ per
share on sales to other dealers. After the initial offering of the shares to the
public, the representatives may change the public offering price and such
concessions. The underwriters do not intend to confirm sales to any accounts
over which they exercise discretionary authority. An electronic prospectus is
available on the Web site maintained by DLJdirect Inc.
The following table shows the underwriting fees to be paid to the
underwriters by us in connection with this offering. These amounts are shown
assuming both no exercise and full exercise of the underwriters' over-allotment
option described below.
<TABLE>
<CAPTION>
PAID BY JUPITER
------------------------
NO FULL
EXERCISE EXERCISE
<S> <C> <C>
Per Share.................................................. $ $
Total......................................................
</TABLE>
We will pay the offering expenses, estimated to be approximately $1.1
million.
We have granted to the underwriters an option, exercisable for 30 days
after the date of this prospectus, to purchase up to 468,750 additional shares
at the public offering price less the underwriting fees. The underwriters may
exercise such option solely to cover over-allotments, if any, made in connection
with this offering. To the extent that the underwriters exercise such option,
each underwriter will become obligated, subject to various conditions, to
purchase a number of additional shares approximately proportionate to that
underwriter's initial purchase commitment.
We have agreed to indemnify the underwriters against various civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments that the underwriters may be required to make in respect
of any of those liabilities.
We, all of our executive officers and directors, stockholders holding an
aggregate of shares of common stock and substantially all of our
option holders have agreed, for a period of 180 days from the date of this
prospectus, not to, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation: offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase
58
<PAGE> 60
any option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, directly or indirectly, any shares of our
common stock or any securities convertible into or exercisable or exchangeable
for our common stock; or enter into any swap or other arrangement that transfers
all or a portion of the economic consequences associated with the ownership of
any common stock, regardless of whether any of these transactions is to be
settled by the delivery of common stock, or such other securities, in cash or
otherwise. In addition, during this 180-day period, we have agreed not to file
any registration statement with respect to, and each of our executive officers,
directors, stockholders and option holders has agreed not to make any demand
for, or exercise any right with respect to, the registration of any shares of
common stock or any securities convertible into or exercisable or exchangeable
for common stock without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation.
Outside the United States, neither we nor the underwriters have taken any
action that would permit a public offering of the shares of common stock
included in this offering in any jurisdiction that requires action for that
purpose. The shares included in this offering may not be offered or sold,
directly or indirectly, nor may this prospectus or any other offering material
or advertisement in connection with the offer and sale of any of these shares be
distributed or published in any jurisdiction, except under circumstances that
will result in compliance with the applicable rules and regulations of that
jurisdiction. We advise persons who receive this prospectus to inform themselves
about and to observe any restrictions relating to the offering of the common
stock and the distribution of this prospectus. This prospectus is not an offer
to sell or a solicitation of an offer to buy any shares of our common stock
included in this offering in any jurisdiction where that would not be permitted
or legal.
In connection with this offering, some underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may overallot this offering,
creating a syndicate short position. The underwriters may bid for and purchase
shares of our common stock in the open market to cover syndicate short positions
or to stabilize the price of the common stock. The underwriting syndicate may
reclaim selling concessions if the syndicate repurchases previously distributed
common stock in syndicate covering transactions, in stabilizing transactions or
in some other way or if Donaldson, Lufkin & Jenrette Securities Corporation
receives a report that indicates clients of such syndicate members have
"flipped" the common stock. These activities may stabilize or maintain the
market price of the common stock above independent market levels. The
underwriters are not required to engage in these activities and may end any of
these activities at any time.
We sell our research products and services to numerous financial services
companies, including each of the underwriters of this offering.
Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners has been named as a lead or co-manager on 43 filed
public offerings of equity securities, of which 25 have been completed, and has
acted as a syndicate member in an additional 19 public offerings of equity
securities. Thomas Weisel Partners does not have any material relationship with
us or any of our officers, directors or other controlling persons, except with
respect to its contractual relationship with us pursuant to the underwriting
agreement entered into in connection with this offering.
Prior to this offering, there has been no established trading market for
our common stock. We will negotiate with the underwriters regarding the initial
public offering price for the shares of common stock offered by this prospectus.
In determining the initial public offering price, the factors we and the
underwriters will consider include:
- the history of and the prospects for the industry in which we compete;
- our past and present operations;
- our historical results of operations;
59
<PAGE> 61
- our prospects for future earnings;
- the recent market prices of securities of generally comparable companies;
and
- the general condition of the securities markets at the time of the
offering.
At our request, the underwriters have reserved for sale at the initial
public offering price up to 7% of the shares of common stock to be sold in this
offering for sale to our employees, friends and persons having business
relationships with us. Our employees who purchase more than 100 shares of common
stock in the initial public offering will sign lock-up agreements in connection
with those shares. To the extent these persons purchase the reserved shares, the
number of shares available for sale to the general public will be reduced. The
underwriters will offer any reserved shares not so purchased on the same basis
as the other shares offered by this prospectus.
60
<PAGE> 62
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Brobeck, Phleger & Harrison LLP, New York, New York. Various legal matters in
connection with the offering will be passed upon for the underwriters by Hale
and Dorr LLP, Boston, Massachusetts.
EXPERTS
The balance sheets of Jupiter Communications, LLC as of December 31, 1998
and 1997 and the related statements of operations, members' equity (deficiency)
and cash flows for the three years in the period ended December 31, 1998 have
been included in reliance on the reports of KPMG LLP, independent accountants,
given on the authority of that firm as experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1, including exhibits, schedules and amendment filed with
the registration statement, under the Securities Act with respect to the common
stock to be sold in this offering. This prospectus does not contain all of the
information set forth in this registration statement. For further information
about us and the shares of common stock to be sold in the offering, please refer
to this registration statement. For additional information, please refer to the
exhibits that have been filed with our registration statement on Form S-1.
You may read and copy all or any portion of the registration statement or
any other information we file at the Securities and Exchange Commission's public
reference room at 450 Fifth Street, N.W., Washington, D.C., 20549. You can
request copies of these documents upon payment of a duplicating fee, by writing
to the Securities and Exchange Commission. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information about the public
reference rooms. Our Securities and Exchange Commission filings, including the
registration statement, will also be available to you on the Securities and
Exchange Commission's Web site (http://www.sec.gov).
We intend to furnish our stockholders with annual reports containing
audited financial statements and to make available quarterly reports containing
unaudited financial information.
61
<PAGE> 63
JUPITER COMMUNICATIONS, LLC
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report................................ F-2
Balance Sheets as of December 31, 1997 and 1998, and June
30, 1999 (unaudited)...................................... F-3
Statement of Operations for the years ended December 31,
1996, 1997 and 1998, and for the six months ended June 30,
1998 (unaudited) and 1999 (unaudited)..................... F-4
Statements of Members' Equity (Deficiency) for the years
ended December 31, 1996, 1997 and 1998, and for the six
months ended June 30, 1999 (unaudited).................... F-5
Statements of Cash Flows for the years ended December 31,
1996, 1997 and 1998, and for the six months ended June 30,
1998 (unaudited) and 1999 (unaudited)..................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE> 64
INDEPENDENT AUDITORS' REPORT
The Board of Members and Members
Jupiter Communications, LLC:
We have audited the accompanying balance sheets of Jupiter Communications,
LLC as of December 31, 1997 and 1998, and the related statements of operations
and members' equity (deficiency), 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 Jupiter Communications, LLC
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.
/s/ KPMG LLP
New York, New York
March 18, 1999
F-2
<PAGE> 65
JUPITER COMMUNICATIONS, LLC
BALANCE SHEETS
DECEMBER 31, 1997, 1998 AND JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
(SEE NOTE 2(A))
DECEMBER 31, JUNE 30, JUNE 30,
------------------------- ----------- ---------------
1997 1998 1999 1999
---------- ----------- ----------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......... $1,614,050 $ 216,144 $ 1,553,525 $46,953,525
Accounts receivable, less allowance
for doubtful accounts of
$51,483, $37,915 and $28,934 in
1997, 1998, and 1999,
respectively.................... 1,136,230 4,579,856 8,485,017 8,485,017
Prepaid expenses and other
assets.......................... 141,062 797,168 1,752,473 1,752,473
---------- ----------- ----------- -----------
Total current assets............ 2,891,342 5,593,168 11,791,015 57,191,015
Property and equipment, net.......... 396,805 1,071,432 3,032,566 3,032,566
Intangible assets, net............... 84,791 54,791 39,791 39,791
Investment in Methodfive LLC ........ 48,740 26,510 -- --
Security deposits.................... 41,531 121,120 187,961 187,961
---------- ----------- ----------- -----------
Total assets.................... $3,463,209 $ 6,867,021 $15,051,333 $60,451,333
========== =========== =========== ===========
LIABILITIES AND MEMBERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable................... $1,203,578 $ 1,241,618 $ 812,616 $ 812,616
Accrued expenses................... 329,411 208,843 729,122 729,122
Accrued compensation............... 135,915 841,624 1,029,417 1,029,417
Deferred revenue................... 1,775,003 6,677,233 14,191,842 14,191,842
---------- ----------- ----------- -----------
Total current liabilities....... 3,443,907 8,969,318 16,762,997 16,762,997
Deferred rent........................ 10,695 26,477 172,605 172,605
Common stock, $0.001 par value:
100,000,000 shares authorized on a
pro forma basis, 10,819,335 shares
outstanding on a pro forma basis,
and 13,944,335 shares outstanding
on a pro forma as adjusted basis... -- -- -- 13,944
Additional paid-in capital........... 3,506,265 3,506,265 3,881,265 43,501,787
Accumulated deficit.................. (3,497,658) (5,635,039) (5,765,534) --
---------- ----------- ----------- -----------
Total stockholders'/members' equity
(deficiency)....................... 8,607 (2,128,774) (1,884,269) 43,515,731
Commitments and contingencies........ -- -- -- --
---------- ----------- ----------- -----------
Total liabilities and
stockholders'/ members' equity
(deficiency).................. $3,463,209 $ 6,867,021 $15,051,333 $60,451,333
========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 66
JUPITER COMMUNICATIONS, LLC
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
AND JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------- -------------------------
1996 1997 1998 1998 1999
---------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Strategic Planning Services.... $ 565,555 $ 1,850,154 $ 6,183,188 $ 1,994,980 $ 8,166,289
Conferences.................... 2,685,834 3,426,079 4,889,703 1,979,021 4,552,796
Other.......................... 3,000,593 3,245,919 3,729,440 1,939,045 1,680,723
---------- ----------- ----------- ----------- -----------
Total revenues.............. 6,251,982 8,522,152 14,802,331 5,913,046 14,399,808
Cost of services and
fulfillment.................... 4,686,993 6,259,433 9,675,838 4,281,976 6,853,869
---------- ----------- ----------- ----------- -----------
Gross profit................ 1,564,989 2,262,719 5,126,493 1,631,070 7,545,939
Other operating expenses:
Sales and marketing expenses... 514,548 1,557,676 3,173,368 1,313,430 4,008,079
General and administrative
expenses.................... 1,663,565 2,955,340 4,090,506 1,918,220 3,668,355
---------- ----------- ----------- ----------- -----------
Total other operating
expenses.................. 2,178,113 4,513,016 7,263,874 3,231,650 7,676,434
---------- ----------- ----------- ----------- -----------
Net loss.................... $ (613,124) $(2,250,297) $(2,137,381) $(1,600,580) $ (130,495)
========== =========== =========== =========== ===========
Pro forma basic and diluted net
loss per common share.......... $ (0.21) $ (0.16) $ (0.01)
=========== =========== ===========
Pro forma weighted average common
shares outstanding............. 10,318,359 10,318,359 10,454,736
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 67
JUPITER COMMUNICATIONS, LLC
STATEMENTS OF MEMBERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
AND FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------- ADDITIONAL TOTAL
NUMBER PAR PAID-IN ACCUMULATED MEMBERS'
OF SHARES VALUE CAPITAL DEFICIT EQUITY (DEFICIENCY)
----------- ------- ----------- ----------- -------------------
<S> <C> <C> <C> <C> <C>
Balance as of December 31,
1995......................... -- -- $ 228,794 $ (634,237) $ (405,443)
Contributions made by
members...................... -- -- 325,000 -- 325,000
Distributions paid to
members...................... -- -- (20,743) -- (20,743)
Net loss for the year ended
December 31, 1996............ -- -- -- (613,124) (613,124)
----------- ------- ----------- ----------- -----------
Balance as of December 31,
1996......................... -- -- 533,051 (1,247,361) (714,310)
Contributions made by members,
net of offering costs of
$254,098..................... -- -- 2,996,175 -- 2,996,175
Distributions paid to
members...................... -- -- (22,961) -- (22,961)
Net loss for the year ended
December 31, 1997............ -- -- -- (2,250,297) (2,250,297)
----------- ------- ----------- ----------- -----------
Balance as of December 31,
1997......................... -- -- 3,506,265 (3,497,658) 8,607
Net loss for the year ended
December 31, 1998............ -- -- -- (2,137,381) (2,137,381)
----------- ------- ----------- ----------- -----------
Balance as of December 31,
1998......................... -- -- 3,506,265 (5,635,039) (2,128,774)
Exercise of unit investment
options (unaudited).......... -- -- 375,000 -- 375,000
Net loss for the six months
ended June 30, 1999
(unaudited).................. -- -- -- (130,495) (130,495)
----------- ------- ----------- ----------- -----------
Balance as of June 30, 1999
(unaudited).................. -- -- $ 3,881,265 $(5,765,534) $(1,884,269)
----------- ------- ----------- ----------- -----------
Pro forma adjustments (Note
2(a)):
Issuance of shares for member
interests (unaudited)...... 10,819,335 $10,819 $(5,776,353) $ 5,765,534 $ --
Issuance of common stock in
connection with the
Company's IPO, net of
offering expenses
(unaudited)................ 3,125,000 3,125 45,396,875 -- 45,400,000
----------- ------- ----------- ----------- -----------
Pro forma balance as of June
30, 1999 (unaudited)......... 13,944,335 $13,944 $43,501,787 -- $43,515,731
=========== ======= =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 68
JUPITER COMMUNICATIONS, LLC
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
AND JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------- -------------------------
1996 1997 1998 1998 1999
--------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss............................................. $(613,124) $(2,250,297) $(2,137,381) $(1,600,580) $ (130,495)
Adjustments to reconcile net loss to net cash used in
operating activities:
Equity loss from investment in Methodfive
L.L.C. .......................................... -- 35,000 22,230 11,116 26,510
Depreciation and amortization...................... 74,816 99,751 193,410 96,706 316,987
Provision for allowance for doubtful accounts...... 26,000 25,483 (13,568) 1,282 (8,981)
Changes in operating assets and liabilities:
Increase in accounts receivable.................. (290,022) (328,142) (3,430,058) (697,198) (3,896,180)
(Increase) decrease in inventory................. (14,615) 24,035 -- -- --
Increase in prepaid expenses and other assets.... (77,035) (10,962) (656,106) (444,472) (955,305)
(Increase) decrease in security deposits......... (24,938) 3,815 (79,589) (80,790) (66,841)
Increase (decrease) in accounts payable.......... 417,505 397,337 38,040 23,412 (429,002)
Increase in accrued expenses..................... 87,357 298,300 606,858 374,731 708,072
Increase in deferred revenue..................... 432,776 657,280 4,902,230 2,089,257 7,514,609
(Decrease) increase in deferred rent............. (4,262) (13,138) (3,016) 5,808 146,128
--------- ----------- ----------- ----------- -----------
Net cash provided by (used in) operating
activities.................................. 14,458 (1,061,538) (556,950) (220,728) 3,225,502
--------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures................................. (198,651) (206,842) (838,037) (258,078) (2,263,121)
Investment in Methodfive L.L.C. ..................... (58,594) -- -- -- --
Investment in Internet Content Report................ -- (25,000) -- -- --
--------- ----------- ----------- ----------- -----------
Net cash used in investing activities......... (257,245) (231,842) (838,037) (258,078) (2,263,121)
--------- ----------- ----------- ----------- -----------
Cash flows from financing activities:
Member contributions................................. 325,000 3,250,273 -- -- --
Exercise of unit investment options.................. -- -- -- -- 375,000
Offering costs....................................... -- (254,098) -- -- --
Distributions paid to members........................ (20,743) (22,961) -- -- --
Repayment of notes payable........................... (55,000) (70,000) -- -- --
Principal payments under capital lease obligation.... (2,841) (3,447) (2,919) -- --
--------- ----------- ----------- ----------- -----------
Net cash provided by (used in) financing
activities.................................. 246,416 2,899,767 (2,919) -- 375,000
--------- ----------- ----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents................................. 3,629 1,606,387 (1,397,906) (478,806) 1,337,381
Cash and cash equivalents at beginning of period....... 4,034 7,663 1,614,050 1,614,050 216,144
--------- ----------- ----------- ----------- -----------
Cash and cash equivalents at end of period............. $ 7,663 $ 1,614,050 $ 216,144 $ 1,135,244 $ 1,553,525
========= =========== =========== =========== ===========
Supplemental cash flow information:
Cash paid during the period for:
Interest........................................... $ -- $ 8,694 $ 11,855 $ -- $ --
========= =========== =========== =========== ===========
Supplemental noncash operating and financing
activities:
Fair value of barter transactions.................... $ 105,974 $ 18,120 $ -- $ -- $ 25,000
========= =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 69
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(1) ORGANIZATION
Jupiter Communications, LLC ("Jupiter" or the "Company") was organized in
New York on December 1, 1994. Jupiter is a new media research firm that helps
companies make intelligent business decisions about consumer interactivity. The
Company's information services encompass Strategic Planning Services,
conferences, newsletters, book-length studies, and custom research reports and
provide clients and customers with focused research and strategic planning
support as they develop interactive products and services.
(2) SIGNIFICANT ACCOUNTING POLICIES
(a) UNAUDITED INTERIM FINANCIAL INFORMATION AND UNAUDITED PRO FORMA BALANCE
SHEET
The interim financial statements of the Company for the six months ended
June 30, 1998 and 1999 included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the SEC. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations relating to interim
financial statements.
In the opinion of management, the accompanying unaudited interim financial
statements reflect all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of the Company
at June 30, 1999 and the results of its operations and its cash flows for the
six months ended June 30, 1998 and 1999.
The accompanying pro forma balance sheet as of June 30, 1999 gives effect
to (i) the Company's pending reorganization from a limited liability company to
a corporation (see Note 2(f)) as though the reorganization had occurred as of
June 30, 1999, and (ii) the sale of 3,125,000 shares of common stock related to
the Company's proposed initial public offering ("IPO") (see Note 14 regarding
the proposed IPO) at an assumed initial public offering price of $16.00 per
share (less estimated underwriting discounts and offering expenses) as though
the IPO had occurred as of June 30, 1999.
(b) CASH AND CASH EQUIVALENTS
Cash equivalents of $1,613,015, $211,681 and $1,470,060 at December 31,
1997, December 31, 1998 and June 30, 1999, respectively, consist of a money
market account with an initial term of less than three months. For purposes of
the statements of cash flows, the Company considers all highly liquid debt
instruments with original maturities of three months or less to be cash
equivalents.
(c) PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other assets primarily consist of prepaid Strategic
Planning Services commissions and prepaid conference costs.
(d) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided by the
straight-line method over the estimated useful lives of the respective assets,
which range from three to five years. Leasehold improvements are amortized on a
straight-line basis over the shorter of the lease term or their estimated useful
life. Additions and major improvements are capitalized, whereas the cost of
maintenance and repairs is charged to operations as incurred.
F-7
<PAGE> 70
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(e) INTANGIBLE ASSETS
Intangible assets are stated at cost and are amortized over their useful
lives. The net book value of intangible assets is periodically evaluated by
management as to the realizability by the Company with any permanent impairment
in such value charged to operations in the year so determined.
(f) INCOME TAXES
Until completion of the proposed IPO (see Note 14 regarding the proposed
IPO), the Company will remain a New York limited liability company. Accordingly,
income or loss attributed to the Company's operations prior to the closing of
the IPO will be allocated to its members to be reported on their personal tax
returns. As a result, Jupiter will not be able to offset future taxable income,
if any, against losses incurred prior to the closing of the IPO.
Upon completion of the proposed IPO, the Company's LLC status will be
terminated as a result of the Company reorganizing to a "C" corporation for tax
purposes. Effective on this date, income taxes will be accounted for under the
asset and liability method. Under this method, deferred tax assets and
liabilities are recognized for future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and 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
results of operations in the period that the tax change occurs. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the
amount expected to be realized.
(g) REVENUE AND COMMISSION EXPENSE RECOGNITION
Strategic Planning Services revenues are deferred and then reflected
proportionally in operations over the term of the service period, which is
generally up to one year. Conference revenues are reflected in operations when
the conference occurs. Newsletter subscriptions are deferred and then reflected
proportionally in operations over the term of the subscription, which is
generally up to one year. Book-length studies and custom research are reflected
in operations when the product is shipped.
Deferred revenue is composed of prepaid Strategic Planning Services fees to
be earned in the future over the term of the service period, prepaid conference
sponsorship/exhibition fees to be earned from conferences held after the balance
sheet date, and prepaid newsletter subscriptions to be earned in the future over
the term of the subscriptions.
The Company records prepaid commissions related to Strategic Planning
Services upon the signing of the contract and amortizes this corresponding
prepaid commission expense over the contract period in which the related
revenues are earned and amortized to income.
(h) CONCENTRATION OF RISK
The Company's customers are concentrated in the United States. The Company
performs ongoing credit evaluations of its customers' financial condition and
generally does not require collateral and establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of customers, historical
trends and other information. To date, such losses have been within management's
expectations.
F-8
<PAGE> 71
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
For each of the years in the three-year period ended December 31, 1998, no
customer accounted for more than 10% of revenues generated by the Company, or of
accounts receivable at December 31, 1998, 1997 and 1996.
(i) USE OF ESTIMATES
The accompanying financial statements are prepared in accordance with U.S.
generally accepted accounting principles (GAAP). In preparing financial
statements in conformity with GAAP, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenue and expenses during the reporting period. Actual results
could differ from those estimates.
(j) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, accounts payable and
accrued expenses approximated fair value because of the relatively short
maturity of these instruments.
(k) STOCK-BASED COMPENSATION
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
123, "Accounting for Stock-Based Compensation," which permits entities to
recognize the fair value of all stock-based awards on the date of grant as
expense over the vesting period. Alternatively, SFAS No. 123 also allows
entities to continue to apply the provisions of APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and provide pro forma net loss disclosures for
employee unit option grants made as if the fair value-based method defined in
SFAS No. 123 had been applied.
Under APB Opinion No. 25, compensation expenses would be recorded on the
date of grant only if the current market price of the underlying units exceeded
the exercise price. The Company has elected to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.
(l) PRO FORMA BASIC AND DILUTED NET LOSS PER COMMON SHARE
Pro forma basic and diluted net loss per common share is computed by
dividing net loss by the pro forma weighted average number of shares of common
stock. Pro forma weighted average number of shares of common stock gives effect
to the Company's pending reorganization from a limited liability company to a
corporation (see Note 2(f)). Pro forma weighted average number of shares of
common stock does not include any common stock equivalents because inclusion of
common stock equivalents would have been anti-dilutive.
(m) IMPAIRMENT OF LONG-LIVED ASSETS TO BE DISPOSED OF
The Company applies the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which 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 net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be
F-9
<PAGE> 72
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
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. Adoption of
this Statement did not have a material impact on the Company's financial
position, results of operations or liquidity.
(n) RECENT ACCOUNTING PRONOUNCEMENTS
In April 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") which 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. SOP 98-1 will be effective for the
Company's fiscal year ending December 31, 1999. The adoption of SOP 98-1 is not
expected to have a material impact on the Company's financial statements.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which provides guidance on the financial reporting of
start-up costs and organization costs. It requires costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 will be effective
for the Company's fiscal year ending December 31, 1999. The adoption of SOP 98-5
is not expected to have a material impact on the Company's financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information" which establishes standards for the way
that a public enterprise reports information about operating segments in annual
financial statements, and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. SFAS No. 131 is
effective for fiscal years beginning after December 15, 1997, and requires
restatement of earlier periods presented. In the initial year of application,
comparative information for earlier years must be restated. The Company has
determined that it does not have any separately reportable business segments.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" 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, 2000. This
statement is not expected to affect the Company as it currently does not engage
or plan to engage in derivative instruments or hedging activities.
F-10
<PAGE> 73
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(3) PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------- ------------
1997 1998 1999
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Deferred SPS commissions................................... $ -- $632,406 $1,313,315
Prepaid conference expenses................................ 125,159 101,974 296,634
Other...................................................... 15,903 62,788 142,524
-------- -------- ----------
$141,062 $797,168 $1,752,473
======== ======== ==========
</TABLE>
(4) PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------- -----------
1997 1998 1999
--------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment....................................... $ 367,759 $ 758,428 $1,954,597
Furniture and fixtures................................... 90,689 178,892 572,872
Office equipment......................................... 52,812 96,623 164,955
Leasehold improvements................................... 70,249 385,603 990,243
--------- ---------- ----------
581,509 1,419,546 3,682,667
Less accumulated depreciation and amortization........... (184,704) (348,114) (650,101)
--------- ---------- ----------
$ 396,805 $1,071,432 $3,032,566
========= ========== ==========
</TABLE>
(5) INTANGIBLE ASSETS
In June 1995, the Company acquired substantially all of the assets of the
Internet Business Report ("IBR") in exchange for a $140,000 promissory note,
payment of which was completed during 1997. The purchase price of $140,000 was
allocated as follows: $62,500 to the IBR subscriber list; $62,500 to the IBR
trademark; and $15,000 for the editorial costs which were subsequently written
off.
In September 1997, the Company purchased the rights and interests in the
trademark "Internet Content Report" for $25,000. This included a subscriber list
with information regarding current and former subscribers. The purchase price
was allocated equally between the subscriber list and the trademark.
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- ----------- AMORTIZATION
1997 1998 1999 PERIOD IN YEARS
-------- -------- ----------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Internet Content Report:
Subscriber list......................... $ 12,500 $ 12,500 $ 12,500 5
Trademark............................... 12,500 12,500 12,500 5
-------- -------- ---------
25,000 25,000 25,000
</TABLE>
F-11
<PAGE> 74
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-------------------- ----------- AMORTIZATION
1997 1998 1999 PERIOD IN YEARS
-------- -------- ----------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Internet Business Report:
Subscriber list......................... 62,500 62,500 62,500 5
Trademark............................... 62,500 62,500 62,500 5
-------- -------- ---------
125,000 125,000 125,000
Less accumulated amortization............. (65,209) (95,209) (110,209)
-------- -------- ---------
$ 84,791 $ 54,791 $ 39,791
======== ======== =========
</TABLE>
(6) INVESTMENT IN METHODFIVE LLC
Jupiter has an investment in Methodfive LLC ("Methodfive"), formerly the
Myriad Agency, LLC, a Web site design and consulting company. For the years
ended December 31, 1997 and 1998, Methodfive experienced a net loss from
operations and the Company recorded its share of the loss in the accompanying
statements of operations and members' equity (deficiency). Jupiter's cumulative
interest in Methodfive as of December 31, 1997 and 1998 was approximately 17.4%
and has been accounted for under the equity method.
As of June 30, 1999 the Company has written down its investment as a result
of the current financial position and recurring losses of Methodfive. The
Company has no future funding responsibilities with respect to Methodfive and
has a 17.4% passive interest.
(7) MEMBERS' EQUITY
The Company has three classes of members' equity: Class A, Class B and
Class C. Class A, Class B and Class C equity members own respectively 33.5%,
29.2% and 37.3% of the Company, as of December 31, 1998. All equity members have
substantially the same rights and privileges, except that Class B equity members
do not participate in the day-to-day management of the business. Class C equity
members, as well, do not participate in the day-to-day management of the
business; however, certain actions, as defined in the operating agreement,
require the consent of Class C equity members.
During October 1997, Gartner Group, Inc. ("acquiror") purchased 3,515,624
Class C units of the Company for $8.0 million from both the Company and existing
members. The Company amended its operating agreement to allow current members to
sell all or part of their units to the acquiror. During 1997, existing members
sold 2,197,265 units for $5.0 million, and 1,318,359 units were purchased from
the Company for $3.0 million and recorded as capital contributions by the
Company, less $254,098 in offering costs. Class A and Class B units sold by
existing members to the acquiror automatically converted to Class C units upon
transfer on a one-for-one basis to the acquiror. Three members sold 100% of
their units to the acquiror. In addition, during 1997 capital contributions of
$250,273 were made by existing Class A and B equity members. During 1998, an
existing member sold 333,333 units for $1.25 million to the acquiror. After
completion of the transactions, the acquiror owned 37.3% of all outstanding
units as of December 31, 1998, and had two seats on the board of members.
Profits and losses are shared by all members based on their respective
percentage ownership interests. No member shall be liable for any debts of the
Company or be required to contribute any additional capital related to deficits
incurred.
F-12
<PAGE> 75
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(8) OPTIONS
During 1997, the Company established the 1997 Employee Unit Option Plan
(the "Plan"). Under the Plan, 1,590,000 Class B units shall be available for
grant. On March 1, 1999, the equity members authorized an increase in the number
of units reserved for issuance under the Plan from 1,590,000 to 2,500,000 (see
Note 14). Unit options may be granted to key employees of the Company upon
selection by the managing members. The exercise price of a unit option shall be
equal to the established fair market value of the unit at the time of grant, in
accordance with the provisions of the Plan. These options vest ratably over a
four-year period.
All unit options have a fixed term determinable by the managing members,
but no option shall be exercisable more than seven years after the date of
grant. Option exercisability is subject to the terms and conditions as
determined by the managing members.
Unit option activity under the Plan is as follows:
<TABLE>
<CAPTION>
WEIGHTED
UNIT AVERAGE
OPTIONS EXERCISE
GRANTED PRICE
--------- --------
<S> <C> <C>
Outstanding at December 31, 1996............................ --
Granted..................................................... 704,738 $ .50
Exercised................................................... --
Canceled.................................................... --
---------
Outstanding at December 31, 1997............................ 704,738 $ .50
---------
Granted..................................................... 563,000 $2.08
Exercised................................................... --
Canceled.................................................... --
---------
Outstanding at December 31, 1998............................ 1,267,738 $1.20
---------
Granted (unaudited)......................................... 1,163,650 $3.72
Exercised (unaudited)....................................... --
Canceled (unaudited)........................................ (44,532) $2.38
---------
Outstanding at June 30, 1999 (unaudited).................... 2,386,856 $2.41
=========
Vested at December 31, 1997................................. 217,912
=========
Vested at December 31, 1998................................. 499,155
=========
Vested at June 30, 1999 (unaudited)......................... 672,723
=========
</TABLE>
The fair value of each unit option granted to employees during 1998 is
estimated using the Black-Scholes Option Pricing Model with the following
assumptions: dividend yield 0%, 1998 risk-free interest rate 6% and an expected
life of four years. As permitted under the provision of SFAS No. 123, and based
on the historical lack of a public market for the Company's units, no factor for
volatility has been reflected in the unit option pricing calculation.
The Company applies APB Opinion No. 25 in accounting for its Plan and,
accordingly, no compensation cost has been recognized for its unit options in
the accompanying financial statements.
F-13
<PAGE> 76
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
The pro forma effect on the Company's net loss, had such options been
accounted for at fair value at the date of grant, is as follows:
<TABLE>
<CAPTION>
1997 1998
<S> <C> <C>
Net Loss:
As Reported............................................... $(2,250,297) $(2,137,381)
=========== ===========
Pro Forma................................................. $(2,269,149) $(2,216,536)
=========== ===========
</TABLE>
In addition to the units granted under the Plan, during November 1996, the
Company granted unit investment options to three equity members in conjunction
with contributions made by those equity members. A total of 667,968 unit
investment options were granted at a weighted average exercise price of $0.75.
The unit investment options were immediately vested and are exercisable at any
time during the period ending on the earlier of (a) October 31, 2001 or (b) the
closing of an initial public offering.
During May 1999, two of the equity members exercised 500,976 unit
investment options at a weighted average exercise price of $0.75. As a result,
166,992 unit investment options remain outstanding related to one equity member
at a weighted average exercise price of $0.75.
(9) DEFERRED REVENUE
Deferred revenue consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------ ------------
1997 1998 1999
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Strategic Planning Services........................... $ 614,472 $5,638,847 $11,486,016
Conferences........................................... 359,337 783,912 2,540,442
Newsletter subscriptions.............................. 801,194 254,474 165,384
---------- ---------- -----------
$1,775,003 $6,677,233 $14,191,842
========== ========== ===========
</TABLE>
(10) OTHER REVENUES
Other revenues consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------------ -------------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Book length studies.................. $1,488,705 $1,518,545 $1,681,114 $ 884,859 $ 831,582
Newsletter subscriptions............. 1,130,377 1,492,000 1,470,380 853,597 337,890
Other................................ 381,511 235,374 577,946 200,589 511,251
---------- ---------- ---------- ---------- ----------
$3,000,593 $3,245,919 $3,729,440 $1,939,045 $1,680,723
========== ========== ========== ========== ==========
</TABLE>
(11) BARTER TRANSACTIONS
During 1997, the Company entered into barter transactions by exchanging its
products for advertising. Barter revenue and expenses are recorded at the fair
market value of services provided or received,
F-14
<PAGE> 77
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
whichever is more determinable in the circumstances. The value of these
transactions was $105,974 and $18,120 for the years ended December 31, 1996 and
1997, respectively. No such transactions were entered into by the Company during
1998.
(12) 401(k) PROFIT SHARING PLAN
The Company has a 401(k) profit sharing plan for its employees. Employees
who have completed one year of service and attained age 21 are eligible to
participate. The Company makes a matching contribution equal to 50% for every
one dollar of each participant's contribution and applies such matching
percentage to the participant's salary reduction, up to 6% of the participant's
compensation. During 1996, 1997 and 1998, the Company's matching contribution
was $10,639, $12,435 and $38,882, respectively.
(13) COMMITMENTS AND CONTINGENCIES
(a) OFFICE LEASES
The Company leases office space in New York City and London. The future
minimum annual rental commitments under the leases are:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1999...................................................... $ 515,113
2000...................................................... 625,536
2001...................................................... 734,024
2002...................................................... 655,491
2003...................................................... 677,844
2004 and thereafter....................................... 218,318
----------
$3,426,326
==========
</TABLE>
Rent expense for the years ended December 31, 1996, 1997 and 1998 was
$111,433, $335,063 and $303,061, respectively.
During April 1998, the Company entered into a seven-year operating lease
agreement for office space in London. The lease agreement calls for monthly
payments with no scheduled increase in succeeding periods.
During January 1999, the Company terminated its existing New York operating
lease agreements that were due to expire in May 2000 and December 2001 and
signed a new five-year operating lease agreement with the same landlord. The new
lease agreement covers the same office space as the terminated lease agreement
as well as additional office space. In connection with this lease agreement, the
Company received two months of free rent. The agreement also calls for scheduled
increases in succeeding periods. As such, the Company records rent expense on a
straight-line basis. The future payments related to this new lease agreement are
reflected in the above schedule, and the deferred rent balance as of June 30,
1999 reflects the impact of the new lease.
F-15
<PAGE> 78
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
(b) EQUIPMENT LEASE
Future minimum lease payments under noncancellable operating leases as of
December 31, 1998 are:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1999...................................................... $ 42,370
2000...................................................... 47,956
2001...................................................... 47,956
2002...................................................... 38,671
2003...................................................... 18,840
Thereafter................................................ 4,710
--------
Total.................................................. $200,503
========
</TABLE>
(14) SUBSEQUENT EVENTS (UNAUDITED)
a) INITIAL PUBLIC OFFERING
In July 1999, the Class A equity members authorized the filing of a
registration statement with the Securities and Exchange Commission ("SEC") that
would permit the Company to sell shares of its common stock in connection with
the proposed IPO.
Upon the completion of the proposed IPO, the Company will be reorganized
from a limited liability company (LLC) to a corporation, which will be treated
as a "C" corporation for tax purposes. All of the members of the LLC will
exchange their respective member interests in the LLC for shares of common stock
in the corporation.
After the IPO, the members no longer retain the rights granted to them as
part of the Company's Operating Agreement, other than piggyback registration
rights and, with respect to the Class C equity member, limited indemnification
rights.
b) LINE OF CREDIT
During March 1999, the Company entered into an agreement for a line of
credit of $750,000 with the Silicon Valley Bank. Any unpaid balance is payable
on demand and bears an interest rate of prime plus 1%. All of the Company's
assets were listed as collateral in the event of default. No amounts were
outstanding as of March 31, 1999.
During June 1999, the Company received a commitment to increase this line
of credit to $3.0 million. Any unpaid balance is payable on demand and bears an
interest rate of prime plus 1 1/2%. In the event that the Company raises an
additional $3 million of equity financing, the interest rate on the $3 million
line of credit will be reduced to prime plus 3/4%.
c) ADVERTISING COMMITMENTS
In 1999, the Company entered into certain advertising contracts and has
future advertising commitments with a publishing company in the amount of
approximately $500,000.
F-16
<PAGE> 79
JUPITER COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997 AND 1998 AND JUNE 30, 1999
(ALL INFORMATION SUBSEQUENT TO DECEMBER 31, 1998 IS UNAUDITED)
d) UNIT OPTION PLAN
In March 1999, the equity members authorized an increase in the number of
units reserved for issuance under the Plan from 1,590,000 to 2,500,000.
In July 1999, the equity members authorized an additional increase in the
number of units reserved for issuance under the Plan from 2,500,000 to
2,750,000.
e) CLASS B (NON-VOTING) UNITS
In July 1999, the equity members authorized the Company to issue Class B
(Non-Voting) units which shall provide Jupiter with, among other things,
flexibility in the issuance of units in connection with mergers, acquisitions
and/or similar transactions and in the exercise of options. Holders of Class B
(Non-Voting) units shall have the same rights and privileges as holders of Class
B units, except for certain specified rights.
f) ACQUISITION OF INTELLIGENCE SE AB
In July 1999, the Company acquired all of the stock of Intelligence SE AB,
a Swedish research company, in exchange for 137,000 Class B (Non-Voting) units
at an aggregate value of $808,000.
g) SALE OF UNITS BY MEMBERS
On May 25, 1999, two equity members sold a total of 254,238 units to other
existing equity members.
h) NON-PLAN OPTIONS
During 1999, the Company issued 7,500 unit options outside of the Plan to
third parties for services rendered at a fair value exercise price of $3.00.
F-17
<PAGE> 80
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
, 1999
[JUPITER COMMUNICATIONS LOGO]
SHARES OF COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
DONALDSON, LUFKIN & JENRETTE
DEUTSCHE BANC ALEX. BROWN
THOMAS WEISEL PARTNERS LLC
DLJdirect INC.
- --------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of Jupiter
Communications, Inc. have not changed since the date hereof.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Until 1999 (25 days after the date of this prospectus) all
dealers that effect transactions in these shares of common stock may be required
to deliver a prospectus. This is in addition to the dealer's obligation to
deliver a prospectus when acting as an underwriter and with respect to their
unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
<PAGE> 81
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the costs and expenses, other
than the underwriting discounts and commissions, payable by the registrant in
connection with the issuance and distribution of the common stock being
registered.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 15,985
NASD fee.................................................... 6,250
NASDAQ listing fee.......................................... 88,500
Legal fees and expenses..................................... 350,000
Accounting fees and expenses................................ 300,000
Printing expenses........................................... 250,000
Blue sky fees and expenses.................................. 10,000
Transfer Agent and Registrar fees and expenses.............. 12,500
Miscellaneous............................................... 66,765
----------
Total............................................. $1,100,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The registrant's certificate of incorporation in effect as of the date
hereof, and the registrant's amended and restated certificate of incorporation
to be in effect upon the closing of this offering (collectively, the
"Certificate") provide that, except to the extent prohibited by the Delaware
General Corporation Law, as amended (the "DGCL"), the registrant's directors
shall not be personally liable to the registrant or its stockholders for
monetary damages for any breach of fiduciary duty as directors of the
registrant. Under the DGCL, the directors have a fiduciary duty to the
registrant which is not eliminated by this provision of the Certificate and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available. In addition, each director will
continue to be subject to liability under the DGCL for breach of the director's
duty of loyalty to the registrant, for acts or omissions which are found by a
court of competent jurisdiction to be not in good faith or involving intentional
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are prohibited by DGCL. This provision
also does not affect the directors' responsibilities under any other laws, such
as the Federal securities laws or state or Federal environmental laws. The
registrant intends to obtain liability insurance for its officers and directors
prior to the closing of this offering.
Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this provision
shall not eliminate or limit the liability of a director: (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) arising under Section 174 of the DGCL, or (iv)
for any transaction from which the director derived an improper personal
benefit. The DGCL provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under the corporation's bylaws, any agreement, a vote
of stockholders or otherwise. The Certificate eliminates the personal liability
of directors to the fullest extent permitted by Section 102(b)(7) of the DGCL
and provides that the registrant shall fully indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that such person is or was a director or
officer of the registrant, or is or was serving at the request of the registrant
as a director or officer of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorney's fees), judgments, fines
II-1
<PAGE> 82
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Certificate. The registrant is not aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Within the last three years, the registrant has sold and issued the
following securities:
Units. Between November 1996 and February 1997, the registrant sold
approximately 11% of the company to Kurt Abrahamson, Joshua A. Weinreich and
Narain Gehani, for an aggregate purchase price of $500,000. In addition, the
registrant granted these individuals options to purchase an additional 667,968
units at a weighted average exercise price of $0.75. In October 1997, Gartner
Group purchased 1,318,359 Class C units from Jupiter Communications, LLC for a
total of $3.0 million.
Upon the closing of this offering, Jupiter Communications, LLC will merge
with and into Jupiter Communications, Inc. In connection with this merger, all
membership units in Jupiter Communications, LLC will be exchanged for shares of
common stock of Jupiter Communications, Inc. The sales of the above securities
were deemed to be exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
Options. The registrant has from time to time granted options to purchase
units in Jupiter Communications, LLC in reliance upon exemptions from
registration pursuant to either Section 4(2) of the Securities Act of 1933, as
amended, or Rule 701 promulgated under the Securities Act of 1933, as amended.
The following table sets forth certain information regarding such grants:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
UNITS EXERCISE PRICE
--------- --------------
<S> <C> <C>
August 1, 1996 to December 31, 1996......................... 667,968 $ 0.75
January 1, 1997 to December 31, 1997........................ 704,738 $ 0.50
January 1, 1998 to December 31, 1998........................ 563,000 $ 2.08
January 1, 1999 to August 31, 1999.......................... 1,438,275 $ 4.45
</TABLE>
The sales of the above securities were deemed to be exempt from
registration pursuant to either Section 4(2) of the Securities Act of 1933, as
amended, or Rule 701 promulgated under the Securities Act of 1933, as amended.
The recipients of securities in each of these transactions represented their
intention to acquire the securities for investment only and not with view to or
for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates and instruments issued in such
transactions. All recipients had adequate access, through their relationship
with the Registrant, to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
1.1* Form of underwriting agreement.
3.1** Certificate of incorporation.
3.2* Form of amended and restated certificate of incorporation to
be in effect upon the closing of this offering.
3.3** Bylaws.
3.4 Form of amended and restated bylaws to be in effect upon the
closing of this offering.
</TABLE>
II-2
<PAGE> 83
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
4.1* Specimen common stock certificate.
4.2 Please see Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of
the certificate of incorporation and bylaws of the
registrant defining the rights of holders of common stock of
the registrant.
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1** Employment Agreement, dated as of October 22, 1997, between
the registrant and Gene DeRose.
10.2** Employment Agreement, dated as of October 22, 1997, between
the registrant and Kurt Abrahamson.
10.3** 1997 Option Plan.
10.4* 1999 Stock Incentive Plan.
10.5* 1999 Employee Stock Purchase Plan.
10.6 Form of registration rights agreement to be in effect upon
the closing of this offering.
10.7 Lease, dated April 7, 1998, between Abbey Life Assurance
Company Limited and the registrant.
10.8 Agreement of Lease, dated as of November 21, 1996, between
625 Properties Associates and the registrant.
10.9 Agreement of Lease, dated as of January 25, 1999, between
Renaissance 627 Broadway LLC and the registrant.
23.1 Consent of KPMG LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in
Exhibit 5.1).
24.1** Powers of Attorney (please see Signature Page).
27.1** Financial Data Schedule.
</TABLE>
- ------------------------------
* To be filed by amendment.
** Supplied previously as an exhibit to Form S-1 filed on July 30, 1999.
(b) Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts
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
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 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 of 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
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon
II-3
<PAGE> 84
Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497 (h) under the Securities Act of
1933 shall be deemed to be part of this registration statement as of the
time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 85
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on this 2nd day of September, 1999.
JUPITER COMMUNICATIONS, INC.
By: /s/ GENE DEROSE
------------------------------------
Gene DeRose
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities indicated on September 2, 1999:
<TABLE>
<CAPTION>
SIGNATURE TITLE(S)
--------- --------
<C> <S>
/s/ GENE DEROSE Chief Executive Officer and Chairman of the
- ----------------------------------------------------- Board of Directors
Gene DeRose (Principal Executive Officer)
/s/ JEAN ROBINSON Chief Financial Officer
- ----------------------------------------------------- (Principal Financial and Accounting Officer)
Jean Robinson
* President, Chief Operating Officer and
- ----------------------------------------------------- Director
Kurt Abrahamson
* Director
- -----------------------------------------------------
Robert Kavner
</TABLE>
*By: /s/ GENE DEROSE
--------------------------------------
Gene DeRose
Attorney-in-fact
II-5
<PAGE> 86
SCHEDULE II
JUPITER COMMUNICATIONS, LLC
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AT PROVISION BALANCE AT
BEGINNING FOR DOUBTFUL END OF
OF PERIOD ACCOUNTS DEDUCTIONS PERIOD
---------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
For the year ended December 31, 1996
Allowance for doubtful accounts.............. $ -- $26,000 $ -- $26,000
======= ======= ======== =======
For the year ended December 31, 1997
Allowance for doubtful accounts.............. $$26,000 $25,483 $ -- $51,483
======= ======= ======== =======
For the year ended December 31, 1998
Allowance for doubtful accounts.............. $51,483 $ -- $(13,568) $37,915
======= ======= ======== =======
</TABLE>
II-6
<PAGE> 87
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <S>
1.1* Form of underwriting agreement.
3.1** Certificate of incorporation.
3.2* Form of amended and restated certificate of incorporation to
be in effect upon the closing of this offering.
3.3** Bylaws.
3.4 Form of amended and restated bylaws to be in effect upon the
closing of this offering.
4.1* Specimen common stock certificate.
4.2 Please see Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of
the certificate of incorporation and bylaws of the
registrant defining the rights of holders of common stock of
the registrant.
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1** Employment Agreement, dated as of October 22, 1997, between
the registrant and Gene DeRose.
10.2** Employment Agreement, dated as of October 22, 1997, between
the registrant and Kurt Abrahamson.
10.3** 1997 Option Plan.
10.4* 1999 Stock Incentive Plan.
10.5* 1999 Employee Stock Purchase Plan.
10.6 Form of registration rights agreement to be in effect upon
the closing of this offering.
10.7 Lease, dated April 7, 1998, between Abbey Life Assurance
Company Limited and the registrant.
10.8 Agreement of Lease, dated as of November 21, 1996, between
625 Properties Associates and the registrant.
10.9 Agreement of Lease, dated as of January 25, 1999, between
Renaissance 627 Broadway LLC and the registrant.
23.1 Consent of KPMG LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in
Exhibit 5.1).
24.1** Powers of Attorney (please see Signature Page).
27.1** Financial Data Schedule.
</TABLE>
- ------------------------------
* To be filed by amendment.
** Supplied previously as an exhibit to Form S-1 filed on July 30, 1999.
<PAGE> 1
Exhibit 3.4
AMENDED AND RESTATED BY-LAWS
OF
JUPITER COMMUNICATIONS, INC.
ARTICLE I
CERTIFICATE OF INCORPORATION AND BYLAWS
Section 1. These By-Laws are subject to the Certificate of
Incorporation of the Corporation, as amended to date. In these By-Laws,
references to law, the Certificate of Incorporation and By-Laws mean the law,
the provisions of the Certificate of Incorporation and the By-Laws as from time
to time in effect.
ARTICLE II
OFFICES
Section 1. The registered office of the Corporation in the
State of Delaware shall be Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, Delaware 19801 and the name of the registered
agent at that address is The Corporation Trust Company.
Section 2. The Corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the Corporation may require.
ARTICLE III
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election
of directors shall be held at such place as may be fixed from time to time by
the Board of Directors, or at such other place either within or without the
State of Delaware as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or without the
State of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
<PAGE> 2
Section 2. Annual meetings of stockholders shall be held at
such date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote the directors to be elected at such meeting, and transact such
other business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not fewer than ten (10) nor more than sixty (60) days
before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (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.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the chairman of the board or
president and shall be called by the chairman of the board, the president or
secretary at the request in writing of two-thirds of the Board of Directors.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not fewer than ten (10) nor more than sixty
(60) days before the date of the meeting, to each stockholder entitled to vote
at such meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of fifty percent (50%) of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
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Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the Certificate of Incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the Certificate of
Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the Certificate of
Incorporation, the Chairman of the Board may adjourn a meeting of stockholders
from time to time, without notice other than announcement at the meeting. No
notice of the time and place of an adjourned meeting need be given except as
required by law.
Section 12.
A. Annual Meetings of Stockholders
1. Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the stockholders may
be made at an annual meeting of stockholders only (a) pursuant to the
Corporation's notice of meeting (or any supplement thereto), (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 notice provided for in
this Section 12, who is entitled to vote at the meeting and who complies with
the notice procedures set forth in this Section 12.
2. For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(a)(1) of this Section 12, 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. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
ninetieth (90th) day nor earlier than the close of business on the one hundred
twentieth (120th) day prior to the first anniversary of the date of the
preceding year's annual meeting; provided, however, that if either the date of
the annual meeting is more than thirty (30) days before or more than seventy
(70) 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 one hundred
twentieth (120th) day prior to such annual meeting and not later than the close
of business on the later of the ninetieth (90th) 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 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
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case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director it elected); (b) as to any other
business that the stockholder proposes to bring before the meeting, the text of
the proposal or business (including the text of any resolutions proposed for
consideration and in the event that such business includes a proposal to amend
the By-laws of the Corporation, the language of the proposed amendment), 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
(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, (ii) the class and number of
shares of capital stock of the Corporation which are owned beneficially and of
record by such stockholder and such beneficial owner, (iii) a representation
that the stockholder is a holder of record of stock of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to propose such business or nomination, and (iv) a representation
whether the stockholder or the beneficial owner, if any, intends or is part of a
group which intends (a) to deliver a proxy statement and/or form of proxy to
holders of at least the percentage of the Corporation's outstanding capital
stock required to approve or adopt the proposal or elect the nominee and/or (b)
otherwise to solicit proxies from stockholders in support of such proposal or
nomination. The Corporation may require any proposed nominee to furnish such
other information as it may reasonably require to determine the eligibility of
such proposed nominee to serve as a director of the Corporation.
3. Notwithstanding anything in the second sentence of
paragraph (a)(2) of this Section 12 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 one hundred (100) days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by this Section
12 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 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 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 meeting (a) by or at the direction of the Board of
Directors or (b) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time notice provided for in
this Section 12 is delivered to the Secretary of the Corporation, who is
entitled to vote at the meeting and upon such election, who complies with the
notice procedures set forth in this Section 12. If the Corporation calls a
special meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder entitled to vote in
such election of directors 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
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<PAGE> 5
required by paragraph (A)(2) of this Section 12 shall be delivered to the
Secretary at the principal executive offices of the Corporation not earlier than
the close of business on the one hundred twentieth (120) day prior to such
special meeting and not later than the later of (x) the close of business of the
ninetieth (90th) day prior to such special meeting or (y) the close of business
of the tenth (10th) day following the day on which public announcement is first
made of the date of such special meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment or postponement of a special meeting commence a
new time period (or extend any time period) for the giving of a stockholder's
notice as described above.
C. General.
1. Only such persons who are nominated in accordance with
the procedures set forth in this Section 12 shall be eligible to be elected at
an annual or special meeting of stockholders of the Corporation 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 12. Except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws, the chairman of the meeting shall
have the power and duty (a) 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 12 (including
whether the stockholder or beneficial owner, if any, on whose behalf the
nomination or proposal is made solicited (or is part of a group which solicited)
or did not so solicit, as the case may be, proxies in support of such
stockholder's nominee or proposal in compliance with such stockholder's
representation as required by clause (A)(2)(c)(iv) of this Section 12) and (b)
if any proposed nomination or business was not made or proposed in compliance
with this Section 12, to declare that such nomination shall be disregarded or
that such proposed business shall not be transacted.
2. For purposes of this Section 12, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Sections 13, 14 and 15(d) of the Exchange Act.
3. Notwithstanding the foregoing provisions of this Section
12, 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 12 shall be deemed to affect
any rights (i) of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(ii) of the holders of any series of Preferred Stock to elect directors pursuant
to any applicable provisions of the Certificate of Incorporation.
Notwithstanding any other provision of law, the Certificate of
Incorporation or these By-Laws, and notwithstanding the fact that a lesser
percentage may be specified by law, the affirmative vote of the holders of at
least 66.67% of the votes which all the stockholders would be entitled to cast
at any annual election of directors or class of directors shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Section 12.
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<PAGE> 6
ARTICLE IV
DIRECTORS
Section 1. The number of directors which shall constitute the
whole Board shall be determined by resolution of the Board of Directors or by
the stockholders at the annual meeting of the stockholders, except as provided
in Section 2 of this Article. The Board shall be divided into three classes as
nearly equal in number as possible. The members of each class shall be elected
for a term of three years and until their successors are elected and qualified.
The Board of Directors shall be classified in accordance with the provisions of
the Corporation's Certificate of Incorporation. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by 66.67%
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election at which such director's class is to be elected and until their
successors are duly elected and shall qualify, unless sooner displaced. If there
are no directors in office, then an election of directors may be held in the
manner provided by statute. If, at the time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute less than a
majority of the whole Board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in office.
Section 3. The business of the Corporation shall be managed by
or under the direction of its Board of Directors which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
Meetings of the Board of Directors
Section 4. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the Board. Members of the Board of Directors may participate in
regular or special meetings by means of conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear each other. Such participation shall constitute presence in person.
Section 6. Special meetings of the Board may be called by the
chairman of the board or president on two (2) days' notice to each director by
mail or forty-eight (48) hours
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notice to each director either personally or by telecopy; special meetings
shall be called by the president or secretary or chairman of the board in like
manner and on like notice on the written request of two directors unless the
Board consists of only one director, in which case special meetings shall be
called by the chairman of the board or the president or secretary in like manner
and on like notice on the written request of the sole director.
Section 7. At all meetings of the Board a majority of the
directors fixed by Section 1 shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the Certificate of
Incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 8. Unless otherwise restricted by the Certificate of
Incorporation of these By-Laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or 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.
Section 9. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any 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 such participation in a meeting shall
constitute presence in person at the meeting.
Committees of Directors
Section 10. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.
In the absence of disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution
of the Board of Directors, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or
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exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-Laws of the Corporation; and,
unless the resolution or the Certificate of Incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Section 11. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.
Compensation of Directors
Section 12. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Director and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Removal of Directors
Section 13. Any director or the entire Board of Directors may
be removed only in accordance with the provisions of the Corporation's
Certificate of Incorporation.
ARTICLE V
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the Certificate of Incorporation or of these By-Laws, notice is required to
be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed to
such director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telecopy.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the Certificate of Incorporation or of
these By-Laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
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ARTICLE VI
OFFICERS
Section 1. The officers of the Corporation shall be chosen by
the Board of Directors and shall consist of a chief executive officer, chief
financial officer, president, treasurer and a secretary. The Board of Directors
may elect from among its members a Chairman of the Board and a Vice Chairman of
the Board. The Board of Directors may also choose one or more vice-presidents,
assistant secretaries and assistant treasurers. Any number of offices may be
held by the same person, unless the Certificate of Incorporation or these
By-Laws otherwise provide.
Section 2. The Board of Directors at its first meeting after
each annual meeting of stockholders shall choose a chief executive officer, a
president, a treasurer, and a secretary and may choose vice presidents.
Section 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
Section 4. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
Section 5. The officers of the Corporation shall hold office
until their successors are chosen and qualify. Any officer elected or appointed
by the Board of Directors may be removed at any time by the affirmative vote of
a majority of the Board of Directors. Any vacancy occurring in any office of the
Corporation shall be filled by the Board of Directors.
The Chairman of the Board
Section 6. The Chairman of the Board shall be the chief
executive officer of the Corporation and shall preside at all meetings of the
stockholders and directors. The Chairman shall conduct general and active
management of the business of the Corporation and shall see that all orders and
resolutions of the Board are carried into effect, subject, however, to the right
of the directors to delegate any specific powers, except such as may be by
statute exclusively conferred on the Chairman of the Board, to any other officer
or officers of the Corporation. The Chairman shall have the general powers and
duties of supervision and management usually vested in the office of Chairman of
the Board of a corporation. Such individual shall execute bonds, mortgages and
other contracts requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some officer or agent of the Corporation.
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The President
Section 7.
The President shall conduct general and active management of
the business of the Corporation and shall see that all orders and resolutions of
the Board are carried into effect, subject, however, to the right of the
directors to delegate any specific powers, except such as may be by statute
exclusively conferred on the President, to any other officer or officers of the
Corporation. The President shall have the general power and duties of
supervision and management usually vested in the office of President of a
corporation. In the absence of the Chairman and Vice Chairman of the Board, the
President shall preside at all meetings of the stockholders and the Board of
Directors.
Such individual shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
The Vice-Presidents
Section 8.
In the absence of the president or in the event of his
inability or refusal to act, the vice-president, if any, (or in the event there
be more than one vice-president, the vice-presidents in the order designated by
the directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
The Secretary and Assistant Secretary
Section 9.
The secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the Corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. Such individual shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or president, under whose supervision such individual shall be. Such individual
shall have custody of the corporate seal of the Corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing by his signature.
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Section 10. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as the Board of
directors may from time to time prescribe.
The Treasurer and Assistant Treasurers
Section 11. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors.
Section 12. The treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the president and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all his transactions as treasurer and of the financial condition
of the Corporation.
Section 13. If required by the Board of Directors, such
individual shall give the Corporation a bond (which shall be renewed every six
years) in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
Section 14. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
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ARTICLE VII
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the Corporation 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 the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the Corporation, certifying the number of shares owned
by him in the Corporation.
If the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions or such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the Corporation shall issue to represent such class or
series of stock, a statement that the Corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
individual were such officer, transfer agent or registrar at the date of issue.
Lost Certificates
Section 3. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
12
<PAGE> 13
Transfer of Stock
Section 4. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Fixing Record Date
Section 5. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting unless expressly disallowed by the Certificate of
Incorporation, 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 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. 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.
Registered Stockholders
Section 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VIII
GENERAL PROVISIONS
Dividends
Section 1. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
13
<PAGE> 14
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purposes as the directors shall think conducive to the interest
of the Corporation, and the directors may modify or abolish any such reserve in
the manner in which it was created.
Checks
Section 3. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Fiscal Year
Section 4. The fiscal year of the Corporation shall end on
December 31, unless otherwise fixed by resolution of the Board of Directors.
Seal
Section 5. The Board of Directors may adopt a corporate seal
having inscribed thereon the name of the Corporation, the year of its
organization and the words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
Section 6. No contract or transaction between the Corporation
and one or more of the directors or officers, or between the Corporation and any
other corporation, partnership, association, or other organization in which one
or more of the directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because such director or officer is present at or participates in the meeting of
the Board of Directors or a committee of the Board of Directors which authorizes
the contract or transaction or solely because his, her or their votes are
counted for such purpose, if:
(1) The material facts as to his or her 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 or committee in good faith
authorizes the contract or transaction by the affirmative vote of a majority of
the disinterested directors, even though the disinterested directors be less
than a quorum;
(2) The material facts as to his or her 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
14
<PAGE> 15
(3) 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 of the Board of Directors, or the stockholders. Common
or 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
AMENDMENTS
These By-Laws may be repealed, altered, amended or rescinded
by the stockholders of the Corporation by vote of not less than 66.67% of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that purpose (provided
that notice of such proposed repeal, alteration, amendment or rescission is
included in the notice of such meeting). In addition, in accordance with the
Corporation's Certificate of Incorporation, the Board of Directors may repeal,
alter, amend or rescind these By-Laws by vote of 66.67% of the Board of
Directors.
15
<PAGE> 1
Exhibit 5.1
September 2, 1999
Jupiter Communications, Inc.
627 Broadway
New York, New York 10012
Re: Jupiter Communications, Inc. -- Registration Statement on
Form S-1 (File No. 333-84175)
Ladies and Gentlemen:
We have acted as counsel to Jupiter Communications, Inc., a
Delaware corporation (the "Company"), in connection with the proposed issuance
and sale by the Company of up to 3,125,000 shares of the Company's Common Stock
(the "Shares") pursuant to the Company's Registration Statement on Form S-1 (the
"Registration Statement") filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
This opinion is being furnished in accordance with the
requirements of Item 16(a) of Form S-1.
We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the issuance and
sale of the Shares. Based on such review, we are of the opinion that the Shares
have been duly authorized, and if, as and when issued in accordance with the
Registration Statement and the related prospectus (as amended and supplemented
through the date of issuance) will be legally issued, fully paid and
nonassessable.
We consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus which is part of the Registration
Statement. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the Act,
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder, or Item 509 of Regulation S-K.
<PAGE> 2
Page 2
Jupiter Communications, Inc.
September 1, 1999
This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company or the Shares.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
Exhibit 10.6
JUPITER COMMUNICATIONS, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made as of
September __, 1999 by and among Jupiter Communications, Inc., a Delaware
corporation (the "Company"), and the individuals and entities named as
Stockholders on the signature pages hereof (the "Stockholders").
WHEREAS, the Stockholders previously entered into that certain Third
Amended and Restated Operating Agreement of Jupiter Communications, LLC, dated
as of October 22, 1997 (the "Operating Agreement"), which provides for certain
registration rights to be granted to the Stockholders;
WHEREAS, in connection with the Company's proposed initial public
offering, the Company will effect a merger (the "Merger") pursuant to which
Jupiter Communications, LLC will be merged with and into the Company;
WHEREAS, in connection with the Merger, the Stockholders will receive
shares (the "Shares") of the common stock, par value $0.001 per share (the
"Common Stock"), of the Company in exchange for the units of Jupiter
Communications, LLC currently owned by the Stockholders; and
WHEREAS, the Company now wishes to grant the Stockholders certain
registration rights with respect to the Shares.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth herein, the Company and the Stockholders agree as follows:
1. EFFECTIVE DATE. This Agreement shall become effective upon the
consummation of the Merger.
2. REGISTRATION RIGHTS.
(a) In the event that the Company contemplates a Public
Offering (as defined below), the Company shall so notify the Stockholders in
writing of its intention to do so at least thirty (30) days prior to the filing
of the registration statement related to such Public Offering. Each Stockholder
shall give written notice to the Company, within twenty (20) days of receipt of
such notice from the Company, of such Stockholder's desire to have any of its
Registrable Securities (as defined below) of the Company included in such
registration statement and may, subject to the provisions of this Section 2,
have its Registrable Securities so included. The Company shall file any required
amendments of or supplements to any registration statement related to such
Public Offering and otherwise use its best efforts to insure that such
registration statement remains in effect under the Securities Act of 1933, as
amended, until the earlier of the sale of all of the Registrable Securities
included in the registration or the expiration of one hundred twenty (120) days
from the effective date thereof.
1
<PAGE> 2
For purposes of this Section 2, a "Public Offering" shall mean
a public offering by the Company of any class or classes of its securities under
the Securities Act of 1933, as amended, provided that the aggregate gross
proceeds of the offering of such securities (before reduction by underwriting
commissions and other expenses of sale) exceed $15,000,000.
(b) "Registrable Securities" shall mean shares of Common Stock
outstanding as of the date hereof or any equity securities into which such
shares of Common Stock may be converted or exchanged and which are included in
the registration statement being filed.
(c) If the Public Offering of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Stockholders as a part of the written notice given pursuant to
Section 2(a). In such event the right of a Stockholder to registration pursuant
to Section 2(a) shall be conditioned upon the Stockholder's participation in
such underwriting and the inclusion of the Stockholder's Registrable Securities
in the underwriting to the extent provided herein. If the managing underwriter
in such underwritten offering shall advise the Company that, due to marketing
limitations or other industry-accepted criteria, it declines to include a
portion or all of the securities requested by Stockholders and other persons
with piggyback registration rights to be included in the registration statement,
then all or a portion of the Registrable Securities requested for inclusion in
the registration statement (and offering, if applicable) may be excluded from
such registration statement (and offering, if applicable), in which case the
number of securities included in the registration statement on behalf of persons
other than the Company shall be allocated among the Stockholders and other
holders of registration rights in proportion to the respective numbers of
securities entitled to registration rights held by the Stockholders and other
holders requesting registration. In such event the Company shall give the
Stockholders prompt notice of the number of Registrable Securities excluded.
Should a Stockholder propose to distribute the Company's securities through such
underwriting, then the Stockholder shall (together with the Company and any
others distributing their securities through such underwriting) enter into an
underwriting agreement and related documents in customary form with the managing
underwriter selected for such underwriting by the Company (or by any other
person or entity who has demanded such registration), which may include, among
other things, indemnification, lock-up and expense sharing provisions.
(d) The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 2 prior to the effectiveness
of such registration whether or not any Stockholder or Stockholders have elected
to include securities in such registration.
(e) The Stockholders will cooperate with the Company in all
respects in connection with such registration statement, including, but not
limited to, timely supplying all information reasonably requested by the Company
and executing and returning all documents reasonably requested in connection
with the registration and sale of the Registrable Securities. It shall be a
condition to the Company's obligations to include Registerable Securities that
the Stockholder provide written information requested by the Company or the
managing underwriter in a timely manner.
2
<PAGE> 3
(f) The Gartner Group, Inc. ("Gartner") hereby agrees that,
for a period of one (1) year following the first of any Public Offerings,
neither it or any Affiliate (as defined below) will acquire any additional
shares of common stock or other equity securities of the Company, if immediately
after such acquisition Gartner would own, directly or indirectly, more than
thirty-two percent (32%) of any class of common stock or other equity securities
of the Company.
For purposes of this Section 2(f), "Affiliate" shall mean,
with respect to any Person, any other Person, directly or indirectly,
controlling, controlled by, or under direct or indirect common control with,
such Person. For the purposes of this definition: "Person" shall mean an
individual, corporation, partnership, joint venture, association, trust,
unincorporated organization or other entity; "control," when used with respect
to any specified Person, shall mean the power to direct or cause the direction
of management and policies of such Person, directly or indirectly, whether
through ownership of voting securities or partnership or other ownership
interests, by contract or otherwise; and "controlling" and "controlled" shall
have correlative meanings.
3. MISCELLANEOUS.
3.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the internal laws of the State of New York without regard to
conflicts of laws principles. The parties expressly stipulate that any
litigation under this Agreement shall be brought in the state courts of the
County of New York, New York or in the United States District Court for the
Southern District of New York. The parties agree to submit to the jurisdiction
and venue of those courts.
3.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
3.3 TRANSFER OR ASSIGNMENT RIGHTS. The rights granted to the
Stockholders by the Company under this Agreement may only be transferred or
assigned by the Stockholders to a transferee or assignee of any of the Shares if
the Company is given notice by the Stockholders prior to the time of said
transfer or assignment, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such rights are
being transferred or assigned; the transferee or assignee of such rights assumes
the obligations of the Stockholders under this Agreement, and provided that (i)
the transfer is in connection with a transfer of all securities of the Company
held by the transferor, (ii) the transferee after the transfer has an aggregate
of at least 100,000 shares of the Registrable Securities (in either case, as
adjusted for stock splits, stock dividends and events of a similar nature),
(iii) the transfer is from one Stockholder to another Stockholder, or (iv) the
transfer or assignment is to constituent partners or stockholders who agree to
act through a single representative.
3.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes
the full and entire understanding and agreement between the parties with regard
to the subjects hereof
3
<PAGE> 4
and thereof, and no party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants except as specifically
set forth herein or therein. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought; provided,
however, that holders of a majority of the Shares (as adjusted for stock splits,
stock dividends and similar events) may, with the prior written consent of the
Company, waive, modify or amend on behalf of all holders, any provisions hereof.
3.5 NOTICES, ETC. All notices and other communications
required or permitted in this Agreement shall be in writing, shall be effective
when given, and shall in any event be deemed to be given upon receipt or, if
earlier, (a) five (5) days after deposit with the U.S. Postal Service or other
applicable postal service, if delivered by first class mail, postage prepaid,
(b) upon delivery, if delivered by hand, (c) one business day after the business
day of deposit with Federal Express or similar overnight courier, freight
prepaid or (d) one business day after the business day of facsimile
transmission, if delivered by facsimile transmission with copy by first class
mail, postage prepaid, and shall be addressed if to a Stockholder, at the
Stockholder's address as set forth on Exhibit A hereto, if to the Company to the
address set forth on the signature page hereto, or at such other address as a
party may designate by ten days' advance written notice to the other party
pursuant to the provisions above.
3.6 DELAYS OR OMISSIONS. Except as expressly provided herein,
no delay or omission to exercise any right, power or remedy accruing to any
Stockholder, upon any breach or default of the Company under this Agreement,
shall impair any such right, power or remedy of such holder nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any holder of any
breach or default under this Agreement, or any waiver on the part of any holder
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
3.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which may be executed by less than all of the
Stockholders, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
3.8 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
3.9 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are
4
<PAGE> 5
used for convenience only and are not considered in construing or interpreting
this Agreement.
3.10 TERMINATION OF RIGHTS GRANTED IN EARLIER AGREEMENT. Upon
execution and delivery of this Agreement by the Company and the Stockholders,
the registration rights granted to the Stockholders pursuant to the Operating
Agreement shall be terminated and superseded by the rights granted in this
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
<PAGE> 6
The foregoing agreement is hereby executed by each party as of the date
set forth above.
JUPITER COMMUNICATIONS, INC.
By
---------------------------------
Name:
Title:
THE STOCKHOLDERS:
------------------------------------
Eugene DeRose
------------------------------------
Kurt Abrahamson
------------------------------------
Michael Fleischer
------------------------------------
Joshua Harris
------------------------------------
Richard Tahta
------------------------------------
Joshua A. Weinreich
23
<PAGE> 7
------------------------------------
Robert Weinreich
------------------------------------
Narain Gehani
------------------------------------
Robert Kavner
------------------------------------
Ernest Abrahamson
24
<PAGE> 8
EXHIBIT A
LIST OF STOCKHOLDERS
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES
---------------- ----------------
<S> <C>
Eugene DeRose 2,393,478
627 Broadway
New York, NY 10012
Kurt Abrahamson 1,004,721
627 Broadway
New York, NY 10012
Michael Fleisher 29,905
56 Top Gallant Road
Stamford, CT 06904-2212
Joshua Harris 1,070,595
600 Broadway
New York, NY 10012
Richard Tahta 118,391
68 Kensington Church Street
London W8 4BY U.K.
Joshua A. Weinreich 971,221
27 Glen Oaks Avenue
Summit, NJ 07901
Robert Weinreich 8,475
1323 Anchor Court
Orlando, Florida 32804
Narain Gehani 148,711
25 Beverly Road
Summit, NJ 07901
Robert Kavner 200,000
6331 San Ignacio Avenue
San Jose, CA 95119
</TABLE>
25
<PAGE> 9
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES
---------------- ----------------
<S> <C>
Ernest Abrahamson 845,335
16 Sutton Place
New York, NY
Gartner Group, Inc. 4,028,503
P.O. Box 10212
56 Top Gallant Road
Stamford, CT
</TABLE>
26
<PAGE> 1
Exhibit 10.7
DATE 7TH APRIL 1998
ABBEY LIFE ASSURANCE COMPANY LIMITED
JUPITER COMMUNICATIONS LLC
Counterpart/
LEASE
of office premises at
10/11 St. Martins Court
London WC2
MACFARLANES
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1 ABBY LIFE ASSURANCE COMPANY LIMITED whose registered office is
at 80 Holdenhurst Road. Bournemouth BH8 8QL. (the "Landlord")...........................................1
2 JUPITER COMMUNICATIONS LLC (Registered Company No. FC020941)
whose address for service is at 11/15 Betterton Street,
London WC2H 9BP and any person in whom the Term is from time to
time vested ("the Tenant")...............................................................................1
3 DEFINITIONS..............................................................................................1
2 INTERPRETATION...........................................................................................3
3 DEMISE...................................................................................................4
4 INTRODUCTION.............................................................................................4
5 RENT.....................................................................................................4
6 OUTGOINGS................................................................................................5
7 REPAIR AND DECORATION....................................................................................5
8 ALTERATIONS..............................................................................................6
9 SIGNS....................................................................................................6
10 USER.....................................................................................................7
11 ASSIGNMENTS AND UNDERLETTINGS............................................................................8
12 LEGAL OBLIGATIONS........................................................................................9
13 PLANNING................................................................................................10
14 DEFECTIVE PREMISES......................................................................................11
15 ENCROACHMENTS...........................................................................................11
16 LANDLORD'S RIGHTS.......................................................................................12
17 COSTS...................................................................................................12
18 INTEREST................................................................................................13
19 INDEMNITY...............................................................................................13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
20 MISCELLANEOUS COVENANTS AND YIELDING UP.................................................................13
21 INSURANCE DEFINITIONS...................................................................................14
22 LANDLORD'S COVENANTS....................................................................................14
23 ABATEMENT OF RENT.......................................................................................15
24 TENANT'S INSURANCE COVENANTS:...........................................................................15
25 QUIET ENJOYMENT.........................................................................................16
26 DEFINITIONS AND INTERPRETATION..........................................................................17
27 REVIEW OF RENT..........................................................................................17
28 OPEN MARKET RENT........................................................................................17
29 PROCEDURE...............................................................................................18
30 DELAYED REVIEW..........................................................................................19
31 RESTRICTIONS............................................................................................19
32 MEMORANDA...............................................................................................20
33 RECOVERY OF MONEY.......................................................................................20
34 USER....................................................................................................20
35 EASEMENTS...............................................................................................20
36 COVENANTS...............................................................................................20
37 NOTICE..................................................................................................21
38 RIGHT OF RE-ENTRY.......................................................................................21
39 INSOLVENCY..............................................................................................21
40 INTRODUCTION............................................................................................22
41 GUARANTOR'S COVENANT....................................................................................22
</TABLE>
SCHEDULE 1 Rights
SCHEDULE 2 Exceptions and Reservations
SCHEDULE 3 Incumbrances
SCHEDULE 4 Authorised Guarantee Agreement
3
<PAGE> 4
LEASE
DATE 7th April 1998
PARTIES
1 ABBY LIFE ASSURANCE COMPANY LIMITED whose registered office is at 80
Holdenhurst Road. Bournemouth BH8 8QL. (the "Landlord").
2 JUPITER COMMUNICATIONS LLC (Registered Company No. FC020941)
whose address for service is at 11/15 Betterton Street, London
WC2H 9BP and any person in whom the Term is from time to time
vested ("the Tenant").
3 DEFINITIONS
Where in this Deed the following words commence with capital letters
they have the following meanings unless the context otherwise requires:
AGREED TERM: a term of years commencing on the 7th day of April 1998
and expiring on the 31 March 2005.
AUTHORITY: any statutory public local or other competent authority
or a court of competent jurisdiction.
BUILDING: 10/11 St. Martins Court, London WC2 as shown for the
purposes of identification edged blue on the Plans numbered 1 and 2
annexed hereto.
CLAUSE: a clause of this Deed.
CONDUIT: Any pipe drain culvert sewer flue duct gutter wire cable optic
fibre conduit channel and other medium for the passage or transmission
of water soil gas air soil electricity light information or other
matter and all ancillary equipment or structures.
DETERMINATION OF THE TERM: the determination of the Term by re-entry
notice surrender or otherwise.
FIRST RENT PAYMENT: pound sterling12,448.02 to be paid on the 7th day
of April 1998 in respect of the period commencing on the 7th April 1998
and expiring on the 24 day of June 1998.
INTEREST: interest at the Interest Rate (both before and after any
judgment) calculated on a daily basis from the date on which interest
becomes chargeable on any payment pursuant to any provision of the
Lease to the date upon which such payment is made to be compounded
with rests at the usual quarter days.
<PAGE> 5
INTEREST RATE: 4% p.a. above the base lending rate from time to time
of Barclays Bank Plc (or such other banks as the Landlord may (acting
reasonably) give notice from time to time).
LANDLORD: the party so named at the head of this Lease and any person
for the time being entitled to the reversion immediately expectant on
the Determination of the Term.
LEASE: this Lease as from time to time varied or supplemented whether
by deed licence or otherwise.
PARTY: The Landlord or the Tenant or the Guarantor (if any).
PERMITTED PART: Each of the upper floors of the Premises.
PERMITTED USER: Offices within Class B1(a) of the Schedule to the
Town & Country Planning (Use Classes) Order 1987 (to which
Clause 2.6 shall not apply).
PLAN: the plans annexed to this Deed.
PLANNING ACTS: The Town and Country Planning Acts 1990/91 and all
subsequent statutes containing provisions relating to town and country
planning when from time to time in force and all other statutory
instruments regulations and orders included by virtue of Clause 2.6.
POSSESSION DATE: the date hereof.
PREMISES: the Building and all and any part of such property and any
additions thereto excluding the Retained Property.
RENT: The sum of FIFTY EIGHT THOUSAND TWO HUNDRED AND FIFTY POUNDS
(pound sterling58.250) exclusive of VAT per annum or such other amount
as is from time to time agreed or determined pursuant to the terms of
this Lease.
RETAINED PROPERTY: the Units comprising the ground floor and basement
of 10 and 11 St. Martins Court respectively as shown for identification
edged red and numbered 1 on the plan annexed hereto and all and any
part of such property and any additions thereto including:
(i) the internal finishes of the walls dividing those Units from
other parts of the Building but not those walls themselves and
the floorboards and ceilings but not the loadbearing members of a
floor;
(ii) internal walls which are not load bearing;
(iii) the internal finishes of any load bearing walls within those
Units but not those walls themselves;
2
<PAGE> 6
(iv) the doors door frames windows and window frames shop fronts and
fascias of those Units;
(v) Conduits and Facilities to the extent that they are within and
exclusively serve those Units (but not other Conduits or
Facilities);
(vi) Fixtures and fitting at those Units whenever fixed except those
fixed by the tenants which are generally regarded as tenants or
trade fixtures but for the avoidance of doubt no areas outside
the boundaries of the walls the floor and the ceiling containing
those Units are included therein (without prejudice to any
rights expressly granted to the Tenant).
SCHEDULE: a schedule of this Deed.
SUPERIOR LEASE: a lease dated 14th September 1995 and made between
The Sixth Marquess of Salisbury and Viscount Cranborne (1) Gascoyne
Holdings Limited (2) London and Regional (Central) Investment, Limited.
THE SUPERIOR LANDLORD: Gascoyne Holdings Limited.
TENANT: Jupiter Communications LLC (Registered No. FC 020941) whose
address for service is at 11/15 Betterton Street. London WC2H 9BP and
any person in whom the Term is from time to time vested.
TERM: the Agreed Term and any continuation or extension of it whether
by agreement operation of law or otherwise.
THE TRUSTEES: The Sixth Marquess of Salisbury and Viscount Cranborne.
UNIT: a unit of accommodation that is from time to time let or
otherwise occupied or designed or intended for letting or occupation.
VAT: Value Added Tax or other tax of a similar nature (and unless
otherwise expressly stated all references to Rent or other monies
payable by the Tenant are exclusive of any VAT charged or chargeable
thereon).
2 INTERPRETATION
The provisions of this Lease shall unless the context otherwise
requires be construed as follows:
2.1 Obligations and liabilities of a Party comprising more than one person
are obligations and liabilities of such persons jointly and severally.
2.2 Words importing one gender include all other genders.
2.3 The singular includes the plural and vice versa.
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2.4 A covenant by the Tenant not to do something shall be construed as
including a covenant not to permit or suffer it to be done by a third
party.
2.5 A consent or approval to be given by the Landlord is not effective for
the purposes of the Lease unless it is in writing and signed by or on
behalf of the Landlord.
2.6 Reference to a statute includes any amendment modification extension
consolidation or re-enactment of it and any statutory instrument
regulation or order made under it which is for the time being in
force.
2.7 Headings to Clause Schedules or parts of the lease do not affect the
interpretation or construction of the Lease.
3 DEMISE
The Landlord demises the Premises to the Tenant:
3.1 together with the rights set out in Schedule 1;
3.2 except and reserving to the Landlord as set out in Schedule 2;
3.3 to hold the same to the Tenant for the Agreed Term;
3.4 subject to all rights easements restrictions covenants and liabilities
affecting the Premises including without prejudice to the generality
of the foregoing those described in Schedule 3;
3.5 yielding and paying to the Landlord the Rent without any deduction or
set-off by equal quarterly payments in advance on the usual quarter
days in each year and proportionately for any period of less than a
year.
4 INTRODUCTION
With effect from and including the Possession Date the Tenant covenants
with the Landlord as set out in this part of the Lease.
5 RENT
The Tenant shall pay the Rent as provided in clause 3.5 of the Lease
(including the First Rent Payment) without deduction or set-off and
for payment of which if and for so long as required by the Landlord
the Tenant shall give to its bankers for the time being a standard
order directing such quarterly payments to be made on the due date at
the bankers for the time being of the Landlord.
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6 OUTGOINGS
6.1 The Tenant shall pay and indemnify the Landlord against all rates taxes
assessments impositions duties charges and outgoings now or at any time
during the Term payable by the owner or occupier of or otherwise in
respect of the Premises(except any tax assessed on the Landlord or any
Superior Landlord in respect of its ownership of rental income from or
any dealings with its reversionary interest).
6.2 The Tenant shall pay and keep the Landlord indemnified against
all VAT which may from time to time be charged on the Rent or
on any other monies payable by the Tenant under the Lease.
6.3 If the Landlord has an option whether or not charge VAT the Tenant
hereby irrevocably consents to the Landlord freely exercising that
option to the extent form time to time permitted by law.
6.4 The Tenant shall pay and indemnify the Landlord against all charges
for electricity gas and other services at the Premises.
6.5 The Tenant shall pay a fair and proper proportion (to be determined by
the surveyor for the time being save in the case of manifest error of
the Landlord such determination to be final and binding on the parties
hereto) of the proper and reasonable expenses payable in respect of
constructing repairing and cleansing and (if necessary for the purposes
of repair only) renewing and in all ways whatsoever maintaining all
party walls fences sewers conduits passageways, stairways roofs roads
ways pavements land and all other things the use of which is common to
the Premises and to any adjoining or neighboring premises (including
for the avoidance of doubt any other Unit).
7 REPAIR AND DECORATION
The Tenant shall (subject to the provisions relating to insurance set
out in the Lease to the intent that it shall not be liable for damages
caused by way of any of the risks against which the Landlord herein
covenants to insure unless and to the extent that the Landlord's
policy or policies of insurance shall have been vitiated or been
rendered void or voidable of payment of policy monies been refused or
withheld in consequence of any act or default on the part of the
Tenant its servants or agents):
7.1 keep the Premises at all times in good and substantial repair and
condition;
7.2 clean the Premises regularly and maintain them at all times in a clean
and tidy condition;
7.3 clean all windows regularly and at least once a month;
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7.4 decorate the outside of the Premises in the years ending on the 24th
day of March 2001 and 2003 and in the last three months of the Term
(however and whenever determined) and the inside of the Premises in the
year ending on the 24th day of March 2000 and 2005 the decoration of
the outside whenever it differs from the present colour or type to be
in a colour and type previously approved in writing by the Landlord
and the Superior Landlord (such approvals not to be unreasonably
withheld or delayed);
7.5 within two months (or sooner in emergency) of receipt of notice from
the Landlord of any breach of this Clause to proceed diligently to
carry out the repair cleaning of decoration required to remedy the
breach and if the Tenant fails diligently to comply with such notice
and the Landlord enters the Premises to carry out such work the Tenant
shall upon demand pay to the Landlord all proper costs which the
Landlord so incurs.
8 ALTERATIONS
8.1 The Tenant shall make no addition or alteration to the Premises unless
permitted by this clause.
8.2 The Landlord will not unreasonably withhold or delay consent for the
carrying out of a Tenant's Alteration in a manner consistent with the
provisions of this Lease and the Superior Lease.
8.3 "Tenant's Alteration" means an alteration to the interior of the
Premises which is non-structural.
8.4 The Landlord may before giving consent require:
8.4.1 the submission to the Landlord of drawings and specifications
(in triplicate plus as many further copies as are reasonably
requested by the Superior Landlord) showing the proposed
Tenant's Alteration.
8.4.2 the execution of such licence to carry out the Tenant's Alterations as
the Landlord may reasonably require; and
8.4.3 if in the Landlord's reasonable opinion the Tenant's Alteration
require substantial works the provision of security (by way of bonds
the deposit of money or otherwise) which is sufficient to enable the
Landlord to complete or reinstate the works if the Tenant commences
but does not within a reasonable time complete the works such security
to be provided prior to commencement of the works and to be released
upon their satisfactory completion.
9 SIGNS
The Tenant shall not:
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9.1 fix anything to the exterior of the Premises nor to the exterior of
any fascia door or windows unless permitted by this Clause;
9.2 display any notice sign poster or advertisement which is visible from
outside the Premises except to indicate the name and business of the
Tenant in a manner first approved by the Landlord and the Superior
Landlord (such approval not to be unreasonably withheld or delayed).
10 USER
10.1 Subject always to the prohibitions and restrictions hereinafter
contained the Tenant shall not use the Premises other-wise than for
the Permitted User.
10.2 Not to use or permit or suffer the Premises or any part thereof to be
used for any illegal or immoral purposes nor for the sale or
manufacturer on the Premises of beer, wine or spirituous liquors nor
as a betting shop gaming house bingo hall funfair or leisure centre
nor as a sex shop peep show sauna or massage parlour beauty parlour
hostess agency, escort agency nor as a brothel or disorderly house nor
for the business of an undertaker nor for any noisy noisome noxious
offensive or dangerous trade profession or business nor to show or
allow to be shown to the public on the Premises any films nor to sell
or display for sale any pictures prints books or other printed matter
nor any films cassettes video equipment marital aids or any articles
of clothing or any other items of whatever nature which are
pornographic obscene or offensive or that are detrimental to the
neighborhood nor as a residence or sleeping place for any person.
10.3 Not to sell by auction or permit or suffer any sale by auction within
or upon the Premises nor to use the Premises for public exhibition
show or political meeting.
10.4 Not to do or permit or suffer to be done on the Premises or any part
thereof anything which is likely to cause a nuisance damage disturbance
injury or danger of or to owners lessees or occupiers of any premises
in the neighbourhood and (without prejudice to the generality of the
foregoing) not to use or permit or suffer to be used on the Premises
any electrical instrument or devices unless fitted with an effective
suppresser and properly earthed and insulated And to keep the
Landlord fully and effectively indemnified against all actions
proceedings damages, costs, expenses claims and demands
whatsoever arising out of or in consequence of any breach or
non-observance of this covenant.
10.5 The Tenant shall not overload the structure of the Premises.
10.6 The Tenant shall not make use of conduits beyond their capacity nor in
a manner which may block or damage them and in particular will not
stop up or obstruct or permit oil grease or other deleterious matter
or substance to enter any drain or sewer.
10.7 The Tenant shall comply with the Regulation (if any).
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11 ASSIGNMENTS AND UNDERLETTINGS
11.1 The Tenant shall not assign charge underlet hold upon trust for
another share occupation or part with possession of the Premises or
any part or parts thereof save by way of an assignment or underletting
of the whole of the Premises or an underletting of a Permitted Part as
permitted under the following provisions of this clause and with the
prior consent of the Superior Landlord in accordance with the Superior
Lease.
11.2 The Tenant shall not assign the Premises as a whole without
the previous written consent of the Landlord such consent not
to be unreasonably withheld or delayed and in the case of an
assignment subject to compliance with the conditions in clause
11.3 below.
11.3 The Landlord may give consent subject to the condition that before the
Tenant assigns this Lease the Tenant enters into an agreement under
which the Tenant.
11.3.1 guarantees the performance by the proposed assignee of all the
covenants on the part of the Tenant contained in this Lease in
the form set out in the Fourth Schedule of this Lease; and
11.3.2 is liable to the Landlord as principal debtor and is not
released even if the Landlord gives the proposed assignee
extra time to comply with any obligation or does not insist on
its strict terms.
11.4 The Landlord may where it is reasonable to do so require as a
condition of granting consent to a proposed assignment that the
proposed assignee either:
11.4.1 furnish the Landlord with a guarantee of payment of the rent
reserved and performance of all the covenants on the part of
the Tenant in this Lease from a guarantor of financial
standing acceptable to the Landlord provided that in judging
whether the financial standing of the proposed guarantor is
acceptable the Landlord shall act reasonably; or
11.4.2 furnish the Landlord with a rent deposit and/or provide such
additional security for performance by the proposed assignee
of its obligations under this Lease as the Landlord may
reasonably require.
11.5 The provisions of clause 11.4 shall operate without prejudice
to the right of the Landlord to impose further conditions upon
a grant of consent where such imposition would be reasonable.
11.6 The Tenant shall:
11.6.1 not underlet the whole of the Premises or any Permitted Part
at a premium or fine and any such underlease must reserve a
yearly rent during the whole of the term thereby granted of an
amount which can never be less than the open market rent;
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11.6.2 procure that the underlease shall be made subject to the Tenant's
covenants and conditions herein contained;
11.6.3 procure that the underlease shall contain an absolute covenant
on the part of the underlessee not to charge underlet hold on
trust for another share occupation or part with possession of
the underlet premises or any parts thereof;
11.6.4 procure that the underlease shall contain the following
covenant the Tenant covenants with the Landlord to observe and
perform the covenants on the part of the Landlord as tenants
contained in the Superior Lease (save as to the payment of the
rent therein reserved and so far as the same relate to the
premises to be underlet);
11.6.5 not underlet the whole of the Premises or any Permitted Part
otherwise than on terms which contain an agreement between the
parties to such underletting that the provisions of Section
24-28 (inclusive) of the Landlord and Tenant Act 1954 shall
not apply to the tenancy thereby created nor without having
obtained an order of this court under Section 38(4) of the
said Act authorising that agreement.
11.7 The Tenant may not without the prior written consent of the
Landlord (such consent not to be unreasonably withheld or
delayed) release vary or waive any of the underlessee's
covenants or any conditions contained in any underlease.
11.8 The Tenant shall upon request from time to time provide within
one month an information which the Landlord may reasonably
request under Section 40(1)(a) and (b) of the Landlord and
Tenant Act 1954.
11.9 Within two months after any assignment underletting charge mortgage or
other devolution of title relating to the Premises to give notice
thereof in writing to the Landlord (or the Landlord's solicitors)
together with two certified copies of the relevant instrument and to
pay to the Landlord (or the Landlord's Solicitors) such reasonable
registration fee as the Landlord (or the Landlord's Solicitors) may
specify being not less than pound sterling25 plus VAT for the
registration of such instrument.
12 LEGAL OBLIGATIONS
12.1 In this clause "Legal Obligation" means any present or future
statute statutory instrument or bye law or any present or
future regulation order notice direction code of practice or
requirement of any Authority insofar as it relates to the
Premises or to their occupation or use but irrespective of
this person on whom such obligation is imposed.
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12.2 If the Tenant receives from an Authority formal notice of a Legal
Obligation it shall (as soon as is reasonably possible) produce a copy
to the Landlord and if such notice is in the Landlord's reasonable
opinion contrary to the interests of the Landlord the Tenant shall make
at the joint cost of the Landlord and the Tenant such objection or
representations against such Legal Obligation as the Landlord may
reasonably require but otherwise shall at its own expense observe and
comply with all Legal obligations.
12.3 Where a Legal Obligation requires the carrying out of works the Tenant
shall so far as such Legal Obligation permits also comply with the
provisions of the Lease in relation to such works.
12.4 The Tenant shall not do or omit to do in relation to the Premises or
their use of occupation anything by reason of which the Landlord may
incur any liability whether for costs a penalty damages compensation
or otherwise.
12.5 The Tenant shall not cause or permit a nuisance on or in relation to
the Premises and if a nuisance occurs shall forthwith take all
necessary action to abate it.
12.6 Without prejudice to the generality of this clause the Tenant shall
in particular observe and comply with all Legal Obligations of any
appropriate Authority relating to health and safety means of escape
in case of fire and the protection and preservation of life and
property carrying out such works of modification and improvement to the
Premises as may from time to time be reasonably required by such Legal
Obligations (the Landlord however having the right (but no obligation)
to carry out such works where the Legal Obligation affects both the
Premises and other Units in which event the Tenant shall within 28 days
of demand repay to the Landlord all costs and expenses properly so
incurred by the Landlord which are attributable to the Premises).
12.7 The Tenant shall carry out any works to the Premises not only
in accordance with all legal Obligations but also with good
quality materials and in a good and workmanlike manner to the
reasonable satisfaction of the Landlord.
12.8 The Tenant shall perform and observe al covenants and other provisions
contained or referred to in any documents listed in the Third Schedule
insofar as they relate to or affect the Premises or their use or
occupation.
13 PLANNING
13.1 The provisions of this clause supplement the general obligations
imposed by clause 12.
13.2 The Tenant shall not commit a breach of planning control (as defined
in Section 171 of the Town and Country Planning Act 1990) in relation
to the Premises.
13.3 The Tenant shall observe and comply with the Planning Acts in relation
to the Premises.
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13.4 The Tenant shall make no application under the Planning Acts (whether
for planning permission or otherwise) in relation to the Premises
without the Landlord's prior consent (which consent shall not be
unreasonably withheld or delayed) in relation to the Premises where
works are permitted by the Landlord under clause 8).
13.5 The Tenant shall supply to the Landlord promptly and without further
request copies of all applications notices decisions and other formal
communications under the Planning Acts which relate in any way to the
Premises and where such communications relate only to the Premises or
to an application made by the Tenant then the Tenant shall at its own
expense take such action to protect the Landlord's interests as the
Landlord may reasonable require.
13.6 The Tenant shall not implement a planning permission until the Landlord
has given its consent (such consent not to be unreasonably withheld or
delayed where a planning permission is granted pursuant to an
application approved by the Landlord).
13.7 Where a planning permission imposes conditions the Landlord may if
reasonable before giving consent to its implementation require the
Tenant:
13.7.1 to provide reasonable security for compliance with the conditions; and
13.7.2 to undertake that if it implements the planning permission it will
carry out prior to the Determination of the Term all works which the
planning conditions may at any time require.
14 DEFECTIVE PREMISES
The Tenant shall promptly give notice to the Landlord of any defect in
the Premises in respect of which the Landlord may have a liability or
duty of care under the Lease the Defective Premises Act of 1972 or
otherwise.
15 ENCROACHMENTS
15.1 The Tenant shall not stop up darken or obstruct any window or light at
the Premises.
15.2 The Tenant shall not permit and shall take all reasonable measures to
prevent any new window light opening pathway conduit or other
encroachment or casement being made or acquired in against out of or
upon the Premises.
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16 LANDLORD'S RIGHTS
16.1 The Tenant shall permit the Landlord any Superior Landlord and persons
authorised by any of them to exercise any right excepted and reserved
by the Second Schedule and in addition to the rights to enter the
Premises at all reasonable times after not less than two days' written
notice (except in emergency) with tools and equipment (if appropriate):
16.1.1 to inspect the Premises to ascertain whether the Tenant is complying
with the Leases or to view their state and condition or to make surveys
or to show the Premises to prospective tenants or purchasers or for any
other reasonable purpose under the Lease;
16.1.2 to execute works following the Tenant's failure to comply with a notice
served under clause 7.5 (without prejudice to any other remedy
available to the Landlord) and also pursuant to 12.6;
16.1.3 to take schedules or inventories;
16.1.4 to inspect or execute works of repair maintenance decoration
construction alteration improvement or otherwise to the Building or
other property (including those parts of the Retained Property within
or bounding the Premises);
the person entering causing as little damage and disturbance as is
reasonably practicable and making good as soon as practicable any
physical damage to the Premises so caused.
16.2 The Tenant will permit the Landlord any Superior Landlord and persons
authorised by any of them to carry out any works of repair construction
development improvement alteration to other property (including the
Retained Property) and to erect scaffolding notwithstanding
interference with the access of light or air to the Premises or
temporary interference with any other right or easement but causing as
little disturbance as is reasonably practicable and maintaining
pedestrian access to the Premises and supplies of water gas and
electricity and drainage (where applicable) will be maintained during
normal business hours.
16.3 The Tenant will permit the affixation to suitable parts of the Premises
of reletting notices during the six months preceding the Determination
of the Term and of notices relating to the disposal or acquisition of
any reversionary interest at any time.
17 COSTS
The Tenant shall pay and indemnify the Landlord against all liability
proper costs fees charges disbursements and expenses connected with or
consequent upon and (where appropriate) in preparing:
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17.1 an application for the landlord's consent (whether or not the consent
is given (unless unlawfully withheld) or the application is withdrawn);
17.2 a schedule of dilapidations whether served at up to six months after
the Determination of the Term;
17.3 notice pursuant to a provision of the Lease or under section 146 147 of
the Law of Property Act 1925 and proceedings under those sections even
if forfeiture is avoided otherwise than by relief granted by the court;
17.4 the recovery of arrears of Rent or other sums payable under the Lease;
17.5 the enforcement of any covenant or obligation of the Tenant under the
Lease;
17.6 abating a nuisance which the Tenant fails to abate.
18 INTEREST
Without prejudice to any other right or remedy of the Landlord the
Tenant shall pay to the Landlord Interest on any Rent and VAT
(if applicable) which is not paid to the Landlord on the date it is
due (whether payment is formally demanded or not) and Interest on any
other sum which is not paid to the Landlord by the later of the date
it is due and the date seven days after a demand for payment is made.
19 INDEMNITY
19.1 The Tenant is responsible for and shall indemnify and keep the Landlord
indemnified against all claims demands actions or proceedings made or
brought and all proper and reasonable losses damages costs expenses and
liabilities incurred suffered or arising directly or indirectly in
respect of or otherwise connected with:
19.1.1 the use and occupation of the Premises;
19.1.2 any act omission or negligence of the Tenant or of any other person at
the Premises with the express or implied authority of the Tenant or of
anyone deriving title through the Tenant; and
19.1.3 any breach of any covenant or other provision of the Lease to be
observed or performed by the Tenant.
20 MISCELLANEOUS COVENANTS AND YIELDING UP
20.1 The Tenant shall not do or permit to be done anything on or in the
Premises inconsistent with or in breach of the provisions of the
Superior Lease.
20.2 Upon the Determination of the Term the Tenant shall:
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20.2.1 remove all signs and tenant's fixtures and fittings and furniture and
effects making good any damage to the premises so caused; and
20.2.2 yield up the Premises in a state and condition consistent with due
compliance by the Tenant with its covenants and obligations under the
Lease.
21 INSURANCE DEFINITIONS
In this part of the Lease:
21.1 "Insured Risks" means risks of loss or damage by fire storm tempest
flood lightning explosion aircraft articles dropped from aircraft riot
civil commotion malicious damage terrorist act (where such risk is
usually capable of being covered by a similar policy to that effected
by the Landlord) impact bursting and overflowing of pipes or tanks or
of other apparatus) and by such other perils against which the Landlord
may insure;
21.2 "the Insurance Policies" means the following insurance policies
effected in such insurance office of repute or with such underwriters
and through such agency as the Landlord may reasonably decide and
subject to such excesses enclusions limitations and conditions as the
insurer may require or the Landlord may property negotiate and
covering;
21.2.1 insurance of the Building (but specifically including glass tenant's
and trade fixtures and fittings) against the Insured Risks for a sum
sufficient to cover the cost of reinstatement assuming total loss
including all applicable VAT and ancillary costs (such as site
clearance and professional fees) and appropriate allowance for
inflation;
21.2.2 a "Loss of Rent Policy" being insurance against the loss of all Rent
and applicable VAT from the Building for such period (being not less
than three years) as the Landlord may from time to time reasonably
consider sufficient to complete the reinstatement of the Building
following a total loss and for such sum as takes into account any
likely rent review during that period;
21.2.3 insurance against third party and public liability at the Building for
such sum as the Landlord may from time to time consider prudent;
21.2.4 such other insurance in relation to the Building not otherwise
specifically mentioned in this part for as the Landlord from time to
time reasonably considers prudent.
22 LANDLORD'S COVENANTS
The Landlord covenants with the Tenant that from and including the
Possession Date until the Determination of the Term:
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22.1 the Landlord will effect and maintain the Insurance Policies (but only
so far as they are to vitiated by any act neglect or default of the
Tenant anyone deriving title through the Tenant or anyone at the
Premises with the express or implied authority of either of them);
22.2 the Landlord will upon reasonable request from time to time produce to
the Tenant a copy or sufficient details of the Insurance Policies and
evidence that they are in force;
22.3 the Landlord will notify the Tenant of any change in the provisions of
the Insurance Policies from time to time which is material to the
Tenant;
22.4 in the event of any loss or damage against which the Landlord has
covenanted to effect an Insurance Policy the Landlord will apply all
monies received from the insurer and from the Tenant pursuant to Clause
24 in carrying out works of reinstatement or otherwise making good such
loss or damage and carrying out any necessary works of reinstatement as
soon as reasonably practicable and will to the extent that such monies
are insufficient up such insufficiency out of its own resources.
23 ABATEMENT OF RENT
23.1 If the Building is destroyed or so damaged by an Insured Risk that the
Premises are wholly or partially unfit for occupation and use or
inaccessible and the Insurance Policies have not been vitiated or any
payment thereunder refused by reason of some act neglect or default of
the Tenant someone deriving title through the Tenant or some person
with the express or implied authority of either of them the Rent or a
fair proportion thereof according to the nature and extent of the
damage sustained shall cease to be payable until the Premises are again
fit for occupation and use and accessible to the extent only that such
loss of Rent is recoverable under the Loss of Rent Policy.
23.2 A dispute as to the amount or duration of such cesser of Rent shall be
referred to arbitration under the Arbitration Act 1996 the arbitrator
to be appointed (failing agreement between the Parties) by the
President of the Royal Institution of Chartered Surveyors upon the
application of either the Landlord or the Tenant.
24 TENANT'S INSURANCE COVENANTS:
The Tenant covenants with the Landlord that from and including the
Possession Date.
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24.1 the Tenant will pay to the Landlord within 7 days of demand a fair
proportion of all premiums and others expenses (including reasonable
valuation fees such fees not to be incurred more than once in every two
years) incurred by the Landlord in effecting and maintaining the
Insurance Policies such proportion to be properly determined by the
Landlord (and which for the avoidance of any doubt may in the case of
the Loss of Rent Policy include the whole of the premium payable in
respect of the Premises or a fair proportion of the premium payable in
respect of the Building excepting those parts of the Building which
shall be unlet or vacant at the date.
24.2 the Tenant will comply with the insurers requirements in relation to
the Premises and will not do or omit to do anything which may make an
Insurance Policy void or voidable in whole or in part or increase the
premium for such policy but if as a result of a breach of this covenant
a premium is increased then the Tenant will forthwith upon demand pay
to the Landlord the whole of such increase.
24.3 the Tenant will maintain such fire fighting equipment on the Premises
as the insurer or an Authority may reasonably require.
24.4 the Tenant will a soon as reasonably practicable notify the Landlord of
any loss damage or destruction of or relating to the Premises and of
any other event which comes to the attention of the Tenant and which
may affect or give rise to a claim under an Insurance Policy.
24.5 the Tenant will forthwith within 7 days of demand pay to the Landlord
an amount equal to all monies which the Landlord is unable to recover
under an Insurance Policy by reason of an act default or omission of
the Tenant and a fair proportion of all such monies which are
irrecoverable by reason of:
24.5.1 a condition of the policy; or
24.5.2 the imposition by the insurer or the reasonable acceptance by the
Landlord of an obligation to bear part of an insured loss (commonly
called an excess).
24.6 the Tenant shall not effect any insurance policy equivalent to any of
the Insurance Policies but if in breach of this covenant it does so it
shall pay to the Landlord all monies received under such policy.
25 QUIET ENJOYMENT
25.1 Subject to the Tenant paying the Rent and other sums due under the
Lease and complying with its covenants the Landlord covenants with the
Tenant from and including the Possession Date until the Determination
of the Term to permit the Tenant peaceably and quietly to hold and
enjoy the Premises without any interruption or disturbance from or by
the Landlord or any person claiming under or in trust for the Landlord.
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25.2 To pay the rent reserved by the Superior Lease and comply with the
Tenant's covenants contained in the Superior Lease.
26 DEFINITIONS AND INTERPRETATION
26.1 Where in this part of the Lease the following underlined words commence
with capital letters they have the following meanings unless the
context otherwise requires:
26.1.1 "Review Date" 24th March 2000.
26.1.2 "Restrictions" means restrictions imposed by an Authority which
operates to impose any limitation in relation to the review of rent or
the collection of any increase in rent.
26.1.3 "Open Market Rent" is as defined in clause 28.
26.2 Time is not of the essence except where specified.
27 REVIEW OF RENT
With effect from the Review Date the Rent shall be the amount payable
(but for any abatement of Rent) immediately prior to the Review Date
or (if greater) the Open Market Rent as agreed or determined under
this part of the Lease.
28 OPEN MARKET RENT
"Open Market Rent" means the yearly rent which would reasonably by
expected to be paid for the Premises (after the expiry of a rent free
period or period of reduced rent that might be negotiated in the open
market between a willing landlord and a willing tenant for the purpose
of fitting out the Premises) upon a letting in the open market at the
Review Date with vacant possession by a willing landlord to a willing
tenant.
28.1 upon the assumption (if not a fact) that:
28.1.1 the Premises are available to let as a whole with vacant possession on
the open market without a fine or premium under a lease for a term of
five years but commencing on the Review Date including provisions for
review of rent on the forth anniversary of the Review Date and
otherwise on the same terms as the Lease (except as to the amount of
the Rent);
28.1.2 the covenants and provisions of the Lease on the part of the Tenant
have been fully performed and observed;
28.1.3 the Premises may be used for any purpose permitted by this Lease;
28.1.4 if the Premises have been destroyed or damaged they have been fully
restored;
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28.1.5 the Premises are fully fitted out to the requirements of a willing
tenant and are available for immediate occupation and use;
28.1.6 no work has been carried out to the Premises (unless by the landlord or
a Superior Landlord) which has diminished or increased their rental
value;
28.1.7 every prospective willing landlord and willing tenant is able to
recover VAT in full;
28.2 but disregarding:
28.2.1 any effect on rent of the fact that the Tenant any undertenant or any
of their respective predecessors in title have been in occupation of
the Premises;
28.2.2 any goodwill attached to the Premises by reason of the carrying on of
the business of the Tenant any undertenant or any of their predecessors
in title;
28.2.3 the taxable status of any Party for the purpose of VAT or any other
tax;
28.2.4 any effect on rent of the Restrictions;
28.2.5 any adverse effect of any temporary works operations or other
activities on any adjoining or neighbouring property;
28.2.6 any effect on rent attributable to any improvement to the Premises
carried out with consent where required and otherwise than in pursuance
of an obligation to the Landlord or its predecessors in title to the
extent only that such improvement has been carried out without cost to
the Landlord or its predecessors in title and that such improvement was
completed either during the Term or during any period of occupation
prior to the commencement of the Term arising out of an agreement to
grant the Lease.
29 PROCEDURE
29.1 The Landlord may serve upon the Tenant notice during the period of nine
months before or at any time after the Review Date requiring the Rent
to be increased with effect from the Review Date or stating that the
Rent is not to be increased.
29.2 If the Landlord serves notice requiring the Rent to be increased
("Review Notice") the Landlord and the Tenant shall endeavour to agree
the Open Market Rent as at the Review Date.
29.3 If the Landlord and the Tenant do not agree the Open Market Rent within
three months after service of a Review Notice or by the date three
months before the Review Date (whichever is the later) either may by
notice to the other require the Open Market Rent as at the Review Date
to be determined by a Chartered Surveyor having at least ten years'
experience in assessing the rental value of premises similar to the
Premises and acting as an expert.
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29.4 If the Landlord and the Tenant do not agree on the joint appointment of
an expert the expert shall be nominated on the joint application of the
Landlord and the Tenant (or if either of them neglects to concur in
such application then on the sole application of the other) by the
President or other chief officer or acting chief officer for the time
being of the Royal Institution of Chartered Surveyors.
29.5 Each Party shall be entitled to submit to the expert in writing within
four weeks after his appointment a valuation and representation and
within a further two weeks written comments on or replies to the
valuation and/or representations of the other Party but the expert
shall not be limited or fettered by any submission by either Party and
shall determine the market rent in accordance with his own judgment and
his decision shall be binding on both the Landlord and the Tenant.
29.6 The expert shall within three months of his appointment or within such
extended period as the Landlord may agree give to the Landlord and the
Tenant written notice of the amount of the Open Market Rent as
determined by him but if he does not or if for any reason it becomes
apparent that he will not be able to complete his duties in accordance
with his appointment the Landlord and the Tenant may agree upon or
either of them may apply for the appointment of another expert (which
procedure may be repeated as often as necessary) pursuant to the
provisions of this clause.
30 DELAYED REVIEW
Where the Rent payable with effect from a Review Date is not
ascertained prior to the Review Date the Tenant shall:
30.1 with effect from the Review Date pay an "Interim Rent" at the rate at
which Rent was payable immediately prior to the Review Date; and
30.2 If the Rent when ascertained exceeds the Interim Rent then within
fourteen days of the Rent being ascertained pay to the Landlord an
amount equal to the aggregate of the sums by which each quarterly
installment of Rent would have exceeded each installment if Interim
Rent had the Rent been ascertained by the Review Date together with
Interest on each of those sums from the date it would have been due to
the date of payment at a rate 4% below the Interest Rate.
31 RESTRICTIONS
Where Restrictions are in force at the Review Date the Landlord may
give notice to the tenant at any time but not later than 28 days after
the Review Date postponing the Review Date until such later date as the
Landlord may by not less than three months prior notice specify and in
that event the rent payable immediately prior to the Review Date that
is postponed shall continue to be the Rent payable until increased upon
review at the postponed Review Date.
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32 MEMORANDA
Where Rent is increased with effect from the Review Date the Landlord
and Tenant shall (at their own cost) sign memoranda thereof in such
form as the Landlord may reasonably require for annexation to both the
original and counterpart of the Lease.
33 RECOVERY OF MONEY
In addition to any other remedy available to the Landlord all monies
due (by way of Rent or Outgoings) from the Tenant to the Landlord under
the Lease may be recovered as if such monies were reserved as Rent.
34 USER
The Landlord does not warrant that the Premises may lawfully be used
for any purpose authorised under the Lease.
35 EASEMENTS
35.1 The Tenant is not entitled to and the Premises do not enjoy any right
of light or air which might restrict or interfere with the free use of
any other property owned by the Landlord for building or any other
purpose.
35.2 The operation of Section 62 of the Law of Property Act 1925 is excluded
from the Lease and the only right granted with the Premises are those
expressly granted in the Lease.
35.3 A person exercising any right of entry granted or reserved under the
Lease in order to carry out works must:
35.3.1 give reasonable prior written notice to the relevant Party (except in
emergency);
35.3.2 exercise the right in a manner which causes as little damage and
inconvenience as is practicable in the circumstances; and
35.3.3 make good any physical damage caused as soon as is reasonably
practicable.
36 COVENANTS
36.1 Nothing contained or implied in the Lease gives the Tenant the benefit
of or the right to enforce or to prevent the release or modification of
any covenant agreement or condition relating to other property.
36.2 Each covenant in the Lease by the Tenant remains in full force at law
and in equity notwithstanding any waiver or release temporarily or
permanently revocably or irrevocably of any other covenant in the Lease
or of any covenant affecting other property.
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37 NOTICE
37.1 A notice by one party ("the Sender") to another ("the Recipient") is
duly served if in writing and either delivered to the recipient or sent
by registered or recorded delivery post addressed to the recipient at
his address as stated in this deed or as from time to time notified to
the sender.
37.2 In this clause "writing" includes telex facsimile or other electronic
means of communication and "delivered" includes communication by such
means in which event service is deemed to be effected when the sender
has finished transmitting the notice unless either the sender knows or
ought reasonably to know that the transmission has failed or is
incomplete (in which case service takes place outside normal business
hours (in which notice is deemed to be served when normal business
hours next commence).
37.3 In this clause "working day" means any day except Saturday, Sunday or a
Bank or Public Holiday and "normal business hours" are 9:30 a.m. to
5:30 p.m. on a working day.
38 RIGHT OF RE-ENTRY
The Landlord may at any time after the occurrence of any of the
following events re-enter the Premises whereupon this demise shall
absolutely determine (but without prejudice to any right of action of
the Landlord in respect of any arrears of Rent or any antecedent
breach of covenant):
38.1 if any Rent remains unpaid 21 days after it is due (whether formally
demanded or not); or
38.2 if any covenant or stipulation in the Lease which is to be performed or
observed by the Tenant is not performed or observed; or
38.3 if the Tenant permits any execution or distress to be levied on any
goods in the Premises; or
38.4 if the Tenant (or any party included within the definition of the
Tenant) becomes Insolvent (as defined in the next clause).
39 INSOLVENCY
"insolvent" means for the purposes of this part of the Lease:
39.1 in relation to a company that:
39.1.1 it is deemed unable to pay its debts as defined in Section 123 of the
Insolvency Act 1986 (referred to as "the Act" in the remainder of this
clause); or
39.1.2 an order is made for a voluntary arrangement under Part I of the Act;
or
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39.1.3 a petition is presented for an administration order under Part II of
the Act; or
39.1.4 a receiver or manager is appointed whether under Part III of the Act
(including an administrative receiver) or otherwise; or
39.1.5 it goes into liquidation as defined in Section 247(2) of the Act (other
than a voluntary winding up solely for the purpose of amalgamation or
reconstruction while solvent); or
39.1.6 a provisional liquidator is appointed under Section 135 of the Act; or
39.1.7 a scheme of arrangement is made under Section 425 of the Companies Act
1985; and
39.2 in relation to an individual that:
39.2.1 an application is made for an interim order or a-proposal is made for a
voluntary arrangement is made under Part VIII of the Act; or
39.2.2 a bankruptcy petition is presented to the Court; or
39.2.3 he enters into a deed of arrangement.
40 INTRODUCTION
The parties agree and declare as follows:-
40.1 where a Guarantor is a party to the Lease the Guarantor covenants with
the Landlord as set out in the next Clause;
40.2 where a surety for an assignee is required such surety shall covenant
with the Landlord as if it were the Guarantor under the Lease except
that the guarantee will take effect only from the date of the relevant
assignment and extend only to the obligations of the assignee
(including the assignee's obligations under any authorised guarantee
agreement);
40.3 where a surety for an undertenant is required such surety shall
covenant with the Landlord as if it were the Guarantor under the Lease
except that the guarantee will extend only to the obligations of the
undertenant and its successors in title under the underlease and the
provisions relating to disclaimer of the Lease will not apply.
41 GUARANTOR'S COVENANT
The Guarantor covenants with the Landlord (for the benefit of the
Landlord and of the person in whom from time to time the reversion
immediately expectant upon the Determination of the Term is vested
without the need for any express assignment) that:
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41.1 during the Term the Tenant shall punctually pay the Rent and observe
and perform the covenants and other provisions of the Lease and in case
of default the Guarantor will pay the Rent and observe and perform the
covenants and provisions in respect of which the Tenant is in default
and make good to the Landlord on demand and indemnify the Landlord
against all losses damages costs and expenses thereby arising or
incurred by the Landlord;
41.2 the liability of the Guarantor under clause 41.1 shall not be affected
in any way by:
41.2.1 any neglect or forbearance of the Landlord in enforcing payment of Rent
or observance or performance of the covenants and provisions of the
Lease;
41.2.2 any time or indulgence given to the Tenant by the Landlord;
41.2.3 any refusal by the Landlord to accept Rent from the Tenant following a
breach of covenant by the Tenant;
41.2.4 any agreement with the Tenant any license or consent granted to the
Tenant or any variation in the terms of the Lease;
41.2.5 the death of the Tenant (if an individual) or the dissolution of the
Tenant (if a company);
41.2.6 a surrender of part of the Premises except that the Guarantor will have
no liability in relation to the surrendered part in respect of any
period following date of surrender;
41.2.7 any other act matter or thing apart from the express release in writing
of the Guarantor;
41.3 if during the Term the Tenant (being a company) enters into liquidation
or (being an individual) becomes bankrupt and the liquidator or the
trustee in bankruptcy disclaims the Lease the Guarantor shall upon
written notice from the Landlord given within three months after the
date of disclaimer accept a new lease of the Premises for a term equal
to the residue then remaining unexpired of the Agreed Term at the Rent
then being paid under the Lease and otherwise subject to the same
covenants and provisions as in the Lease (without however requiring any
other person to act as guarantor) such new lease to take effect from
the date of disclaimer and to be granted at the cost of the Guarantor
who shall execute and deliver to the Landlord a counterpart of it;
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41.4 if the Lease is disclaimed and for any reason the Landlord does not
require the Guarantor to accept a new lease pursuant to clause 43.3 the
Guarantor shall pay to the Landlord on demand an amount equal to the
difference between any money received by the Landlord for the use or
occupation of the Premises and the Rent (if higher) which would have
been payable had the Lease not been disclaimed for the period
commencing with the date of disclaimer and ending upon the date six
months after the date of disclaimer or (if earlier) the date upon which
the Premises are relet.
IN WITNESS whereof this Lease has been executed by the parties hereto as a deed
the day and year first above written.
FIRST SCHEDULE
(RIGHTS)
The Tenant and those deriving title through or otherwise authorised by the
Tenant shall have the following rights during the Term (subject always to
compliance with the Regulations):
1. The right to free and uninterrupted passage and running of water
drainage gas electricity communication and other services by any
Conduit forming part of the Retained Property and the right to enter
the Retained Property in order to inspect clean maintain repair renew
remove make connections with or install any new Conduit the Tenant
making good to the Landlord all damage occasioned in or arising out of
the exercise of such rights or any of them.
2. The right of support and protection for the benefit of the Premises as
is now enjoyed from the Retained Property and the adjoining property.
SECOND SCHEDULE
(EXCEPTIONS AND RESERVATIONS)
The following rights are excepted and reserved to the Landlord and
Superior Landlord and the Trustees:
1. All rights of support and protection afforded by the Premises.
2. Right to free and uninterrupted passage and running of water
drainage gas, electricity communication and other services by
any Conduit or Facility in or passing through the Premises and
the right to enter the Premises in order to inspect clean
maintain repair renew remove divert make connections with or
install any new Conduits.
3. All rights and liberty at any time and form time to time
during the period of 80 years commencing on the date hereof to
execute or cause or suffer to be executed works and erections
upon any of the adjoining or adjacent or neighbouring land
premises or buildings and the right to alter repair redevelop
rebuild use and let
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such adjoining adjacent or neighbouring land premises or
buildings in any manner or for any purpose notwithstanding
that the passage of light or air to the Premises or any part
thereof may thereby by obstructed or interfered with or any
other liberty easement right or advantage belonging to the
Tenant is thereby diminished or prejudicially affected.
4. All rights which the Tenant covenants to permit under the
Lease.
5. The right of free passage and running of water and soil gas
and electricity and other energy from and to the Landlord's or
the Trustees' adjoining or neighbouring land and any other
adjoining or neighbouring land owned by the Landlord or the
Trustees through any conduits which are now or may thereafter
be installed by the Landlord or the Trustees upon through
under on or over the premises and liberty to make such
connections with such Conduits for the purpose of exercising
such right TOGETHER WITH the right after giving reasonable
prior notice in writing (except in an emergency) to enter upon
the Premises for the purpose of installing repairing or
renewing the same the person so entering making good all
damage to the Premises occasioned thereby.
6. The right to erect scaffolding for the purpose of repairing or
cleaning the Landlord's or the Trustees' adjoining or
neighbouring property notwithstanding that such scaffolding
may temporarily interfere with the access to or enjoyment and
use of the Premises.
7. The right for the Landlord or the Trustees the tenants of the
adjoining buildings and all persons authorised by it or them
to pass through or over the Premises in case of fire or other
emergency as a means of escape through the escape route or
routes existing therein from time to time (including the route
shown hatched green on plan number 1 annexed hereto).
8. Such other easements enjoyed by the Landlord's or the
Trustees' adjoining or neighbouring land in common with the
Premises as are capable of benefiting the Landlord's or the
Trustees' adjoining or neighbouring land.
9. The right for the Landlord or the Trustees and the lessees and
occupiers of any adjoining or neighbouring premises or their
respective agents and workmen at any reasonable time or times
to enter if reasonable upon the Premises on reasonable prior
written notice (except in any emergency) for executing
necessary repairs additions or alterations paint or decoration
to or upon any adjoining or neighbouring premises or for
making repairing maintaining renewing connecting or cleansing
any pipes drains channels watercourses sewers wires or cables
belonging to or leading from the same which can reasonably be
carried out without so entering on the Premises the person so
entering making good forthwith all damage to the premises
occasioned thereby.
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THIRD SCHEDULE
(INCUMBRANCES)
All matters contained or referred to in the Superior Lease and in leasehold
title number NGL743466 insofar as they relate to the premises as evidence in
office copies dated 23 March 1998 save for entries 2 and 3 in the charges
register therein.
FOURTH SCHEDULE
(AUTHORISED GUARANTEE AGREEMENT)
THIS DEED is made the day of
BETWEEN
1 LIMITED PLC of whose registered office is at
(Company Registration Number ("the Lessee")
2 LIMITED PLC of (whose registered office is at
("the Lessor")
WHEREAS
A This Agreement is made pursuant to the lease briefly described
in Schedule 1 ("the Lease") which expression shall include
(where the context so admits) all deeds and documents
supplemental to the Lease (whether expressed to be so or not)
relating to the Premises briefly described in Schedule 2 ("the
Premises").
B. The lessee holds the Premises under the Lease and wishes to
assign the Lease to the prospective assignee briefly described
in Schedule 3 ("the Assignee") and pursuant to the Lease the
Lessor's consent is required to such assignment and such
consent is given subject to a condition that the Lessee is to
enter into a deed in the form of this Deed.
NOW THIS DEED WITNESSES AS FOLLOWS:-
1 AUTHORISED GUARANTEE
Pursuant to the said condition the Lessee covenants with the
Lessor as a primary obligation that the Assignee or the Lessee
shall at all times during the period ("the Guarantee Period")
from the completion of the Assignment until the Assignee shall
have ceased to be bound by the tenant covenants (which in this
Deed shall have the meaning attributed thereto by Section
28(1) of the Landlord and Tenant (Covenants) Act 1995 ("the
1995 Act")) contained in the I-case in the manner and at the
times specified in the Lease) duly perform and observe the
tenant covenants.
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2 LESSEE'S LIABILITY
2.1 The Lessee agrees that the Lessor in the enforcement of its
rights under this Deed may proceed against the Lessee as if
the Lessee were the sole or principal debtor in respect of the
tenant covenant in question.
2.2 For the avoidance of doubt notwithstanding the termination of
the Guarantee Period the Lessee shall remain liable under this
Deed in respect of any liabilities which may have accrued
prior to such termination.
2.3 For the avoidance of doubt the Lessee shall be liable under
this Deed for any proper costs and expenses incurred by the
Lessor in enforcing the lessee's obligations hereunder.
3 DISCLAIMER OF LEASE
The Lessee further covenants with the Lessor that if the Crown
or liquidator or trustee in bankruptcy shall disclaim the
Lease during the Guarantee Period the lessee shall if the
Lessor by notice in writing given to the Lessee within three
months after such disclaimer so requires accept from the
execute and deliver to the Lessor a counterpart of a new lease
of the Premises for a term commencing on the date of the
disclaimer and continuing for the residue then remaining
unexpired of the term of the Lease such new lease to be at the
same rents and subject to the same covenants and provisions as
are contained in the Lease.
4 POSTPONEMENT OF CLAIMS BY LESSEE AND OF PARTICIPATION BY
LESSEE IN SECURITY
4.1 The Lessee further covenants with the Lessor that the Lessee
shall subrogate its claim in any liquidation bankruptcy
composition or arrangement of the Assignee in competition with
the Lessor and shall remit to the Lessor the proceeds of all
judgments and an distributions it may receive form any
liquidator trustee in bankruptcy or supervisor of the
Assignee.
4.2 The Lessee shall not be entitled to participate in any
security held by the Lessor in respect of the Assignee's
obligations to the Lessor under the Lease or to stand in the
place of the Lessor in respect of any such security until all
the obligations of the Lessee or the Assignee to the Lessor
under the Lease have been performed or discharged.
4.3 NO RELEASE OF LESSEE
None of the following or any combination of them shall release
determine discharge or in any way lessen or affect the
liability of the Lessee as principal obligor under this Deed
or otherwise prejudice or affect the right of the Lessor to
recover from the lessee to the full extent of this guarantee:
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4.3.1 any neglect delay or forbearance of the Lessor in endeavouring
to obtain payment of any rents or other amounts required to be
paid by the Assignee or in enforcing the performance or
observance of any of the obligations of the Assignee under the
Lease;
4.3.2 any refusal by the Lessor to accept rent tendered by or on
behalf of the Assignee at a time when the Lessor was entitled
(or would after the service of a notice under Section 146 of
the Law of Property Act 1925 have been entitled ) to re-enter
the Premises;
4.3.3 any extension of time given by the Lessor to the Assignee;
4.3.4 any reviews of the rent payable under the Lease and (subject
to Section 18 of the 1995 Act) transfer of the Lessor's
reversion;
4.3.5 any change in the constitution structure or powers of the
Lessee the Assignee or the Lessor or the liquidation
administration or bankruptcy (as the case may be) of either
the Lessee or the Assignee;
4.3.6 any legal limitation or any immunity disability or incapacity
of the Assignee (whether or not known to the Lessor) or the
fact that any dealings with the Lessor by the Assignee may be
outside or in excess of the powers of the Assignee;
4.3.7 any other deed act omission failure matter or thing whatsoever
as a result of which but for this provision the Lessee would
be exonerated wholly or partly (other than a release executed
and delivered as a deed by the Lessor or a release effected by
virtue of the 1995 Act).
44 COSTS OF NEW LEASE
The Lessor's proper costs in connection with any new lease
granted pursuant to clause 3 of this Deed shall be borne by
the Lessee and paid to the Lessor (together with Value Added
Tax thereon) upon completion of such new lease.
IN WITNESS whereof this Deed has been executed by the Lessee and the Surety and
is delivered on the date first above written.
THE COMMON SEAL of )
JUPITER COMMUNICATIONS LLC )
was hereunto affixed in the presence of:- )
Director
Director/Secretary
28
<PAGE> 1
Exhibit 10.8
AGREEMENT OF LEASE, made as of this 21st day of November 1996,
between 625 PROPERTIES ASSOCIATES, having offices at 30th floor, 275 Madison
Avenue, New York, New York 10016 party of the first part, hereinafter referred
to as OWNER, and JUPITER COMMUNICATIONS, 627 Broadway, New York, New York party
of the second part, hereinafter referred to as TENANT.
WITNESSETH: Owner hereby leases to Tenant and Tenant hereby
hires from Owner the entire second (2nd) floor in the building known as 625
Broadway, New York, New York in the Borough of Manhattan, City of New York, for
the term of five (5) years (or until such term shall sooner cease and expire as
hereinafter provided) to commence on the as provided day of in the Rider
nineteen hundred and , and to end on the as provided day of in the Rider
nineteen hundred and both dates inclusive, at an annual rental rate of as
set forth in the Rider which Tenant agrees to pay in lawful money of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, in equal monthly installments in advance on the
first day of each month during said term, at the office of Owner or such other
place as Owner may designate, without any set off or deduction whatsoever,
except that Tenant shall pay the first monthly installment(s) on the execution
hereof (unless this lease be a renewal).
In the event that, at the commencement of the term of this
lease, or thereafter, Tenant shall be in default in the payment of rent to Owner
pursuant to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
Occupancy: 1. Tenant shall pay the rent as above and as
hereinafter provided.
Use. 2. Tenant shall use and occupy demised premises for
office space provided such use is in accordance with the Certificate of
Occupancy for the building, if any, and for no other purpose.
Alterations: 3. Tenant shall make no changes in or to the
demised premises of any nature without Owner's prior written consent. Subject to
the prior written consent of Owner, and to the provisions of this article,
Tenant at Tenant's expense, may make alterations, installations, additions or
improvements which are non-structural and which do not affect utility services
or plumbing and electrical lines, in or to the interior of the demised premises
using contractors or mechanics first approved by Owner. Tenant shall, at its
expense, before making any alterations, additions, installations or improvements
obtain all permits, approval and certificates required by any governmental or
quasi-governmental bodies and (upon completion) certificates of final approvals
and certificates to Owner. Tenant agrees to carry and will cause Tenant's
contractors and sub-contractors to carry such workman's compensation, general
liability, personal and property damage insurance as Owner may require. If any
mechanic's lien is filed against the demised premises, or the building of which
the same forms a part, for work claimed to have been done for, or materials
furnished to, Tenant, whether or not done pursuant to this article, the same
shall be discharged by Tenant within thirty days thereafter, at Tenant's
expense, by filing the bond required by law or otherwise. All fixtures and all
paneling, partitions, railings and like installations, installed in the premises
at any
<PAGE> 2
time, either by Tenant or by Owner on Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be surrendered with the
demised premises unless Owner, by notice to Tenant no later than twenty days
prior to the date fixed as the termination of this lease, elects to relinquish
Owner's right thereto and to have them removed by Tenant, in which event the
same shall be removed from the demised premises by Tenant prior to the
expiration of the lease, at Tenant's expense. Nothing in this Article shall be
construed to give Owner title to or to prevent Tenant's removal of trade
fixtures, moveable office furniture and equipment, but upon removal of any such
from the premises or upon removal of other installations as may be required by
Owner, Tenant shall immediately and at its expense, repair and restore the
premises to the condition existing prior to installation and repair any damage
to the demised premises or the building due to such removal. All property
permitted or required to be removed, by Tenant at the end of the term remaining
in the premises after Tenant's removal shall be deemed abandoned and may, at the
election of Owner, either be retained as Owner's property or removed from the
premises by Owner, at Tenant's expense.
Repairs: 4. Owner shall maintain and repair the exterior of
and the public portions of the building. Tenant shall, throughout the term of
this lease, take good care of the demised premises including the bathrooms and
lavatory facilities (if the demised premises encompass the entire floor of the
building) and the windows and window frames and, the fixtures and appurtenances
therein and at Tenant's sole cost and expense promptly make all repairs thereto
and to the building, whether structural or non-structural in nature, caused by
or resulting from the carelessness, omission, neglect or improper conduct of
Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not
arising from such Tenant conduct or omission, when required by other provisions
of this lease, including Article 6. Tenant shall also repair all damage to the
building and the demised premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be of quality or class
equal to the original work or construction. If Tenant fails, after ten days
notice, to proceed with due diligence to make repairs required to be made by
Tenant, the same may be made by the Owner at the expense of Tenant, and the
expenses thereof incurred by Owner shall be collectible, as additional rent,
after rendition of a bill or statement therefor. If the demised premises be or
become infested with vermin, Tenant shall at its expense, cause the same to be
exterminated. Tenant shall give Owner prompt notice of any defective condition
in any plumbing, heating system or electrical lines located in the demised
premises and following such notice, Owner shall remedy the condition with due
diligence, but at the expense of Tenant, if repairs are necessitated by damage
or injury attributable to Tenant. Tenant's servants, agents, employees, invitees
or licensees as aforesaid. Except as specifically provided in Article 9 or
elsewhere in this lease, there shall be no allowance to the Tenant for a
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner, Tenant or
others making or failing to make any repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. The provisions of this
Article 4 with respect to the making of repairs shall not apply in the case of
fire or other casualty with regard to which Article 9 hereof shall apply.
Window Cleaning: 5. Tenant will not clean nor require, permit,
suffer or allow any window in the demised premises to be cleaned from the
outside in violation of Section 202 of the New York State Labor Law or any other
applicable law or of the Rules of the Board of Standards and Appeals, or of any
other Board or body having or asserting jurisdiction.
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Requirements of Law, Fire Insurance, Floor Loads: 6. Prior to
the commencement of the lease term, if Tenants is then in possession, and at all
times thereafter, Tenant shall, at Tenant's sole cost and expense, promptly
comply with all present and future laws, orders and regulations of all state,
federal, municipal and local governments, departments, commissions and boards
and any direction of any public officer pursuant to law, and all orders, rules
and regulations of the New York Board of Fire Underwriters, or the Insurance
Services Office, or any similar body which shall impose any violation, order or
duty upon Owner or Tenant with respect to the demised premises, whether or not
arising out of Tenant's use or manner of use thereof, or, with respect to the
building, if arising out of Tenant's use or manner of use of the demised
premises or the building (including the use permitted under the lease). Except
as provided in Article 30 hereof, nothing herein shall require Tenant to make
structural repairs or alterations unless Tenant has, by its manner of use of the
demised premises or method of operation therein, violated any such laws,
ordinances, orders, rules, regulations or requirements with respect thereto.
Tenant shall not do or permit any act or thing to be done in or to the demised
premises which is contrary to law, or which will invalidate or be in conflict
with public liability, fire or other policies of insurance at any time carried
by or for the benefit of Owner. Tenant shall not keep anything in the demised
premises except as now or hereafter permitted by the Fire Department, Board of
Fire Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. If by reason of failure to comply with the foregoing the
fire insurance rate shall, at the beginning of this lease or at any time
thereafter, be higher than it otherwise would be, then Tenant shall reimburse
Owner, as additional rent hereunder, for that portion of all fire insurance
premiums hereafter paid by Owner which shall have been charged because of such
failure by Tenant. In any action or proceeding wherein Owner and Tenant are
parties, a schedule or "make-up" or rate for the building or demised premises
issued by a body making fire insurance rates applicable to said premises shall
be conclusive evidence of the facts therein stated and of the several items and
charges in the fire insurance rates then applicable to said premises. Tenant
shall not place a load upon any floor of the demised premises exceeding the
floor load per square foot area which it was designed to carry and which is
allowed by law. Owner reserves the right to prescribe the weight and position of
all safes, business machines and mechanical equipment. Such installations shall
be placed and maintained by Tenant, at Tenant's expense, in settings sufficient,
in Owner's judgement, to absorb and prevent vibration, noise and annoyance.
Subordination: 7. This lease is subject and subordinate to all
ground or underlying leases and to all mortgages which may now or hereafter
affect such leases or the real property of which demised premises are a part and
to all renewals, modifications, consolidations, replacements and extensions of
any such underlying leases and mortgages. This clause shall be self-operative
and no further instrument or subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Owner may request.
Property Loss, Damage, Reimbursement, Indemnity: 8. Owner of
its agents shall be liable for any damage to property of Tenant or of others
entrusted to employees of the building, nor for loss of or damage to any
property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agents, servants or employees; Owner
or its agents shall not be liable for any damage caused by other tenants or
persons in, upon or about said building or caused by
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operations in connection of any private, public or quasi public work. If at any
time any windows of the demised premises are temporarily closed, darkened or
bricked up (or permanently closed, darkened or bricked up, if required by law)
for any reason whatsoever including, but not limited to Owner's own acts, Owner
shall not be liable for any damage Tenant may sustain hereby and Tenant shall
not be entitled to any compensation therefor nor abatement or diminution of rent
nor shall the same release Tenant from its obligations hereunder nor constitute
an eviction. Tenant shall indemnify and save harmless Owner against and from all
liabilities, obligations, damages, penalties, claims, cost and expenses for
which Owner shall not be reimbursed by insurance, including reasonable
attorney's fees, paid suffered or incurred as a result of any breach by Tenant,
Tenant's agents contractors, employees, invitees, or licensees, of any covenant
or condition of this lease, or the carelessness, negligence or improper conduct
of the Tenant, Tenant's agents, contractor, employee, invitee or licensees.
Tenant's liability under this lease extends to the acts and omissions of any
sub-tenant. In case any action or proceeding is brought against Owner any reason
of any such claim, Tenant, upon written notice from Owner will, at Tenant's
expense, resist or defend such action or proceeding by counsel approved by Owner
in writing, such approval not to be unreasonably withheld.
Destruction, Fire and Other Casualty: 9. (a) If the demised
premises or any part thereof shall be damaged by fire or other casualty, Tenant
shall give immediate notice thereof to Owner and this lease shall continue in
full force and effect except as hereinafter set forth. (b) If the demised
premises are partially damaged or rendered partially unusable by fire or other
casualty, the damages thereto shall be repaired by and at the expense of Owner
and the rent, until such repair shall be substantially completed, shall be
apportioned from the day following the casualty according to the part of the
premises which is usable. (c) If the demised premises are totally damaged or
rendered wholly unusable by fire or other casualty, then the rent shall be
proportionately paid up to the time of the casualty and thenceforth shall cease
until the date when the premises shall have been repaired and restored by Owner,
subject to Owner's right to elect not to restore the same as hereinafter
provided. (d) If the demised premises are rendered wholly unusable (whether or
not the demised premises are damaged in whole or in part) the building shall be
so damaged that Owner shall decide to demolish it to rebuild it, then, in any of
such events, owner may elect to terminate this lease by written notice to
Tenant, given within 90 days after such fire casualty, specifying a date for the
expiration of the lease, which date shall not be more than 60 days after the
giving of such notice, and upon the date specified in such notice the term of
this lease shall expire as fully and completely as if such date were the date
set forth above for the termination of this lease and Tenant shall forthwith
quit, surrender and vacate the premises without prejudice however, to Owner's
rights and remedies against Tenant under the lease provisions in effect prior to
such termination, and any rent owing shall be paid up to such date and any
payments of rent made by Tenant which were on account of any period subsequent
to such date shall be returned to Tenant. Unless Owner shall serve a termination
notice as provided for herein. Owner shall make the repairs and restorations
under the conditions of (b) and (c) hereof, with all reasonable expedition,
subject to delays due to adjustment of insurance claims, labor troubles and
causes beyond Owner's control. After any such casualty, Tenant shall cooperate
with Owner's restoration by removing from the premises as promptly as reasonably
possible, all of Tenant's salvageable inventory and movable equipment,
furniture, and other property. Tenant's liability for rent shall resume five (5)
days after written notice from Owner that the premises are substantially ready
for Tenant's occupancy. (e) Nothing contained hereinabove shall relieve Tenant
from liability that may exist as a result of damage from fire or other casualty.
Notwithstanding the foregoing, each party shall look first to any insurance in
its favor before making any claim against the other party for recovery for loss
or damage resulting from fire or other casualty, and to the extent that such
insurance is in force and collectible and to the extent permitted by law, Owner
and Tenant each hereby releases and waives all right of recovery against the
other or any one claiming through or
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under each of them by way of subrogation or otherwise. The foregoing release and
waiver shall be in force only if both releasors' insurance policies contain a
clause providing that such a release or waiver shall not invalidate the
insurance. If, and to the extent, that such waiver can be obtained only by the
payment of additional premiums, then the party benefiting from the waiver shall
pay such premium within ten days after written demand or shall be deemed to have
agreed that the party obtaining insurance coverage shall be free of any further
obligation under the provisions hereof with respect to waiver of subrogation.
Tenant acknowledges that Owner will not carry insurance on Tenant's furniture
and or furnishings or any fixtures or equipment, improvements, or appurtenances
removable by Tenant and agrees that Owner will not be obligated to repair any
damage thereto or replace the same. (f) Tenant hereby waives the provisions of
Section 227 of the Real Property Law and agrees that the provisions of this
article shall govern and control in lieu thereof.
Eminent Domain: 10. If the whole or any part of the demised
premises shall be acquired or condemned by Eminent Domain for any public or
quasi public use or purpose, then and in that event, the term of this lease
shall cease and terminate from the date of title vesting in such proceeding and
Tenant shall have no claim for the value of any unexpired term of said lease.
Assignment, Mortgage, Etc.: 11. Tenant, for itself, its heirs,
distributees, executors, administrators, legal representatives, successors and
assigns, expressly covenants that it shall not assign, mortgage or encumber this
agreement, nor underlet, or suffer or permit the demised premises or any part
hereof to be used by others, without prior written consent of Owner in each
instance. Transfer of the majority of the stock of a corporate Tenant shall be
deemed an assignment. If this lease be assigned, or if the demised premises or
any part thereof be underlet or occupied by anybody other than Tenant, Owner
may, after default by Tenant, collect rent from the assignee, under-tenant or
occupant, and apply the net amount collected to the rent herein reserved, but no
such assignment, underletting, occupancy or collection shall be deemed a waiver
of this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
Electric Current: 12. Rates and conditions in respect to
submetering or rent inclusion, as the case may be, to be added in RIDER attached
hereto. Tenant covenants and agrees that at all times its use of electric
current shall not exceed the capacity of existing leeders to the building or the
risers or wiring installation and Tenant may not use any electrical equipment
which, in Owner's opinion, reasonably exercised, will overload such
installations or interfere with the use thereof by other tenants of the
building. The change at any time of the character of electric service shall in
no wise make Owner liable or responsible to Tenant, for any loss, damages or
expenses which Tenant may sustain.
Access to Premises: 13. Owner or Owner's agents shall have the
right (but shall not be obligated) to enter the demised premises in any
emergency at any time, and, at other reasonable times, to examine the same and
to make such repairs, replacements and improvements as Owner may deem necessary
and reasonably desirable to any portion of the building or which Owner may elect
to perform in the premises after Tenant's failure to make repairs or perform any
work which Tenant is obligated to perform under this lease, or for the purpose
of complying with laws, regulations and other directions of governmental
authorities. Tenant shall permit Owner to use and maintain and replace pipes and
conduits in and through the demised premises and to erect new pipes and conduits
therein provided, wherever possible, they are within walls or otherwise
concealed.
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Owner may, during the progress of any work in the demised premises, take all
necessary materials and equipment into said premises without the same
constituting an eviction nor shall the Tenant be entitled to any abatement of
rent while such work is in progress nor to any damages by reason of loss or
interruption of business or otherwise. Throughout the term hereof Owner shall
have the right to enter the demised premises at reasonable hours for the purpose
of showing the same to prospective purchasers or mortgagees of the building, and
during the last six months of the term for the purpose of showing the same to
prospective tenants and may, during said six months period, place upon the
premises the usual notices "To Let" and "For Sale" which notices Tenant shall
permit to remain thereon without molestation. If Tenant is not present to open
and permit an entry into the premises. Owner or Owner's agents may enter the
same whenever such entry may be necessary or permissible by master key or
forcibly and provided reasonable care is exercised to safeguard Tenant's
property, such entry shall not render Owner or its agents liable therefor, nor
in any event shall the obligations of Tenant hereunder be affected. If during
the last month of the term Tenant shall have removed all or substantially all of
Tenant's property therefrom. Owner may immediately enter, alter, renovate or
redecorate the demised premises without limitation or abatement of rent, or
incurring liability to Tenant for any compensation and such act shall have no
effect on this lease or Tenant's obligations hereunder.
Vault, Vault Space, Area: 14. No Vaults, vault space or area,
whether or not enclosed or covered, not within the property line of the building
is leased hereunder, anything contained in or indicated on any sketch, blue
print or plan, or anything contained elsewhere in this lease to the contrary
notwithstanding. Owner makes no representation as to the location of the
property line of the building. All vaults and vault space and all such areas not
within the property line of the building, which Tenant may be permitted to use
and/or occupy, is to be used and/or occupied under a revocable license, and if
any such license be revoked, or if the amount of such space or area be
diminished or required by any federal, state or municipal authority or public
utility, Owner shall not be subject to any liability nor shall Tenant be
entitled to any compensation or diminution or abatement of rent, nor shall such
revocation, diminution or requisition be deemed constructive or actual eviction.
Any tax, fee or charge of municipal authorities for such vault or area shall be
paid by Tenant, if used by Tenant, whether or not specifically leased hereunder.
Occupancy: 15. Tenant will not at any time use or occupy the
demised premises in violation of the certificate of occupancy issued for the
building of which the demised premises are a part. Tenant has inspected the
premises and accepts them as is, subject to the riders annexed hereto with
respect to Owner's work, if any. In any event, Owner makes no representation as
to the condition of the premises and Tenant agrees to accept the same subject to
violations, whether or not of record. If any governmental license or permit
shall be required for the proper and lawful conduct of Tenant's business, Tenant
shall be responsible for and shall procure and maintain such license or permit.
Bankruptcy: 16. (a) Anything elsewhere in this lease to the
contrary notwithstanding, this lease may be cancelled by Owner by sending of a
written notice to Tenant within a reasonable time after the happening of any one
or more of the following events: (1) the commencement of a case in bankruptcy or
under the laws of any state naming Tenant as the debtor; or (2) the making by
Tenant of an assignment or any other arrangement for the benefit or creditors
under any state statute. Neither Tenant nor any person claiming through or under
Tenant, or by reason of any statute or order of court, shall thereafter be
entitled to possession of the premises demised but shall forthwith quit and
surrender the premises. If this lease shall be assigned in
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accordance with its terms, the provisions of this Article 16 shall be applicable
only to the party then owning Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of
termination of this lease pursuant to (a) hereof, Owner shall forthwith,
notwithstanding any other provisions of this lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rental reserved hereunder for the unexpired portion of
the term demised and the fair and reasonable rental value of the demised
premises for the same period. In the computation of such damages the difference
between any installment of rent becoming due hereunder after the date of
termination and the fair and reasonable rental value of the demised premises for
the period for which such installment was payable shall be discounted to the
date of termination at the rate of four percent (4%) per annum. If such premises
or any part thereof be relet by the Owner for the unexpired term of said lease,
or any part thereof, before presentation of proof of such liquidated damages to
any court, commission or tribunal, the amount of rent reserved upon such
reletting shall be deemed to be the fair and reasonable rental value for the
part or the whole of the premises so re-let during the term of the re-letting.
Nothing herein contained shall limit or prejudice the right of the Owner to
prove for and obtain as liquidated damages by reason of such termination, an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such damages are to be
proved, whether or not such amount be greater, equal to, or less than the amount
of the difference referred to above.
Default: 17. (1) If Tenant defaults in fulfilling any of the
covenants of this lease other than the covenants for the payment of rent or
additional rent; or if the demised premises becomes vacant or deserted "or if
this lease be rejected under Section 35 of Title 11 of the U.S. Code (bankruptcy
code);" or if any execution or attachment shall be issued against Tenant or any
of Tenant's property whereupon the demised premises shall be taken or occupied
by someone other than Tenant; or if Tenant shall make default with respect to
any other lease between Owner and Tenant; or if Tenant shall have failed, after
five (5) days written notice, to redeposit with Owner any portion of the
security deposited hereunder which Owner has applied to the payment of any rent
and additional rent due and payable hereunder or failed to move into or take
possession of the premises within fifteen (15) days after the commencement of
the term of this lease, of which fact Owner shall be the sole judge; in any one
or more of such events, upon Owner serving a written five (5) days notice upon
Tenant specifying the nature of said default and upon the expiration of said
five (5) days, if Tenant shall have failed to comply with or remedy such
default, or if the said default or omission complained of shall be of a nature
that the same cannot be completely cured or remedied within said five (5) day
period, and if Tenant shall not have diligently commenced during such default
within such five (5) day period, and shall not thereafter with reasonable
diligence and in good faith, proceed to remedy or cure such default, then Owner
may serve a written three (3) days' notice of cancellation of this lease upon
Tenant, and upon the expiration of said three (3) days this lease and the term
thereunder shall end and expire as fully and completely as if the expiration of
such three (3) day period were the day herein definitely fixed for the end and
expiration of this lease and the term thereof and Tenant shall then quit and
surrender the demised premises to Owner but Tenant shall remain liable as
hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been
given, and the term shall expire as aforesaid: or if Tenant shall make default
in the payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required:
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceedings or otherwise, and the
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legal representative of Tenant or other occupant of demises premises and remove
their effects and hold the premises as if this lease had not been made, and
Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end. If Tenant shall make default hereunder
prior to the date fixed as the commencement of any renewal or extension of this
lease, Owner may cancel and terminate such renewal or extension agreement by
written notice.
Remedies of Owner and Waiver of Redemption: 18. In case of any
such default, re-entry, expiration and/or dispossess by summary proceedings or
otherwise, (a) the rent, and additional rent, shall become due thereupon and be
paid up to the time of such re-entry, dispossess and/or expiration, (b) Owner
may re-let the premises or any part or parts thereof, either in the name of
Owner or otherwise, for a term or terms, which may at Owner's option be less
than or exceed the period which would otherwise have constituted the balance of
the term of this lease and may grant concessions or free rent or charge a higher
rental than that in this lease. (c) Tenant or the legal representatives of
Tenant shall also pay Owner as liquidated damages for the failure of Tenant to
observe and perform said Tenant's covenants herein contained any deficiency
between the rent hereby reserved and or covenanted to be paid and the net
amount, if any, of the rents collected on account of the subsequent lease or
leases of the demised premises for each month of the period which would
otherwise have constituted the balance of the term of this lease. The failure of
Owner to re-let the premises or any part or parts thereof shall after making
reasonable efforts to do so not release or affect Tenant's liability for
damages. In computing such reasonable liquidated damages there shall be added to
the said deficiency such expenses as Owner may incur in connection with
re-letting, such as legal expenses, attorneys' fees, brokerage, advertising and
for keeping the demised premises in good order or for preparing the same for
re-letting. Any such liquidated damages shall be paid in monthly installments by
Tenant on the rent day specified in this lease and any suit brought to collect
the amount of the deficiency for any month shall not prejudice in any way the
rights of Owner to collect the deficiency for any subsequent month by a similar
proceeding. Owner, in putting the demised premises in good order or preparing
the same for re-rental may, at Owner's option, make such alterations, repairs,
replacements, and/or decorations in the demised premises as Owner, in Owner's
sole judgement, considers advisable and necessary for the purpose of re-letting
the demised premises, and the making of such alterations, repairs, replacements,
and/or decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Owner shall in no event be liable in any way
whatsoever for failure to re-let the demised premises, or in the event that the
demised premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws.
Fees and Expenses: 19. If Tenant shall default in the
observance or performance of any term or covenant on Tenant's part to be
observed or performed under or by virtue of any of the terms or provisions in
any article of this lease, then, unless otherwise provided elsewhere in this
lease, Owner may immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder. If Owner, in connection with the
foregoing or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs any reasonable obligations for
the payment of money, including but not limited to attorney's fees, in
instituting, prosecuting or defending any action or proceedings, then Tenant
will reimburse Owner for
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such sums so paid or obligations incurred with interest and costs. The foregoing
expenses incurred by reason of Tenant's default shall be deemed to be additional
rent hereunder and shall be paid by Tenant to Owner within five (5) days of
rendition of any bill or statement to Tenant therefor. If Tenant's lease term
shall have expired at the time of making such expenditures or incurring of such
obligations, such sums shall be recoverable by Owner as damages.
Building Alterations and Management: 20. Owner shall have the
right at any time without the same constituting an eviction and without
incurring liability to Tenant therefor to change the arrangement and or location
of public entrances, passageways, doors, doorways, corridors, elevators, stairs,
toilets or other public parts of the building and to change the name, number or
designation by which the building may be known. There shall be no allowance to
Tenant for diminution of rental value and no liability on the part of Owner by
reason of inconvenience, annoyance or injury to business arising from Owner or
other Tenant making any repairs in the building or any such alterations,
additions and improvements. Provided Owner shall not unreasonably interfere with
or prevent tenant access to the demised premises. Furthermore Tenant shall not
have any claim against Owner by reason of Owner's imposition of any controls of
the manner of access to the building by Tenant's social or business visitors as
the Owner may deem necessary for the security of the building and its occupants.
No Representations by Owner: 21. Neither Owner nor Owner's
agents have made any representations or promises with respect to the physical
condition of the building, the land upon which it is erected or the demised
premises, the rents, leases, expenses of operation or any other matter or thing
affecting or related to the demised premises or the building except as herein
expressly set forth and no rights, easements or licenses are acquired by Tenant
by implication or otherwise except as expressly set forth in the provisions of
this lease. Tenant has inspected the building and the demised premises and is
thoroughly acquainted with their condition and agrees to take the same "as is"
on the date possession is tendered and acknowledges that the taking of
possession of the demised premises by Tenant shall be conclusive evidence that
the said premises and the building of which the same form a part were in good
and satisfactory condition at the time such possession was so taken, except as
to latent defects. All understandings and agreements heretofore made between the
parties hereto are merged in this contract, which alone fully and completely
expresses the agreement between Owner and Tenant and any executory agreement
hereafter made shall be ineffective to change, modify, discharge or effect and
abandonment of it in whole or in part, unless such executory agreement is in
writing and signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
End of Term: 22. Upon the expiration or other termination of
the term of this lease, Tenant shall quit and surrender to Owner the demised
premises, broom clean, in good order and condition, ordinary wear and damages
which Tenant is not required to repair as provided elsewhere in this lease
excepted, and Tenant shall remove all its property from the demised premises.
Tenant's obligation to observe and perform this covenant shall survive the
expiration or other termination of this lease. If the last day of the term of
this Lease or any renewal thereof, falls on Sunday, this lease shall expire at
noon on the preceding Saturday unless it be a legal holiday in which case it
shall expire at noon on the preceding business day.
Quiet Enjoyment: 23. Owner covenants and agrees with Tenant
that upon Tenant paying the rent and additional rent and observing and
performing all the terms, covenants and conditions, on Tenant's part to be
observed and performed, Tenant may peaceably and quietly enjoy the premises
hereby demised, subject, nevertheless, to the terms and conditions of this lease
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including, but not limited to, Article 34 hereof and to the ground leases,
underlying leases and mortgages hereinbefore mentioned.
Failure to Give Possession: 24. If Owner is unable to give
possession of the demised premises on the date of the commencement of the term
hereof, because of the holding-over or retention of possession of any tenant,
undertenant or occupants or if the demised premises are located in a building
being constructed, because such building has not been sufficiently completed to
make the premises ready for occupancy or because of the fact that a certificate
of occupancy has not been procured or if Owner has not completed any work
required to be performed by Owner, or for any other reason, Owner shall not be
subject to any liability for failure to give possession on said date and the
validity of the lease shall not be impaired under such circumstances, nor shall
the same be construed in any wise to extend the term of this lease, but the rent
payable hereunder shall be abated (provided Tenant is not responsible for
Owner's inability to obtain possession or complete any work required) until
after Owner shall have given Tenant notice that the premises are substantially
ready for Tenant's occupancy. If permission is given to Tenant to enter into the
possession of the demised premises or to occupy premises other than the demised
premises prior to the date specified as the commencement of the term of this
lease. Tenant Covenants and agrees that such occupancy shall be deemed to be
under all the terms, covenants, conditions, and provisions of this lease, except
as to the covenants to pay rent. The provisions of this article are intended to
constitute "an express provision to the contrary" within the meaning of Section
223-a of the New York Real Property Law.
No Waiver 25. The failure of Owner or other person to seek
redress for violation of, or to insist upon the strict performance of any
covenant or condition of this lease or of any of the Rules or Regulations, set
forth or hereafter adopted by Owner, shall not prevent a subsequent act which
would have originally constituted a violation from having all the force and
effect of an original violation. The receipt by Owner of rent with knowledge of
the breach of any covenant of this lease shall not be deemed a waiver of such
breach and no provision of this lease shall be deemed to have been waived by
Owner unless such waiver be in writing signed by Owner. No payment by Tenant or
receipt by Owner of a lesser amount than the monthly rent herein stipulated
shall be deemed to be other than on account of the earliest stipulated rent, nor
shall any endorsement or statement of any check or any letter accompanying any
check or payment as rent be deemed an accord and satisfaction, and Owner may
accept such check or payment without prejudice to Owner's right to recover the
balance of such rent or pursue any other remedy in this lease provided. All
checks tendered to Owner as and for the rent of the demised premises shall be
deemed payments for the account of Tenant. Acceptance by Owner of rent from
anyone other than tenant shall not be deemed to operate as an attornment to
Owner by the payor of such rent or as a consent by Owner to an assignment or
subletting by Tenant of the demised premises to such payor, or as a modification
of the provisions of this lease. No act or thing done by Owner or Owner's agents
during the term hereby demised shall be deemed an acceptance of a surrender of
said premises and no agreement to accept such surrender shall be valid unless in
writing signed by Owner. No employee of Owner or Owner's agent shall have any
power to accept the keys of said premises prior to the termination of the lease
and the delivery of keys to any such agent or employee shall not operate as a
termination of the lease or a surrender of the premises
Waiver of Trial by Jury: 26. It is mutually agreed by and
between Owner and Tenant that the respective parties hereto shall and they
hereby do waive trial by jury in any action, proceeding or counterclaim brought
by either or the parties hereto against the other (except for personal injury or
property damage) on any matters whatsoever arising out of or in any way
connected with this lease, the relationship of Owner and Tenant, Tenant's use of
or occupancy of
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<PAGE> 11
said premises, and any emergency statutory or any other statutory remedy. It is
further mutually agreed that in the event Owner commences any summary proceeding
for possession of the premises, Tenant will not interpose any counterclaim of
whatever nature or description in any such proceeding.
Inability to Perform: 27. This Lease and the obligation of
Tenant to pay rent hereunder and perform all of the other covenants and
agreements hereunder on part of Tenant to be performed shall in no wise be
affected, impaired or excused because Owner is unable to fulfill any of its
obligations under this lease or to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is unable to make, or is delayed in
making any repair, additions, alterations or decorations or is unable to supply
or is delayed in supplying any equipment or fixtures if Owner is prevented or
delayed from so doing by reason of strike or labor troubles or any cause
whatsoever beyond Owner's sole control including, but not limited to, government
preemption in connection with a National Emergency or by reason of any rule,
order or regulation of any department of subdivision thereto or by reason of
the conditions of supply and demand which have been or are affected by war or
other emergency.
Bills and Notices: 28. Except as otherwise in this lease
provided, a bill, statement, notice or communication which Owner may desire or
be required to give to Tenant, shall be deemed sufficiently given or rendered
it, in writing, delivered to Tenant personally or sent by registered or
certified mail addressed to Tenant at the building of which the demised premises
form a part or at the last known residence address or business address of Tenant
or left at any of the aforesaid premises addressed to Tenant, and the time of
rendition of such bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same is delivered to
Tenant, mailed, or left at the premises as herein provided. Any notice by Tenant
to Owner must be served by registered or certified mail addressed to Owner at
the address first hereinabove given or at such other address as Owner shall
designate by written notice.
Water Charges: 29. If Tenant requires, uses or consumes water
for any purpose in addition to ordinary lavatory purposes (of which fact Tenant
Constitutes Owner to be the sole judge) Owner may install a water meter and
thereby measure Tenant's water consumption for all purposes. Tenant shall pay
Owner for the cost of the meter and the cost of the installation, thereof and
throughout the duration of Tenant's occupancy Tenant shall keep said meter and
installation equipment in good working order and repair at Tenant's own cost and
expense in default of which Owner may cause such meter and equipment to be
replaced or repaired and collect the cost thereof from Tenant, as additional
rent. Tenant agrees to pay for water consumed, as shown on said meter as and
when bills are rendered, and on default in making such payment Owner may pay
such charges and collect the same from Tenant, as additional rent. Tenant
covenants and agrees to pay, as additional rent, the sewer rent, charge or any
other tax, rent, levy or charge which now or hereafter is assessed, imposed or a
lien upon the demised premises or the realty of which they are part pursuant to
law, order or regulation made or issued in connection with the use, consumption,
maintenance or supply of water, water system or sewage or sewage connection or
system. If the building or the demised premises or any part thereof is supplied
with water through a meter through which water is also supplied to other remises
Tenant shall pay to Owner, as additional rent, on the first day of each month,
($100.00) of the total meter charges as Tenant's portion. Independently of
and in addition to any of the remedies reserved to Owner hereinabove or
elsewhere in this lease, Owner may sue for and collect any monies to be paid by
Tenant or paid by Owner for any of the reasons or purposes hereinabove set
forth.
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<PAGE> 12
Sprinklers: 30. Anything elsewhere in this lease to the
contrary notwithstanding, if the New York Board of Fire Underwriters of New York
Fire Insurance Exchange or any bureau, department or official of the federal,
state or city government recommend or require the installation of a sprinkler
system or that any changes, modifications, alterations, or additional sprinkler
heads or other equipment be made or supplied in an existing sprinkler system by
reason of Tenant's business, or the location of partitions, trade fixtures, or
contents of the demised premises. Tenant shall, at Tenant's expense, promptly
make such sprinkler system installations, changes, modifications, alterations,
and supply additional sprinkler heads or other equipment as required whether the
work involved shall be structural or non-structural in nature. Tenant shall pay
to Owner as additional rent the sum of $100.00, on the first day of each month
during the term of this lease, as Tenant's portion of the contract price for
sprinkler supervisory service.
Elevators, Heat, Cleaning: 31. As long as Tenant is not in
default under any of the covenants of this lease Owner shall: (a) if freight
elevator service is provided, same shall be provided only on regular business
days Monday through Friday inclusive, and on those days only between the hours
of 9 a.m. and 12 noon and between 1 p.m. and 5 p.m.; (b) furnish heat, water and
other services supplied by Owner to the demised premises, when and as required
by law. (c) clean the public halls and public halls and public portions of the
building which are used in common by all tenants. Tenant shall, at Tenant's
expense, keep the demised premises, including the windows, clean and in order,
to the satisfaction of Owner, and for that purpose shall employ the person or
persons, or corporation approved by Owner. Bills for the same shall be rendered
by Owner to Tenant at such time as Owner may elect and shall be due and payable
hereunder, and the amount of such bills shall be deemed to be, and be paid as,
additional rent. Tenant shall, however, have the option of independently
contracting for the removal of such rubbish and refuse in the event that Tenant
does not wish to have same done by employees of Owner. Under such circumstances,
however, the removal of such refuse and rubbish by others shall be subject to
such rules and regulations as, in the judgement of Owner, are necessary for the
proper operation of the building. Owner reserves the right to stop service of
the heating, elevator, plumbing and electric systems when necessary, by reason
of accident, or emergency, or for repairs, alterations, replacements or
improvements, in the judgement of Owner desirable or necessary to be made, until
said repairs, alterations, replacements or improvements shall have been
completed. If the building of which the demised premises are a part supplies
manually operated elevator service, Owner may proceed with alterations necessary
to substitute automatic control elevator service upon ten (10) day written
Notice to Tenant without in any way affecting the obligations of Tenant
hereunder, provided that the same shall be done with the minimum amount of
inconvenience to Tenant, and Owner pursues with due diligence the completion of
the alterations. All days from 8 AM to 8 PM, Owner agrees to make repairs (as
prompt as possible to the heating equipment. If heating to demised premises as
noted in this article becomes cost ineffective due to the additional hours of
heating requested tenant, a solution between a landlord and tenant to be
negotiated (to keep the demised premise heated during the tenants desired hours)
Security: 32. Tenant has deposited with Owner the sum of
$24,937.50 as security for the faithful performance and observance by Tenant of
the terms, provisions and conditions of this lease; it is agreed that in the
event Tenant defaults in respect of any of the terms, provisions and conditions
of this lease, including, but not limited to, the payment of rent and additional
rent, Owner may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional rent
or any other sum as to which tenant is in default or for any sum which Owner may
expend or may be required to expend by reason of Tenant's default in respect of
any of the terms, covenants and conditions of this lease, including but not
limited to, any damages or deficiency in the reletting of the premises, whether
such damages
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<PAGE> 13
or deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this lease, the security
shall be returned to Tenant after the date fixed as the end of the Lease and
after delivery of entire possession of the demised premises to Owner. In the
Event of a sale of the land and building or leasing of the building, of which
the demised premises form a part, Owner shall have the right to transfer the
security to the vendee or lessee and Owner shall thereupon be released by Tenant
from all liability for the return of such security; and Tenant agrees to look to
the new Owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Owner. Tenant further convenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
Captions: 33. The Captions are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this lease nor the intent of any provision thereof.
Definitions: 34. The term "Owner" as used in this lease means
only the Owner of the fee or of the leasehold of the building the
mortgagee in possession, for the time being of the land and building (or the
owner of a lease of the building or of the land and building) of which the
demised premises form a part, so that in the event of any sale or sales of said
land and building or of said lease, or in the event of a lease of said building,
or of the land and building, the said Owner shall be and hereby is entirely
freed and relieved of all covenants and obligations of Owner hereunder, and it
shall be deemed and construed without further agreement between the parties or
their successors in interest, or between the parties and the purchaser, at any
such sale, or the said lessee of the building, or of the land and building, that
the purchaser or the lessee of the building has assumed and agreed to carry out
any and all covenants and obligations of Owner hereunder. The words "re-enter"
and "re-entry" as used in this lease are not restricted to their technical legal
meaning. The term "rent" includes the annual rental rate whether so-expressed or
expressed in monthly installments, and "additional rent." "Additional rent"
means all sums which shall be due to new Owner from Tenant under this lease, in
addition to the annual rental rate. The term "business days" as used in this
lease, shall exclude Saturdays (except such portion thereof as is covered by
specific hours in Article 31 hereof), Sundays and all days observed by the State
of Federal Government as legal holidays and those designated as holidays by the
applicable building service union employees service contract or by the
applicable building service union employees service contract or by the
applicable Operating Engineers contract with respect to HVAC service.
Adjacent Excavation-Shoring: 35. If an excavation shall be
made upon land adjacent to the demised premises, or shall be authorized to be
made, Tenant shall afford to the person causing or authorized to cause such
excavation, license to enter upon the demised premises for the purpose of doing
such work as said person shall deem necessary to preserve the wall or the
building of which demised premises form a part from injury or damage and to
support the same by proper foundations without any claim for damages or
indemnity against Owner, or diminution or abatement of rent.
Rules and Regulations: 36. Tenant and Tenant's servants,
employees, agents, visitors, and licensees shall observe faithfully, and comply
strictly with, the Rules and Regulations annexed hereto and such other and
further reasonable Rules and Regulations as Owner or Owner's agents may from
time to time adopt. Notice of any additional rules or regulations shall be given
in
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<PAGE> 14
such manner as Owner may elect. In case Tenant disputes the reasonableness of
any additional Rule or Regulation hereafter made or adopted by Owner or Owner's
agents, the parties hereto agree to submit the question of the reasonableness of
such Rule and Regulation for decision to the New York office of the American
Arbitration Association, whose determination shall be final and conclusive upon
the parties hereto. The right to dispute the reasonableness of any additional
Rule or Regulation upon Tenant's part shall be deemed waived unless the same
shall be asserted by service of a notice in writing upon Owner within ten (10)
days after the giving of notice thereof. Nothing in this lease contained shall
be construed to impose upon Owner any duty or obligation to enforce the Rules
and Regulations or terms, covenants or conditions in any other lease, as against
any other tenant and Owner shall not be liable to Tenant for violation of the
same by any other tenant, its servants, employees, agents, visitors or
licensees.
Glass: 37. Owner shall replace, at the expense of the Tenant,
any and all plate and other glass damaged or broken from any cause whatsoever in
and about the demised premises. Owner may insure, and keep insured, at Tenant's
expense, all plate and other glass in the demised premises for and in the name
of Owner. Bills for the premiums therefor shall be rendered by Owner to Tenant
at such times as Owner may elect, and shall be due from, and payable by, Tenant
when rendered, and the amount thereof shall be deemed to be, and be paid, as
additional rent.
Estoppel Certificate: 38. Tenant, at any time, and from time
to time, upon at least 10 days' prior notice by Owner, shall execute,
acknowledge and deliver to Owner, and/or to any other person, firm or
corporation specified by Owner, a statement certifying that this Lease is
unmodified in full force and effect (or, if there have been modifications, that
the same is in full force and effect as modified and stating the modifications),
stating the dates to which the rent and additional rent have been paid, and
stating whether or not there exists any default by Owner under this Lease, and,
if so, specifying each such default.
Directory Board Listing: 39. If, at the request of and as
accommodation to Tenant, Owner shall place upon the directory board in the lobby
of the building, one or more names of persons other than Tenant, such directory
board listing shall not be construed as the consent by Owner to an assignment or
subletting by Tenant to such person or persons.
Successors and Assigns: 40. The covenants, conditions and
agreements contained in this lease shall bind and inure to the benefit of Owner
and Tenant and their respective heirs, distributees, executors, administrators,
successors, and except as otherwise provided in this lease, their assigns.
SEE RIDER ANNEXED HERETO AND MADE A PART HEREOF.
**The Landlord will return one month security to the tenant at the end of the
first anniversary of the lease if all monthly payments are timely made.
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
Witness for Owner: 625 PROPERTIES ASSOCIATES
14
<PAGE> 15
____________________________ By: [L.S.)
Witness for Tenant: JUPITER COMMUNICATIONS
____________________________ By: [L.S.)
15
<PAGE> 16
CORPORATE TENANT
STATE OF NEW YORK,
County of
On this day of , 19 , before me
personally came
to me known, who being by me duly sworn, did depose and say that he resides
in
that he is the of
the corporation described in and which executed the foregoing instrument, as
TENANT; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
board of Directors of said corporation, and that he signed his name thereto by
like order.
- --------------------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK,
County of
On this day of , 19 before me
personally came
to me known and known to me to be the individual described in and who, as
TENANT, executed the foregoing instrument and acknowledge to me that executed
the same.
- --------------------------------------
RULES AND REGULATIONS ATTACHED TO AND MADE A PART
OF THIS LEASE IN ACCORDANCE WITH ARTICLE 36.
1. The sidewalks, entrances, driveways, passages, courts,
elevators, vestibules, stairways, corridors or halls shall not be obstructed or
encumbered by any Tenant or used for any purpose other than for ingress or
egress from the demised premises and for delivery of merchandise and equipment
in a prompt and efficient manner using elevators and passageways designated for
such delivery by Owner. There shall not be used in any space, or in the public
hall of the building, either by any Tenant or by jobbers or others in the
delivery or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and sideguards. If said premises are situated on the ground floor
of the building, Tenant thereof shall further, at Tenant's expense, keep the
sidewalk and curb in front of said premises clean and free from ice, snow, dirt
and rubbish.
2. The water and wash closets and plumbing fixtures shall not
be used for any purposes other than those for which they were designed or
constructed and no sweepings, rubbish, rags, acids or other substances shall be
deposited therein, and the expense of any breakage, stoppage,
16
<PAGE> 17
or damage resulting from the violation of this rule shall be borne by the Tenant
who, or whose clerks, agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out
of any window of the building; and no Tenant shall sweep or throw or permit to
be swept or thrown from the demised premises any dirt or other substances into
any of the corridors or halls, elevators, or out of the doors or windows or
stairways of the building and Tenant shall not use, keep or permit to be used or
kept any foul or noxious gas or substance in the demised premises, or permit or
suffer the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the buildings by reason of noise,
odors, and or vibrations, or interfere in any way, with other Tenants or those
having business therein, nor shall any animals or birds be kept in or about the
building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the building is prohibited.
4. No awnings or other projections shall be attached to the
outside walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises of the building or on the inside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any ability and may charge the expense
incurred by such removal to Tenant or Tenants violating this rule. Interior
signs on doors and directory tablet shall be inscribed, affixed for each Tenant
by Owner at the expense of such Tenant, and shall be of a size, color and style
acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way
deface any part of the demised premises or the building of which they form a
part. No boring, cutting or stringing of wires shall be permitted, except with
the prior written consent of Owner, and as Owner may direct. No Tenant shall lay
linoleum, or other similar floor covering, so that the same shall come in direct
contract with the floor of the demised premises, and, if linoleum or other
similar floor covering is desired to be used an interlining of builder's
deadening felt shall be first affixed to the floor, by a paste or other
material, soluble in water, the use of cement or other similar adhesive material
being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed
upon any of the doors or windows by any Tenant, nor shall any changes be made in
existing locks or mechanism thereof. Each Tenant must, upon the termination of
his Tenancy, restore to Owner all keys of stores, offices and toilet rooms,
either furnished to, or otherwise procured by, such Tenant, and in the event of
the loss of any keys, so furnished, such Tenant shall pay to Owner the cost
thereof.
8. Freight, furniture, business equipment, merchandise and
bulky matter of any description shall be delivered to and removed from the
premises only on the freight elevators and through the service entrances and
corridors, and only during hours and in a manner approved by Owner. Owner
reserves the right to inspect all freight to be brought into the building and to
exclude from the building all freight which violates any of these Rules and
Regulations of the lease of which these Rules and Regulations are a part.
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<PAGE> 18
9. No Tenant shall obtain for use upon the demised premises
ice, drinking water, towel and other similar services, or accept barbering or
bootblacking services in the demised premises, except from persons authorized by
Owner, and at hours and under regulations fixed by Owner. Canvassing, soliciting
and peddling in the building is prohibited and each Tenant shall cooperate to
prevent the same.
10. Owner reserves the right to exclude from the building
between the hours of 6 p.m. and 8 a.m. on business days, after 1 p.m. on
Saturdays, and at all hours on Sundays and legal holidays all persons who do not
present a pass to the building signed by Owner. Owner will furnish passes to
person for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he request such pass and shall be liable to
Owner for all acts of such persons. Notwithstanding the foregoing, Owner shall
not be required to allow Tenant or any person to enter or remain in the
building, except on business days from 8:00 a.m. to 6:00 p.m. and on Saturdays
from 8:00 a.m. to 1:00 p.m.
11. Owner shall have the right to prohibit any advertising by
any Tenant which in Owner's opinion, tends to impair the reputation of the
building or its desirability as a loft building, and upon written notice from
Owner, Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in
or on the demised premises, any inflammable, combustible or explosive fluid,
material, chemical or substance, or cause or permit any odors of cooking or
other processes, or any unusual or other objectionable odors to permeate in or
emanate from the demised premises.
13. Tenant shall not use the demised premises in a manner
which disturbs or interferes with other Tenants in the beneficial use of their
premises.
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<PAGE> 19
Address: 625 Broadway
New York, New York
Premises 2nd Floor
625 PROPERTIES ASSOCIATES, LP
TO
JUPITER COMMUNICATIONS
STANDARD FORM LEASE OF
LOFT LEASE
Dated November , 1996
Rent per Year
Rent per Month
Term
From
To
<PAGE> 20
RIDER TO LEASE DATED AS OF NOVEMBER 25, 1996
BY AND BETWEEN 625 PROPERTIES ASSOCIATES, AS OWNER
AND JUPITER COMMUNICATIONS, AS TENANT
ARTICLE 41. CONFLICT
To the extent that there shall be or exist any inconsistency between
the terms and provisions of this Rider and the terms and provisions, printed or
typewritten, of the Printed Form to which it is attached, the terms and
provisions of this Rider shall govern.
ARTICLE 42. TERM; COMMENCEMENT DATE; ANNUAL RENT; OTHER FEES
(A) This lease shall be for a term of five (5) years commencing on the date
of execution and delivery of this lease in accordance with its terms
(the "Commencement Date") and terminating on the fifth (5) anniversary
of the Commencement Date, unless soon terminated pursuant to law or the
express provisions of this lease.
(B) Tenant shall pay to Owner minimum annual rent throughout the term of
this lease as follows:
1/1/97 to 12/31/97 Ninety Nine Thousand Seven Hundred
Fifty Dollars and 00/1009 ($99,750.00)
per annum ($8,312.50 per month)
1/1/98 to 12/31/98 One hundred Three Thousand Seven
Hundred Forty Dollars and 00/100
($103,740.00) per annum ($8,645.00 per
month)
1/1/99 to 12/31/99 One Hundred Seven Thousand Eight
Hundred Eighty Nine Dollars and 60/100
($107,889.60) per annum ($8,990.80 per
month)
1/1/00 to 12/31/00 One Hundred Twelve Thousand Two Hundred
Five Dollars and 18/100 ($112,205.18)
per annum ($9,350.43 per month)
1/1/01 to 12/31/01 One Hundred Sixteen Thousand Six
Hundred Ninety Three Dollars and 38/100
($116,693.38) per annum ($9,724.44 per
month)
(C) Tenant shall pay to Owner the minimum annual rent as aforesaid and as
escalated and adjusted pursuant to the various provisions of this
lease, in equal monthly installments in advance on the first day of
each calendar month throughout the term hereof and pro rata for the
fractional portion of any month, except that if the Commencement Date
falls on a day other than the first day of a calendar month, then, on
the first day of the third calendar month immediately following the
Commencement Date Tenant shall pay to Owner a pro rata portion of the
monthly annual rent for the initial fractional month. The
<PAGE> 21
first full monthly installment shall be paid, in advance, upon the
execution of this lease. All annual rent, additional rent and other
amounts payable to Owner under the provisions of this lease shall be
paid by Tenants to Owner at the times specifically provided therefor
or, if no such time is expressly set forth, upon demand, or together
with the next succeeding installment of annual rent, whichever shall
first occur, in legal tender, at the address of Owner first hereinabove
set forth, or at such other place as Owner may designate in writing,
without any setoff or deduction whatsoever and without any prior demand
or notice except as may be otherwise expressly provided for in this
lease. Failure to deliver any escalation or other statement to Tenant
shall in no way modify or waive Tenant's obligation to pay any item of
additional rent otherwise due under the lease.
(D) All sums, amounts or charges other than annual rent, payable by Tenant
pursuant to the provisions of this lease, shall be deemed items of
additional rent, and the failure by Tenant to pay any such item of
additional rent shall entitle Owner to exercise all remedies for such
failure which it would be entitled to exercise at law or under this
lease in respect of any failure to pay annual rent.
(E) The Tenant shall pay no rent for the month of January 1997. Commencing
February 1997 through April 1997, tenant shall pay two-thirds (2/3) of
the monthly rent ($5,541.67) to cover the two month rent concession
granted by the landlord.
(F) Tenant shall have access to the premises to do construction work prior
to the lease commencement date.
ARTICLE 43. TAX ESCALATION
(A) Tenant agrees to pay as additional rent eight and 33/100 percent
(8.33%) of any and all increases in Real Estate Taxes (as hereinbelow
defined) over and above the Real Estate Taxes payable for the July 1,
1996 to June 30, 1997 final year (the "Base Tax Year") (such taxes as
finally determined to be payable for such period, after any certiorari
or other proceeding, if any, being hereinafter referred to as the "Base
Taxes") imposed on the Property (as hereinafter defined) with respect
to every calendar year or part thereof during the term of this lease,
whether any such increase results from a higher tax rate or an increase
in the assessed valuation of the Property, or both. "Property" shall
mean the land and the Building, including any "air rights" or
"development rights" thereof "Real Estate Taxes" shall mean all taxes,
assessments, license vault fees, real estate impositions, real estate
fees and all other governmental charges of any nature whatsoever,
whether general or special, ordinary or extraordinary, foreseen or
unforeseen, all of which are imposed upon or in respect of the Property
(as finally determined to be payable for such period, after any
Certiorari or other proceeding) including sewer rents and charges and
water frontage charges (but not water meter charges and the sewer rents
arising therefrom, if any, which are separately metered to the demised
premises, and which are paid directly by Tenant or any other tenant of
the Building), and any special assessment imposed thereon for any
purpose whatsoever, including taxes payable by Owner to a ground
lessor, if any, with respect thereto, and any and all expenses
(including attorney's fees and disbursements) incurred by Owner in
contesting such Taxes, which expenses shall be allocated to the period
in which such expenses were
2
<PAGE> 22
incurred and shall be limited to the amount, if any, of any savings or
reductions in Taxes resulting from such contest. If due to a change in
the method of taxation any franchise, income, profit or other tax,
however designated, shall be levied against Owner's interest in the
Property in whole or in part for or in lieu of any tax which would
otherwise constitute Real Estate Taxes, such change in method of
taxation shall be included in the term "Real Estate Taxes" for purposes
hereof "Tax Years" shall mean each period of twelve (12) months
commencing on the first day of July, 1997. All such payments shall be
appropriately prorated for any partial calendar years occurring during
the first and last years of the term of this lease. A copy of the tax
bill of the City of New York (or other governmental agency where
appropriate) shall be sufficient evidence of the amount of Real Estate
Taxes and for calculation of the amount to be paid by Tenant.
(B) The amounts due under this Article shall be collected as additional
rent without set-off deduction. Owner shall deliver to Tenant a
statement setting forth the Real Estate Taxes for the Base Tax Year and
the Real Estate Taxes for the Tax Year concerned or a portion thereof.
Any adjustment in rent hereunder shall be effective as of the first day
of the Tax Year concerned and, Tenant shall pay its share of increases
in Real Estate Taxes within fifteen (15) days before the first day of
the month in which the Real Estate Taxes for the Tax Year concerned
become due, provided however, that if Real Estate Taxes for such Tax
Year are paid by Owner in installments, then Tenant's payments for such
Tax Year shall be likewise payable in proportionate installments, each
such installment to be paid at least fifteen (15) days prior to the
date upon which the corresponding installment of Real Estate Taxes for
such Tax Year shall become due. In any event any Real Estate Taxes (or
installment thereof) became due and payable by Owner prior to the
furnishing to Tenant of a statement, Tenant shall pay Tenant's share of
increases in Real Estate Taxes (or installments, thereof, if
applicable) within ten (10) days of the furnishing to Tenant of a
statement. Such additional rent shall be paid by Tenant notwithstanding
the fact that Tenant may be exempt in whole or in part, from the
payment of any Real Estate Taxes by reason of Tenant's diplomatic,
charitable, non-profit or otherwise tax exempt status, or for any other
reason whatsoever.
(C) Owner's failure during the lease term to prepare and deliver any of the
foregoing tax bills or statements, or Owner's failure to make a demand
for payment shall not in any waive or cause Owner to forfeit or
surrender its rights to collect any of the foregoing items of
additional rent which may have become due during the term of this
lease. Tenants liability for the amounts due under this Article shall
survive the expiration of the term. In no event shall any adjustment
pursuant to this Article result in any reduction in annual rent.
(D) Upon request of Tenant, Owner agrees to deliver to Tenant a copy of the
bill(s) for Real Estate Taxes in its possession for any year during the
term of this lease.
(E) It is expressly acknowledged that Tenant's failure to pay such tax
escalation additional rent shall entitle Owner to exercise all remedies
for such breach which it would be entitled to exercise at law or under
this lease in respect of any failure to pay annual rent.
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(F) Any statement sent to Tenant with respect to escalations hereunder
shall be biding upon Tenant, unless, within thirty (30) days after such
statement is sent, Tenant shall send a written notice to Owner
objecting to such statement and specifying the respects in which such
statement is claimed to be incorrect. Pending the determination of such
dispute, Tenant shall pay all additional rent shown on such statement
and such statement and acceptance shall be without prejudice to
Tenant's position.
ARTICLE 44. AS IS; REPAIRS; MAINTENANCE
(A) Neither Owner nor Owner's agents have made any representations,
warranties, or promises, either express or implied, with respect to the
physical condition of the Building or the demised premises, the use or
uses to which the demised premises or any part thereof may be put, the
operation of any of the mechanical, plumbing, electrical, ventilation
or exhaust systems servicing the demised premises, the expenses of
operation, except as expressly set forth in this lease; and no rights,
easements, or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth herein. Tenant acknowledges
that it has inspected the Building and the demised premises and is
thoroughly acquainted with their condition, and agrees to take the same
"as is" except that Landlord shall put the existing bathrooms in
functional condition and deliver possession of the demised premises
broom-clean, and except as otherwise set forth in Subarticle (B) below.
Tenant further acknowledges that taking possession of the demised
premises shall be conclusive evidence that the demised premises and the
Building were in good and satisfactory condition at the time such
possession was so taken. It is expressly understood that Owner shall
not in any wise be liable for any latent or patent defects in the
demised premises. Notwithstanding anything contained herein to the
contrary, Owner shall be responsible for maintaining and repairing
structural facilities, heating and ventilation (exclusive of air
conditioning), provided that Tenant does not negligently cause harm to
the foregoing. Owner shall also be responsible, during the term of this
lease, for maintaining and repairing electrical, water, and heating
systems from the source to and on the individual floor herein demised.
(B) Tenant at its sole cost and expense, shall take good care of the
demised premises and all improvements and personal property located
therein, including, without limitation, all furniture, fixtures,
machinery, equipment and all other personal property and stock
purchased by Tenant and used in connection with the operation of its
business at the demised premises, (all of the foregoing being
hereinafter collectively referred to as "Tenants Property") and Tenant
shall not suffer or commit any waste or injury thereto. Tenant shall
make all necessary repairs (other than structural repairs) to the
demised premises and/or Tenants Property, ordinary, as well as
extraordinary, foreseen, as well as unforeseen; provided, however, that
Tenant shall not be obligated to make any repairs including latent
defects to the extent that the same are necessitated by the negligent
acts or omissions of Owner, its agents, employees or contractors.
Tenant shall not be responsible for remediation of environmental
problems unless caused by Tenant, its agents, employees, contractors or
visitors during Tenants occupancy of the demised premises.
Nevertheless, any damage to the Building (including, without
limitation, the demised premises and the roof), interior and agents,
servants, employees, invitees or contractors) shall be repaired by
Tenant, at exterior, arising from or caused by the
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negligence or omissions of Tenant or its sole cost and expense,
regardless of whether such repairs are structural or nonstructural in
nature.
(C) When used in Subarticle (B) above, the term "repairs" shall include
replacements and substitutions of all property when necessary, of a
quality, class and value at least equal to the property replaced or
substituted.
ARTICLE 45. SUPPLEMENTING ARTICLE 3 OF THE PRINTED FORM
(A) Supplementing but not limiting the provisions of Article 3:
(i) No alteration (as such term is hereinafter defined) shall be made
that is of a character which involves changes to the steel framework or
foundations of the Building or affects (a) any part of the Building
outside of the demised premises, or (b) the proper functioning, or
overloads the capacity, of the mechanical, electrical, plumbing,
heating, ventilating, air conditioning or other service systems of the
building inside or outside the demised premises. Tenant shall not make
or allow to be made any alterations, additions or improvements to or on
the demised premises without first obtaining the written consent of
Owner which consent shall not be unreasonably withheld or delayed. Any
such alterations, additions or improvements, including but not limited
to wall covering, paneling and built-in cabinet work, but excepting
movable furniture and trade fixtures, shall be made at Tenant's sole
expense, according to plans and specifications approved in writing by
Owner, in compliance with all applicable laws, by a licensed
contractor, and in a good and workmanlike manner conforming in quality
and design with the demised premises existing as of the Commencement
Date, shall not diminish the value of the Building or the demised
premises and shall at once become a part of the realty and shall be
surrendered with the demised premises. Upon the expiration or sooner
termination of the term hereof, Tenant shall, upon written demand by
Owner, at Tenant's sole expense, with due diligence, remove any
alterations, additions or improvements made by Tenant and designated by
owner to be removed, and repair any damage to the demised premises
caused by such removal. If Tenant shall fail to remove any of its
property of any nature whatsoever from the demised premises or Building
at the termination of this lease such property shall be deemed
abandoned and Owner may remove and dispose of such property without
liability for loss thereof such removal to be at the expense of Tenant.
(ii) Owner will be furnished with a policy or certificate of public
liability insurance covering Owner in limits of $1,000,000 for personal
injuries in any one accident or disaster, and $500,000 for property
damage. Such policy shall be maintained at all times during the
progress of the work and shall provide that no cancellation shall be
effective without at least fifteen (15) days prior written notice to
Owner. Owner shall have the right from time to time during the term of
this lease to require that Tenant increase the amounts of the coverage
required to be maintained hereunder to such amounts that are
customarily required by owners of similar properties in New York City.
The term "alteration" as used in this lease shall mean any
improvement, addition, change or installation of, in or to the demised premises,
including, without limitation, any of such involving electrical, air
conditioning, ventilation, heating, plumbing, ceilings, stairways,
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partitions, demising walls within the demised premises, doors, gates, vaults,
paneling, molding, shelving, radiators, enclosures, floors and floor coverings,
whether or not the same are made in connection with the repair, replacement or
addition to trade fixtures, machinery or equipment, and shall not include
painting or similar decoration. Landlord agrees to not unreasonably withhold or
delay its consent to proposed wallcovering.
ARTICLE 46. REPAIRS, MAINTENANCE
Owner will be notified of all alternations and/or renovations
to be done in the demised premises. Work that has been approved in advance by
both parties would have to be removed at the termination of the lease unless
agreed upon by both parties that such improvement, repair and/or renovation will
remain at the expiration of the said lease.
ARTICLE 47. LIENS
Tenant shall keep the demised premises and the Building free
from any liens arising out of any work performed, materials ordered or
obligations incurred by or on behalf of Tenant, and Tenant hereby agrees to
indemnify and hold Owner, its agents, employees, independent contractors,
officers, directors, partners, and shareholders harmless from any liability,
cost or expense for such liens. Tenant shall cause any such lien imposed to be
released of record by payment or posting of the proper bond acceptable to Owner
within ten (10) days after the earlier of imposition of the lien or written
request by Owner. Tenant shall give Owner written notice of Tenant's intention
to perform work on the demised premises which might result in any claim of lien,
at least ten (10) days prior to commencement of such work. If Tenant fails to
remove any lien within the prescribed ten (10) day period, then Owner may do so
at Tenant's expense and Tenant's reimbursement to Owner for such amount,
including attorneys' fees and costs, shall be deemed additional Rent.
ARTICLE 48. INSURANCE
Tenant shall provide on or before the Commencement Date of the term
hereof at its own expense, and keep in force during the term hereof, for the
benefit of Owner, Owner's designees and Tenant a policy of Comprehensive General
Liability insurance with a Bodily Injury Limit of One Million Dollars
($1,000,000) and a Property Damage Limit of Five Hundred Thousand Dollars
($500,000), protecting Owner and Tenant against claims for bodily injury, or
death, and property damage, including water damage, occurring in, upon, or about
the demised premises or any appurtenances thereto. Such policy is to be written
by good and solvent insurance companies satisfactory to Owner. Such insurance
may be carried under a blanket policy covering the demised premises and other
locations of Tenant, if any. Prior to the time such insurance is first required
to be carried by Tenant, and thereafter at least fifteen (15) days prior to the
expiration of any such policy, Tenant agrees to deliver to Owner either a
duplicate original of the aforesaid policy or a certificate evidencing such
insurance, together with evidence of payment for the policy.
All of the aforesaid insurance shall be in the name of Owner, and all
other designees of Owner, and all other designees of Owner, and Tenant, and
shall contain endorsements that: (I) such insurance may not be cancelled or
amended with respect to Owner (or its designees(s),
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except upon twenty (20) days written notice by registered mail to Owner and such
designees by the insurance company); and (ii) Tenant shall be solely responsible
for payment of premiums and that Owner and its designees shall not be required
to pay any premiums for such insurance. The minimum limits of the comprehensive
general liability policy of insurance shall in no way limit or diminish Tenant's
liability under other provisions of this lease.
Tenant's failure to provide and keep in force the aforementioned
insurance shall be regarded as a material default hereunder, entitling Owner to
exercise any or all of the remedies provided in this lease in the event of
Tenant's default.
Owner shall have the right to require Tenant to increase the amount of
coverage under such policy or policies consistent with amounts customarily
required by owners of similar properties in New York City, provided, however,
that such amount shall not be increased by more than five percent (5%)
cumulative per annum.
Any delay by Owner in exercising, failing to exercise, any right
hereunder shall not be deemed a waiver of said right.
ARTICLE 49. ELECTRICITY
(A) Tenant shall arrange for and pay as additional rent all charges for
electricity used or consumed on the demised premises and shall hold
Owner harmless from any and all liabilities, liens, costs and expenses
arising therefrom. All electricity charges shall be paid directly by
Tenant to the utility company.
Notwithstanding anything to the contrary contained in this
lease, Tenant shall, at Tenant's sole cost and expense, maintain and promptly
make all repairs, structural and nonstructural, to all components of the
electrical system from the meter socket and end-line connection for the floor to
and through the demised premises floor.
(B) Owner shall not be liable for any loss suffered by Tenant by reason of
interruption or discontinuance of electric service.
(C) Tenant covenants and agrees that at all times its use of electric
current shall never exceed the capacity of existing feeders to the
demised premises or the capacity of the risers or wiring installation
in the Building. Tenant agrees not to connect any additional electrical
equipment to the building electric distribution system, other than
computers, telephone, telefax machines, copying machines, typewriters
and other office machines which consume comparable amounts of
electricity, without Owner's prior written consent. In the event
Tenant's electrical requirements require the installations of any
additional risers, Tenant shall request Owner's written approval of
same, which approval may be withheld by Owner for any reason
whatsoever. If Owner approves such installation, Owner shall install
such risers at Tenant's sole cost and expense provided that such
installation will not cause permanent damage or injury to the Building
or the demised premises or cause or create a dangerous or hazardous
condition or entail excessive or unreasonable alterations, repairs or
expense or interfere with or disturb other tenants or occupants of the
Building. If Owner shall consent to the installation of such riser or
risers, which consent can be withheld for any reason, Owner at Tenant's
sole cost and
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expense, shall also install other equipment necessary and proper in
connection therewith subject to the aforesaid terms and conditions.
ARTICLE 50. LATE FEES
Tenant hereby acknowledges that late payment to Owner of Rent,
Additional Rent or other sums due hereunder will cause Owner to incur costs not
contemplated by this lease, the exact amount of which will be extremely
difficult to ascertain. If any Rent, Additional Rent or other sum due from
Tenant is not received by Owner or Owner's designated agent within ten (10) days
of when due, then Tenant shall pay to Owner a late charge equal to five percent
(5%) of such overdue amount, plus any attorneys' fees and costs incurred by
Owner by reason of Tenant's failure to pay Rent and other charges within ten
(10) days of when due hereunder. The parties hereby agree that such late charges
represent a fair and reasonable estimate of the cost that owner will incur by
reason of Tenant's late payment. Owner's acceptance of such late charges shall
not constitute a waiver of Tenant's default with respect to such overdue amount
or estop Owner from exercising any of the other rights and remedies granted
hereunder.
ARTICLE 51. DELAY IN VACATION OF DEMISED PREMISES
(A) Tenant agrees it shall indemnify and save Owner harmless against all
costs, claims, loss or liability resulting from delay by Tenant in
surrendering the demised premises upon the expiration or earlier
termination of this lease, including, without limitation, any claims
made by any succeeding tenant founded on such delay.
(B) The parties recognize and agree that the damage to Owner resulting from
any failure by Tenant timely to surrender the demised premises will be
substantial, will exceed the amount of monthly installments of annual
rent theretofore payable hereunder, and will be impossible of accurate
measurement. Tenant therefore agrees that if possession of the demised
premises is not surrendered to Owner upon the expiration or earlier
termination of the term of this lease, then and in such event Tenant
shall pay Owner, as liquidated damages for each month and for each
portion of any month during which Tenant holds over in the demised
premises after the expiration or termination of the term of this lease,
a sum equal to the greater of the (I) fair market rental at the
expiration of the term and (ii) the highest annual rent and additional
rent which was payable by Tenant per month under this lease. The
provisions of this Subarticle (B) will not limit, reduce or otherwise
affect the liability of Tenant under Subarticle (A) of this Article.
ARTICLE 52. SUPPLEMENTING ARTICLE 11 OF THE PRINTED FORM
(A) Without limiting the scope of Article 11 it is expressly acknowledged
that any assignment or transfer of the shares of stock of any corporate
tenant (by single or multiple transactions), the effect of which is a
transfer of the majority of the issued and outstanding capital stock of
the corporate tenant or the effect of which transfers control of such
corporation to any person or persons who were not stockholders thereof
at the time such corporate tenant acquired Tenant's leasehold estate
hereunder, or any merger of a corporate tenant into, or consolidation
of a corporate tenant with another corporation, shall be conclusively
deemed an assignment under the terms of the lease. Owner may
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request at any time and Tenant shall deliver within ten (10) days after
such request a list of the names and addresses of all stockholders,
officers and directors of a corporate tenant, which lists shall be
sworn to by the chief executive officer of Tenant.
Notwithstanding anything contained herein to the contrary in
the event of an arms-length bona fide sale of Tenant's business, Owner hereby
consents to the assignment of this lease to the purchaser of Tenant's business
or subletting of 30% of demised premises for the remainder of the term provided
that the assignee assumes all of the Tenant's obligations hereunder. Tenant
shall remain liable for all of its obligations under this lease notwithstanding
any assignment of this lease or subletting of the demised premises. Owner shall
not be entitled to the payment of any fees or concessions in the event of an
assignment of the lease or subletting of 30% of demised premises for the
remainder of the term entered into in connection with an arms-length bona fide
sale of Tenant's entire business.
(B) In the event that Tenant shall at any time or times during the term of
this lease desire to assign this lease or sublet all or a portion of
the demised premises, Tenant shall give notice thereof to Owner and
shall submit and otherwise comply with the following:
(i) The name of the proposed assignee or sublessee and the
character of its business;
(ii) The activities to be conducted in and the use to be made of
the demised premises by the proposed assignee or sublessee;
(iii) The terms and conditions of the proposed assignment or
subletting;
(iv) In the case of a proposed subletting of a portion of the
demised premises, a reasonably accurate floor plan of the portion of the
demised premises and to be sublet;
(v) Financial information or credit information pertaining to the
proposed assignee (not required for sublessee) sufficient to enable Owner to
evaluate its financial responsibility; and
(vi) A representation that the proposed assignee or sublessee is
not a tenant, subtenant or occupant of other space in the Building.
During the period of thirty (30) days after receipt by Owner
of the foregoing information Owner will notify Tenant of its election
either to grant or deny its consent to such assignment or subletting.
Owner agrees not to unreasonably withhold or delay its consent to any
proposed assignment or subletting.
If no such notice is given to Tenant, it shall be deemed that
Owner has elected to refuse or withhold consent to the proposed
assignment or subletting.
(C) Any assignment or subletting made in contravention of the provisions of
this Article shall not be binding upon Owner, and, at Owner's option,
may be treated as a nullity, and of no force and effect whatsoever as
against Owner. No assignment of this lease or subletting of the demised
premises (whether with or without Owner's consent), shall operate or be
construed to release or diminish Tenant's liability under this lease,
and such liability shall continue in full force and effect. Moreover,
no assignment or subletting (whether with or
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without Owner's consent) shall operate to relieve Tenant of the
necessary of compliance with all of the provisions of this Article with
respect to any further assignment or subletting.
(D) If the demised premises shall be sublet or occupied by any person or
persons other than Tenant, Owner may, after default by Tenant, collect
rent from the subtenant or occupant and apply the net amount collected
to the rent herein reserved, but no such subletting, occupancy or
collection of rent shall be deemed a waiver of the covenants in this
Article, nor shall it be deemed an acceptance of the subtenant or
occupant as a tenant, or a release of Tenant from the full performance
by Tenant of all the terms, conditions and covenants of this lease.
(E) In the event of a sublet consented to by Owner, one hundred percent
(100%) of the Net Profit for each calendar year shall be paid quarterly
to Owner, as additional rent. For the purpose of this Article, "Net
Profit" for any calendar year shall mean the amount by which "Gross
Receipts" actually paid to Tenant in connection with any subletting
exceed "Gross Expenses" of Tenant with respect to the demised premises
for such calendar year. The Net Profit and Gross Receipts shall be
computed and paid with respect to all subleases in effect.
"Gross Receipts" of Tenant shall mean all rentals and any other sums
paid to Tenant including, without limitation, sums paid to acquire the lease or
sublease, fixture fees, electricity charges, "key money," and any other
consideration paid by any subtenant with respect to the demised premises during
the calendar year in question.
"Gross Expenses" of Tenant with respect to the demised premises for any
calendar year shall mean all rent, additional rent and other sums payable by
Tenant to Owner under this Lease for such calendar year and shall not include
any other expenditures paid or incurred by Tenant except customary brokerage
fees and reasonable attorneys' fees actually paid by Tenant in connection with
such subletting.
Within thirty (30) days after the end of each quarter of each calendar
year during the term of this lease, Tenant shall deliver to Owner a statement
sworn to by an officer of Tenant setting forth the Gross Receipts and Gross
Expenses for such quarter and the computation of the Net Profit, if any, for
such quarter, together with any payment for any Net Profit which may be due
pursuant to this Article. If any such statement contains an untrue statement or
fails to include a complete statement of Gross Receipts, then Tenant shall be
deemed to be in material default under this lease and Owner shall be entitled to
terminate this lease in addition to exercising any other remedy available to it
in law or in equity.
For the period of two (2) years after any statement required by this
Article has been sent by Tenant to Owner, Owner shall have the opportunity to
examine the books of Tenant at Tenant's office, upon reasonable notice to Tenant
and within reasonable hours, in order to determine the accuracy of such
statement(s).
The obligations of Tenant under this subarticle (E) shall survive the
expiration or termination of this lease.
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(F) Each assignee shall assume and be deemed to have assumed this lease and
shall be and remain liable for the payment of the rent and additional
rent, and for the due performance of all the terms, covenants,
conditions and agreements on Tenant's part to be performed during the
term of this lease. No assignment shall be binding on Owner unless the
assignee of Tenant shall deliver to Owner an instrument in recordable
form which contains an assumption by the assignee, but the failure or
refusal of the assignee to execute or deliver such instrument shall not
relieve the assignee from liability as provided in this Subarticle.
(G) Each sublessee shall be and remain liable for the payment of rent, and
for the due performance of all the terms, covenants, conditions, and
agreement on the sublessee's part to be performed during the term of
the sublease. Every sublease shall contain a provision stating that the
sublease is subject and subordinate to the estate created under as well
as to the terms and provisions of this lease. In the event of a
permitted subletting, the sublease shall contain a provision pursuant
to which in the event of a termination of this lease for any reason
whatsoever, Owner shall have the right, at its election, to require the
subleasee to attom to and recognize Owner as the subleasee's owner as
of the commencement date of the sublease. In the event of a permitted
subletting of a portion of the demised premises, the sublease shall
contain a provision whereby Tenant agrees, at its sole cost, to provide
the subleasee with reasonably appropriate means of ingress to and from
the space subleased and Tenant further agrees to restore the space to
it original condition.
ARTICLE 53. INDEMNITY
Without limiting any other indemnity extended by Tenant to Owner under
the provisions of this lease, Tenant hereby indemnifies and agrees to hold Owner
harmless from and against any and all damage, judgment, loss, liability, claim,
cost and/or expense (including, without limitation, reasonable attorneys' fees
and disbursements) in connection with or arising from any default by Tenant
under this lease, Tenant's misuse or occupancy of the demised premises, and/or
any acts, omissions or the negligence of Tenant, its employees, servants,
contractors, agents, licensees and invitees in or about the demised premises,
the Building and sidewalks, if any, adjoining the Building.
ARTICLE 54. SUPPLEMENTING ARTICLE 18 OF THE PRINTED FORM
In the event of termination of this lease pursuant to Article 18,
Tenant shall pay to Owner immediately all rental and other charges payable
hereunder due and unpaid to the date of termination together with an amount
which is equal to the then-present value (using a discount rate equal to the
then-applicable discount rate at the Federal Reserve Bank nearest to the
location of the Building, plus two (2%) percent per annum) of the whole Rent for
the balance of the Term of this lease (including any extension terms which have
been elected) as hereinafter computed. In the event any judgment has been
entered against Tenant for any amount in excess of the total amount required to
be paid by Tenant to Owner hereunder, then the damages assessed under said
judgment shall be reassessed and a credit granted to the extent of such excess.
The parties hereto acknowledge that the damages to which Owner is entitled in
the event of a breach of this lease and termination by Owner are not easily
computed and are subject to many variable factors. The
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parties have therefore agreed to the liquidated damages as herein provided in
order to avoid extended litigation in the event of default by Tenant and
termination of this lease.
Rent for each year for the balance of the term, for the purpose of
computing the rent reserved hereunder for the unexpired portion of the Term,
shall be computed (I) for minimum annual rental, based upon the schedule for
minimum annual rental set forth in the lease, and (ii) for escalations and
Additional Rent, as equal to the yearly average of the escalations and
Additional Rent payable by Tenant for the last three (3) full calendar years
immediately preceding said Event of Default. If three (3) full calendar years
have not preceded the occurrence of said Event of Default, then the annual
average of escalations and Additional Rent payable by Tenant theretofore
required to be paid by Tenant shall be used, in the computation of the
escalations and rent.
ARTICLE 55. ACCESS
Tenant agrees to indemnify and hold harmless Owner from any costs,
expense, liability, damages, judgments, or fees, including legal fees, arising
out of or in connection with Tenant's negligence when entering, using or exiting
the building and demised premises. Tenant is responsible for repairing and
replacing any property vandalized, damaged or stolen if Tenant fails to properly
close the doors or is otherwise negligent.
ARTICLE 56. SUPPLEMENTING ARTICLE 32 HEREOF
Owner shall maintain the security deposit in an interest-bearing
account. Owner shall be entitled to an administrative fee of 1% of the amount of
the security deposit per annum, and, provided that Tenant is not then in default
hereunder, the interest shall be paid to the Tenant once a year on each
September 1.
ARTICLE 57. MISCELLANEOUS
(A) Owner and Tenant each represent and warrant to the other that no broker
brought about the letting contemplated by this lease, and that they
have not contacted any broker in connection with this transaction other
than Tarter/Stats Realty (the "Broker"). Owner shall pay the commission
due and payable to the Broker pursuant to a separate agreement. Tenant
and Owner shall each indemnify and save the other harmless from and
against all loss, claim, liability, damage or suit incurred or suffered
by the other arising out of or in connection with any breach of the
indemnifying party's representations set forth in this Subarticle (A).
(B) Whenever the performance of any duties or obligations on the part of
Tenant reasonably contemplates such performance or discharge after the
termination of this lease, such duties and obligations shall survive
any expiration or sooner termination of this lease.
(C) Tenant agrees that its sole remedy in cases where Owner's
reasonableness in exercising its judgment or withholding its consent or
approval is applicable and in issue shall be those in the nature of an
injunction, declaratory judgment or specific performance, the rights to
any money damages or other remedies being hereby specifically waived.
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(D) Owner shall have the right to alter or to construct additions to the
Building; provided however, that any such alteration or construction
will not materially interfere with the demised premises or Tenant's
business therein. In connection with any such alteration or
construction, Owner shall have the right to utilize and hook up with
all existing risers, conduits and other piping in the Building and to
construct scaffolding as may be required by law, such work to be
performed at Owner's expense.
(E) Owner shall have the right from time to time to change the name, number
or designation by which the Building is commonly known.
(F) Without limiting anything otherwise set forth in the Rules and
Regulations, no awning, canopy or other projections, whether they
contain or do not contain advertising material may be attached to any
portion of the Building without the prior written consent of Owner.
Further, Tenant shall not post or erect or maintain outside the windows
or show windows nor on any exterior construction, any signs, placards
or other advertisements, except with the prior written approval of
Owner. However, Tenant may post signs, placards or other advertisements
to the interior of the windows if professionally prepared by a sign
company. Tenant shall not make any use whatsoever of the area beyond
the building line. No hanging outside sips will be approved nor will
any papered signs posted on the windows or show windows of the demised
premises be approved unless the same are required to be so posted at
such location by law. If Tenant violates the provisions of this
Subarticle, then in addition to and without limiting Owner's remedies
under this lease, Owner may itself remove any such sign, placard,
advertisement or display without liability or obligation to Tenant and,
if necessary, to carry out the foregoing, Owner may enter the demised
premises to effect such removal. The parties acknowledge that a breach
of the provisions of this Subarticle shall be deemed a material breach
of this lease.
(G) Owner, its constituent partners and, if applicable, its shareholders
and officers shall not have any personal liability to Tenant by reason
of any default by Owner under any of Owner's covenants and agreements
under this lease. In the event of such default Tenant shall look only
to Owner's estate in the Building to recover any loss or damage
resulting therefrom and Tenant shall have no right to assert any claim
nor obtain any injunction against any recourse to Owner's other
property or assets or that of any of the shareholders or officers of
Owner to recover such loss or damage.
(H) If any term, covenant, condition or provision of this lease, or the
application thereof to any person or circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this lease, or
the application of such term, covenant or provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or
condition of this lease shall be valid and enforceable to the fullest
extent permitted by law.
(I) Tenant shall at all times enforce good order among its employees.
Subject to the provisions of Tenant's applicable union contract, Tenant
will not employ any person or do anything which will cause union or
labor difficulties or conflicts with the Building, Owner or Owner's
employees. In case of such conflict, Tenant will comply with the
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reasonable direction of Owner and failure so to do shall be deemed a
material breach of this lease.
(J) All notices required or permitted to be given hereunder shall be sent
by certified mail, return receipt requested, addressed as follows:
If to Owner:
626 Properties Associates
Tri Realty Management Corp.
275 Madison Avenue
New York, NY 10016
If to Tenant:
Law Offices of Erik W. Kahn
110 Greene Street, Suite 704
New York, NY 10012
and
Jupiter Communications, to the demised premises
or to such other address as may be furnished by either party to the other in
like manner. All notices shall be deemed given when mailed, except for notice of
change of address or party to receive notice, which shall be deemed given only
upon request.
(K) Wherever in this lease, Owner's consent is required, except where
otherwise expressly set forth, such consent may be granted or withheld
in Owner's sole and arbitrary discretion and such consent shall not be
unreasonably withheld.
(L) If more than one person or entity executes or otherwise assumes or
becomes liable under this lease, the obligations of Tenant shall be the
joint and several obligations of each of them.
(M) Tenant covenants not to introduce any hazardous or toxic materials onto
the demised premises without a) first obtaining Owner's written consent
and b) complying with all applicable Federal, State and local laws or
ordinances pertaining to the transportation, storage, use or disposal
of such materials, including but not limited to obtaining proper
permits. If Tenant's transportation, storage, use or disposal of
hazardous or toxic materials on the demised premises results in the
contamination of the demised premises or the Building, or the soil or
surface or ground water or loss or damage to person(s) or property,
then Tenant agrees to: 1) notify Owner immediately of any
contamination, claim of contamination, loss or damage, 2) after
consultation with Owner, clean up the contamination in full compliance
with all applicable statutes, regulations and standards, and 3)
indemnify, defend and hold Owner harmless from and against any claims,
suits, causes of action, costs and fees, including attorneys' fees and
costs, arising from or connected with any such contamination, claim of
contamination, loss or damage. This
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<PAGE> 34
provision shall survive termination of this lease. Nothing in this
Article shall be construed to hold Tenant responsible for the cleanup
required because of any spills or discharges of hazardous substances
` caused by Owner, or its agents, contractors, employees or invitees or
occurring prior to or after Tenant's occupancy of the demised premises.
(N) Tenant shall not suffer or permit the demised premises or any part
thereof to be used in any manner which would in any way (i) constitute
a public or private nuisance; or (ii) impair or interfere with the use
of any of the other areas of the Building by, or occasion discomfort,
annoyance or inconvenience to, Owner or any of the other tenants or
occupants of the Building, any such impairment or interference to be in
the sole judgment of Owner. Tenant acknowledges that Tenant's failure
to comply with the terms hereof shall constitute a material breach of
this lease entitling Owner to all rights and remedies it may have under
this lease and at law.
(O) Prior to the execution of this lease by Owner, Tenant shall supply
Owner with a copy of resolutions duly certified by the Secretary of
Tenant, of the Board of Directors of Tenant, to the effect that:
(i) Tenant is duly authorized and empowered to enter into this lease; and
(ii) The President of Tenant has been duly authorized, empowered and
directed by said Board of Directors to enter into this lease on behalf of
Tenant.
(P) This lease is offered to Tenant for signature with the understanding
that it shall not be binding upon Owner unless and until Owner shall
have executed and unconditionally delivered to Tenant a fully executed
copy of the lease.
(Q) Those provisions on the front page of the printed portion of this lease
and in Article 17 concerning defaults by Tenant under any other lease
between Tenant and Owner shall apply to any and all other leases
between Owner and Tenant, whether or not such leases are subsidiary to
this lease or for space adjacent to the demised premises.
(R) Tenant agrees that the value of the demised premises and the reputation
of Owner will be seriously injured if the demised premises are used for
any obscene or pornographic purposes or any sort of commercial sex
establishment. Tenant agrees that Tenant will not bring or permit any
obscene or pornographic material on the demised premises, and shall not
permit or conduct any obscene, nude, or semi-nude live performances on
the demised premises, nor permit use of the demised premises for nude
modeling, rap sessions, or as a so-called rubber goods shop, or as a
sex club of any sort, or as a "massage parlor." Tenant agrees further
that Tenant will not permit any of these uses by any sublessee of all
or any portion of the demised premises or any assignee of this lease.
This Article shall directly bind any successors in interest to the
Tenant. Tenant agrees that if at any time Tenant violates any of the
provisions of this Article, such violation shall be deemed a breach of
a substantial obligation of the terms of this lease and objectionable
conduct. Pornographic materials is defined for purposes of this Article
as any written or pictorial matter with prurient appeal or any objects
or instrument that are primarily concerned with
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lewd or prurient sexual activity. Obscene material is defined here as
it is in Penal Law Section 235.00.
(S) Owner shall provide one (1) directory listings for Tenant on each of
the directories in the ground floor and 10th floor lobbies. Tenant may,
at its sole cost and expense, affix to the entrance door to the demised
premises a sign with Tenant's name, subject to Owner's prior written
approval, which shall not be reasonably withheld, of the appearance,
materials and size of such sign.
ARTICLE 58.
Notwithstanding anything to the contrary contained in this lease tenant
shall, at tenant's sole cost and expense be permitted to open an access way
through the existing wall from their current space at 627 Broadway, 2nd Floor,
through to the demised premises, providing that the tenant has properly filed
all necessary applications, plans and documents with the respective governmental
agencies and obtains written approval for all work from the governing
authorities. All work performed shall be done by licensed contractors and in
accordance with all NYC building codes and regulations and only in accordance
with written plans which must be submitted and approved by the landlord as well
as the governing authorities. Tenant agrees it shall indemnify and save owner
harmless against all costs, claims, loss or liability resulting from the
aforementioned work and shall provide written proof of insurance policies naming
the landlord and the managing agent as additional insured prior to the
commencement of any work. Neither owner nor owner's agents have made any
representations, warranties or promises, either expressed or implied with
respect to the physical condition of the building including latent or structural
elements, the integrity of which structural elements shall not be altered. The
landlord makes no representation with respect to the environmental impact
resulting from the renovation and/or removal of walls. The tenant at is sole
cost and expense will be responsible for any cost associated with environmental
impact from the renovation and removal. The above alterations shall be according
to plans and specifications approved in writing by owner in compliance with all
applicable laws by licensed contractors in a good and workmanlike manner
conforming in quality and design to the demised premises and shall not diminish
the value of the building or the demised premises. At the termination of the
aforesaid lease the owner, at its sole discretion shall have the option to keep
the demised premises as is or require the tenant to restore the demised premises
to the condition prior to the inception or commencement of the aforesaid lease.
Landlord requires tenant to deposit an additional sum equaling one month's rent
as security to be paid after 2 1/2 years from the lease commencement date.
ARTICLE 59.
Landlord to exterminate the demised premises twice a month. In the
event that Owner fails to exterminate as provided for herein, Tenant shall
deduct the reasonable cost of exterminating from the rent payments due to the
Owner.
ARTICLE 60.
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If tenant is legally obligated to remove asbestos anywhere on or
related to the premises, due to a pre-existing condition, the Owner will assume
the obligation for such removal and indemnify tenant from any claim or damage
resulting therefrom.
Witness: OWNER:
______________________________ 625 PROPERTIES ASSOCIATES
By:_____________________________
Witness: TENANT:
______________________________ JUPITER COMMUNICATIONS
By:_____________________________
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ADDENDUM A
The owner shall perform the following work:
1) Paint, plaster and repair premises as needed
2) Sand and polyurethane floors
3) Bathrooms to be delivered in working order
4) Floor to be repaired and/or replaced where necessary
5) Removal of carpet (Broadway side)
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<PAGE> 1
Exhibit 10.9
STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York, Inc.
Agreement of Lease, made as of this 25th day of January 1999,
between RENAISSANCE 627 BROADWAY LLC, having an address at 627 Broadway, 6th
Floor, New York, New York 10012 party of the first part, hereinafter referred to
as OWNER, and JUPITER COMMUNICATIONS, LLC, party of the second part, hereinafter
referred to as TENANT,
Witnesseth: Owner hereby leases to Tenant and Tenant hereby
hires from Owner Entire 2nd and 4th Floors in the building known as 627 Broadway
in the Borough of Manhattan, City of New York, for the term of Five (5) Years
(or until such term shall sooner cease and expire as herein provided) to
commence on the 1st day of March nineteen hundred and ninety-nine, and to end on
the 28th day of February two thousand and four both dates inclusive, at an
annual rental rate of SEE PARAGRAPH 36 OF THE ANNEXED RIDER which Tenant agrees
to pay in lawful money of the United States which shall be legal tender in
payment of all debts and dues, public and private, at the time of payment, in
equal monthly installments in advance on the first day of each month during said
term, at the office of Owner or such other place as Owner may designate, without
any set off or deduction whatsoever, except that Tenant shall pay the first
monthly installment(s) on the execution hereof (unless this lease be a renewal).
In the event that, at the commencement of the term of this
lease, or thereafter, Tenant shall be in default in the payment of rent to Owner
pursuant to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
convenant as follows:
Rent Occupancy: 1. Tenant shall pay the rent as above
and as hereinafter provided.
2. Tenant shall use and occupy demised
premises for SEE PARAGRAPH 52 OF THE ANNEXED RIDER and for no other purpose.
Tenant Alterations: 3. Tenant shall make no structural
changes in or to the demised premises of any nature without Owner's prior
written consent Subject to the prior written consent of Owner, and to the
provisions of this article, Tenant at Tenant's expense, may make alterations,
installations, additions or improvements which are non-structural and which do
not affect utility services or plumbing and electrical lines, in or to the
interior of the demised premises by using contractors or mechanics first
approved by Owner. Tenant shall, before making any alterations, additions,
installations or improvements, at its expense, obtain all permits, approvals and
certificates required by any governmental or quasi-governmental bodies and (upon
completion) certificates of final approval thereof and shall deliver promptly
duplicates of all such permits,approvals and certificates to Owner and Tenant
agrees to carry and will cause Tenant's contractors and sub-contractors to carry
such workman's compensation, general liability, personal and property damage
insurance as Owner may require. If any mechanic's lien is filed against the
demised premises, or the building of which the same forms a part, for work
claimed to have been done for, or materials furnished to, Tenant, whether or not
done pursuant to this article, the same shall be discharged by Tenant within
thirty days thereafter,at Tenant's
<PAGE> 2
expense, by filing the bond required by law. All fixtures and all paneling,
partitions, railings and like installations, installed in the premises at any
time, either by Tenant or by Owner in Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be surrendered with the
demised premises unless Owner, by notice to Tenant no later than twenty days
prior to the date fixed as the termination of this lease, elects to relinquish
Owner's right thereto and have them removed by Tenant, in which event the same
shall be removed from the premises by Tenant prior to the expiration of the
lease, at Tenant's expense. Nothing in this Article shall be construed to give
Owner title to or to prevent Tenant's removal of trade fixtures, moveable office
furniture and equipment, but upon removal of any such from the premises or upon
removal of other installations as may be required by Owner, Tenant shall
immediately and at its expense, repair and restore the premises to the condition
existing prior to installation and repair any damage to the demised premises or
the building due to such removal. All property permitted or required to be
removed, by Tenant at the end of the term remaining in the premises after
Tenant's removal shall be deemed abandoned and may, at the election of Owner,
either be retained as Owner's property or may be removed from the premises by
Owner, at Tenant's expense.
Maintenance and Repairs: 4. Tenant shall, throughout the term of
this lease, take good care of the demised premises and the fixtures and
appurtenances therein. Tenant shall be responsible for all damage or injury to
the demised premises or any other part of the building and the systems and
equipment thereof, whether requiring structural or nonstructural repairs caused
by or resulting from carelessness, omission, neglect or improper conduct of
Tenant, Tenant's subtenants, agents, employees, invitees or licensees, or which
arise out of any work, labor, service or equipment done for or supplied to
Tenant or any subtenant or arising out of the installation, use or operation of
the property or equipment of Tenant or any subtenant. Tenant shall also repair
all damage to the building and the demised premises caused by the moving of
Tenant's fixtures, furniture and equipment. Tenant shall promptly make, at
Tenant's expense, all repairs in and to the demised premises for which Tenant is
responsible, using only the contractor for the trade or trades in question,
selected from a list of at least two contractors per trade submitted by Owner.
Any other repairs in or to the building or the facilities and systems thereof
for which Tenant is responsible shall be performed by Owner at the Tenant's
expense. Owner shall maintain in good working order and repair the exterior and
the structural portions of the building, including the structural portions of
its demised premises, and the public portions of the building interior and the
building plumbing, electrical, heating and ventilating systems (to the extent
such systems presently exist) serving the demised premises. Tenant agrees to
give prompt notice of any defective condition in the premises for which Owner
may be responsible hereunder. There shall be no allowance to Tenant for
diminution of rental value and no liability on the part of Owner by reason of
inconvenience, annoyance or injury to business arising from Owner or others
making repairs, alterations, additions or improvements in or to any portion of
the building or the demised premises or in and to the fixtures, appurtenances or
equipment thereof. It is specifically agreed that Tenant shall not be entitled
to any setoff or reduction of rent by reason of any failure of Owner to comply
with the covenants of this or any other article of this Lease. Tenant agrees
that Tenant's sole remedy at law in such instance will by way of an action for
damages for breach of contract. The provisions of this Article 4 shall not apply
in the case of fire or other casualty which are dealt within Article 9 hereof.
2
<PAGE> 3
Window Cleaning: 5. Tenant will not clean nor require, permit, suffer
or allow any window in the demised premises to be cleaned from the outside in
violation of Section 202 of the Labor Law or any other applicable law or of the
Rules of the Board of Standards and Appeals, or of any other Board or body
having or asserting jurisdiction.
Requirements of Law, Fire Insurance, Floor Loads: 6. Prior to the
commencement of the lease term, if Tenant is then in possession, and at all time
thereafter, Tenant, at Tenant's sole cost and expense, shall promptly comply
with all present and future laws, orders and regulations of all state, federal,
municipal and local governments, departments, commissions and boards and any
direction of any public officer pursuant to law, and all orders, rules and
regulations of the New York Board of Fire Underwriters, Insurance Services
Office, or any similar body which shall impose any violation, order or duty upon
Owner or Tenant with respect to the demised premises, whether or not arising out
of Tenant's use or manner of use thereof, (including Tenant's permitted use) or,
with respect to the building if arising out of Tenant's use or manner of use of
the premises or the building (including the use permitted under the lease).
Nothing herein shall require Tenant to make structural repairs or alterations
unless Tenant has, by its manner of use of the demised premises or method of
operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. Tenant may, after securing
Owner to Owner's satisfaction against all damages, interest, penalties and
expenses, including, but not limited to, reasonable attorney's fees, by cash
deposit or by surety bond in an amount and in a company satisfactory to Owner,
contest and appeal any such laws, ordinances, orders, rules, regulations or
requirements provided same is done with all reasonable promptness and provided
such appeal shall not subject Owner to prosecution for a criminal offense or
constitute a default under any lease or mortgage under which Owner may be
obligated, or cause the demised premises or any part thereof to be condemned or
vacated. Tenant shall not do or permit any act or thing to be done in or to the
demised premises which is contrary to law, or which will invalidate or be in
conflict with public liability, fire or other policies of insurance at any time
carried by or for the benefit of Owner with respect to the demised premises or
the building of which the demised premises form a part, or which shall or might
subject Owner to any liability or responsibility to any person or for property
damage. Tenant shall not keep anything in the demised premises except as now or
hereafter permitted by the Fire Department, Board of Fire Underwriters, Fire
Insurance Rating Organization or other authority having jurisdiction, and then
only in such manner and such quantity so as not to increase the rate for fire
insurance applicable to the building, nor use the premises in a manner which
will increase the insurance rate for the building or any property located
therein over that in effect prior to the commencement of Tenant's occupancy.
Tenant shall pay all costs, expenses, fines, penalties, or damages, which may be
imposed upon Owner by reason of Tenant's failure to comply with the provisions
of this article and if by reason of such failure the fire insurance rate shall,
at the beginning of this lease, or at any time thereafter, be higher than it
otherwise would be, then Tenant shall reimburse Owner, as additional rent
hereunder, for that portion of all fire insurance premiums thereafter paid by
Owner which shall have been charged because of such failure by Tenant. In any
action or proceeding wherein Owner and Tenant are parties, a schedule or
"make-up" of rate for the building or demised premises issued by the New York
Fire Insurance Exchange, or other body making fire insurance rates applicable to
said premises shall be conclusive evidence of the facts therein stated and of
the several items and charges in the fire insurance rates then applicable to
said premises. Tenant shall not place a load upon any floor of the demised
premises exceeding the floor load per square foot area which it was designed to
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<PAGE> 4
carry and which is allowed by law. Owner reserves the right to prescribe the
weight and position of all safes, business machines, and mechanical equipment.
Such installations shall be placed and maintained by Tenant, at Tenant's
expense, in settings sufficient, in Owner's judgement, to absorb and prevent
vibration, noise and annoyance.
Subordination: 7. This lease is subject and subordinate to all ground
or underlying leases and to all mortgages which may now or hereafter affect such
leases or the real property of which demised premises are a part and to all
renewals, modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Owner may request.
Property Loss, Damage, Reimbursement, Indemnity: 8. Owner or its agents
shall not be liable for any damage to property of Tenant or of others entrusted
to employees of the building, nor for loss of or damage to any property of
Tenant by theft or otherwise, nor for any injury or damage to persons or
property resulting from any cause of whatsoever nature, unless caused by or due
to the negligence of Owner, it agents, servants or employees. Owner or its
agents will not be liable for any such damage caused by other tenants or persons
in, upon or about said building or caused by operations in construction of any
private, public or quasi public work. If at any time any windows of the demised
premises are temporarily closed, darkened or bricked up (or permanently closed,
darkened or bricked up, if required by law) for any reason whatsoever including,
but not limited to Owner's own acts, Owner shall not be liable for any damage
Tenant may sustain thereby and Tenant shall not be entitled to any compensation
therefore nor abatement or diminution of rent nor shall the same release Tenant
from its obligations hereunder nor constitute an eviction. Tenant shall
indemnify and save harmless Owner against and from all liabilities, obligations,
damages, penalties, claims, costs and expenses for which Owner shall not be
reimbursed by insurance, including reasonable attorneys fees, paid suffered or
incurred as a result of any breach by Tenant, Tenant's agents, contractors,
employees, invitees, or licensees, of any covenant or condition of this lease,
or the carelessness, negligence or improper conduct of the Tenant, Tenant's
agents, contractors, employees, invitees or licensees. Tenant's liability under
this lease extends to the acts and omissions of any sub-tenant, and any agent,
contractor, employee, invitee or licensee of any sub-tenant. In case any action
or proceeding is brought against Owner by reason of any such claim, Tenant, upon
written notice from Owner, will, at Tenant's expense, resist or defend such
action or proceeding by counsel approved by Owner in writing, such approval not
to be unreasonably withheld.
Destruction, Fire and Other Casualty: 9. (a) If the demised premises or
any part thereof shall be damaged by fire or other casualty, Tenant shall give
immediate notice thereof to Owner and this lease shall continue in full force
and effect except as hereinafter set forth. (b) If the demised premises are
partially damaged or rendered partially unusable by fire or other casualty, the
damages thereto shall be repaired by and at the expense of Owner and the rent,
until such repair shall be substantially completed, shall be apportioned from
the day following the casualty according to the part of the premises which is
usable. (c) If the demised premises are totally damaged or rendered wholly
unusable by fire or other casualty, then the rent
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<PAGE> 5
shall be proportionately paid up to the time of the casualty and thenceforth
shall cease until the date when the premises shall have been repaired and
restored by Owner, subject to Owner's right to elect not to restore the same as
hereinafter provided. (d) If the demised premises are rendered wholly unusable
or (whether or not the demised premises are damaged in whole or in part) if the
building shall be so damaged that Owner shall decide to demolish it or to
rebuild it, then, in any of such events, Owner may elect to terminate this lease
by written notice to Tenant, given within 90 days after such fire or casualty,
specifying a date for the expiration of the lease, which date shall not be more
than 60 days after the giving of such notice, and upon the date specified in
such notice the term of this lease shall expire as fully and completely as if
such date were the date set forth above for the termination of this lease and
Tenant shall forthwith quit, surrender and vacate the premises without prejudice
however, to Landlord's rights and remedies against Tenant under the lease
provisions in effect prior to such termination, and any rent owing shall be paid
up to such date and any payments of rent made by Tenant which were on account of
any period subsequent to such date shall be returned to Tenant. Unless Owner
shall serve a termination notice as provided for herein, Owner shall make the
repairs and restorations under the conditions of (b) and (c) hereof, with all
reasonable expedition, subject to delays due to adjustment of insurance claims,
labor troubles and causes beyond Owner's control. After any such casualty,
Tenant shall cooperate with Owner's restoration by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
movable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Owner that the premises are
substantially ready for Tenant's occupancy. (e) Nothing contained hereinabove
shall relieve Tenant from liability that may exist as a result of damage from
fire or other casualty. Notwithstanding the foregoing, each party shall look
first to any insurance in its favor before making any claim against the other
party for recovery for loss or damage resulting from fire or other casualty, and
to the extent that such insurance is in force and collectible and to the extent
permitted bylaw, Owner and Tenant each hereby releases and waives all right of
recovery against the other or any one claiming through or under each of them by
way of subrogation or otherwise. The foregoing release and waiver shall be in
force only if both releasors' insurance policies contain a clause providing that
such a release or waiver shall not invalidate the insurance. If, and to the
extent, that such waiver can be obtained only by the payment of additional
premiums, then the party benefitting from the waiver shall pay such premium
within ten days after written demand or shall be deemed to have agreed that the
party obtaining insurance coverage shall be free of any further obligation under
the provisions hereof with respect to waiver of subrogation. Tenant acknowledges
that Owner will not carry insurance on Tenant's furniture and/or furnishing or
any fixtures or equipment, improvements, or appurtenances removable by Tenant
and agrees that Owner will not be obligated to repair any damage thereto or
replace the same. (f) Tenant hereby waives the provisions of Section 227 of the
Real Property Law and agrees that the provisions of this article shall govern
and control in lieu thereof.
Eminent Domain: 10. If the whole or any part of the demised premises
shall be acquired or condemned by Eminent Domain for any public or quasi public
use or purpose, then and in that event, the term of this lease shall cease and
terminate from the date of title vesting in such proceeding and Tenant shall
have no claim for the value of any unexpired term of said lease and assigns to
Owner, Tenant's entire interest in any such award.
5
<PAGE> 6
Assignment, Mortgage, Etc.: 11. Tenant, for itself, its heirs,
distributees, executors, administrators, legal representatives, successors and
assigns, expressly covenants that it shall not assign, mortgage or encumber this
agreement, nor underlet, or suffer or permit the demised premises or any part
thereof to be used by others, without the prior written consent of Owner in each
instance. Transfer of the majority of the stock of a corporate Tenant shall be
deemed an assignment. If this lease be assigned, or if the demised premises or
any part thereof be underlet or occupied by anybody other than Tenant, Owner
may, after default by Tenant, collect rent from the assignee, under-tenant or
occupant, and apply the net amount collected to the rent herein reserved, but no
such assignment, underletting, occupancy or collection shall be deemed a waiver
of this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
convenants on the part of Tenant herein contained. The consent by Owner to an
assignment or underletting shall not in any wise be construed to relieve Tenant
from obtaining the express consent in writing of Owner to any further assignment
or underletting.
Electric Current: 12. Rates and conditions in respect to submetering or
rent inclusion, as the case may be, to be added in RIDER attached hereto. Tenant
covenants and agrees that at all times its use of electric current shall not
exceed the capacity of existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building. The change at any time of
the character of electric service shall in no wise make Owner liable or
responsible to Tenant, for any loss, damages or expenses which Tenant may
sustain.
Access to Premises: 13. Owner or Owner's agents shall have the right
(but shall not be obligated) to enter the demised premises in any emergency at
any time, and, at other reasonable times, to examine the same and to make such
repairs, replacements and improvements as Owner may deem necessary and
reasonably desirable to the demised premises or to any other portion of the
building or which Owner may elect to perform. Tenant shall permit Owner to use
and maintain and replace pipes and conduits in and through the demised premises
and to erect new pipes and conduits therein provided they are concealed within
the walls, floor, or ceiling. Owner may, during the progress of any work in the
demised premises, take all necessary materials and equipment into said premises
without the same constituting an eviction nor shall the Tenant be entitled to
any abatement of rent while such work is in progress nor to any damages by
reason of loss or interruption of business or otherwise. Throughout the term
hereof Owner shall have the right to enter the demised premises at reasonable
hours for the purpose of showing the same to prospective purchasers or
mortgagees of the building, and during the last six months of the term for the
purpose of showing the same to prospective tenants. If Tenant is not present to
open and permit an entry into the premises, Owner or Owner's agents may enter
the same whenever such entry may be necessary or permissible by master key or
forcibly and provided reasonable care is exercised to safeguard Tenant's
property, such entry shall not render Owner or its agents liable therefore, nor
in any event shall the obligations of Tenant hereunder be affected. If during
the last month of the term Tenant shall have removed all or substantially all of
Tenant's property therefrom Owner may immediately enter, alter, renovate or
redecorate the demised premises without limitation or abatement of rent, or
incurring liability to Tenant for any compensation and such act shall have no
effect on this lease or Tenant's obligations hereunder.
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Vault, Vault Space, Area: 14. No Vaults, vault space or area, whether
or not enclosed or covered, not within the property line of the building is
leased hereunder, anything contained in or indicated on any sketch, blue print
or plan, or anything contained elsewhere in this lease to the contrary
notwithstanding. Owner makes no representation as to the location of the
property line of the building. All vaults and vault space and all such areas not
within the property line of the building, which Tenant may be permitted to use
and/or occupy, is to be used and/or occupied under a revocable license, and if
any such license be revoked, or if the amount of such space or area be
diminished or required by any federal, state or municipal authority or public
utility, Owner shall not be subject to any liability nor shall Tenant be
entitled to any compensation of diminution or abatement of rent, nor shall such
revocation, diminution or requisition be deemed constructive or actual eviction.
Any tax, fee or charge of municipal authorities for such vault or area shall be
paid by Tenant.
Occupancy: 15. Tenant will not at anytime use or occupy the demised
premises in violation of the certificate of occupancy issued for the building of
which the demised premises are a part. Tenant has inspected the premises and
accepts them as is, subject to the riders annexed hereto with respect to Owner's
work, if any.
Bankruptcy: 16. Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by the sending of a
written notice to Tenant within a reasonable time after the happening of any one
or more of the following events: (1) the commencement of a case in bankruptcy or
under the laws of any state naming Tenant as the debtor; or (2) the making by
Tenant of an assignment or any other arrangement for the benefit of creditors
under any state statute. Neither Tenant nor any person claiming through or under
Tenant, or by reason of any statute or order of court, shall thereafter be
entitled to possession of the premises demised but shall forthwith quit and
surrender the premises. If this lease shall be assigned in accordance with its
terms, the provisions of this Article 16 shall be applicable only to the party
then owning Tenant's interest in this lease.
(b) it is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of four percent (4%) per annum. If such premises or any
part thereof, be relet by the Owner for the unexpired term of said lease, or any
part thereof before presentation of proof of such liquidated damages to any
court, commission or tribunal, the amount of rent reserved upon such reletting
shall be deemed to be the fair and reasonable rental value for the part or the
whole of the premises so re-let during the term of the re-letting. Nothing
herein contained shall limit or prejudice the right of the Owner to prove for
and obtain as liquidated damages by reason of such termination, an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
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Default: 17. (1) If Tenant defaults in fulfilling any of the covenants
of this lease other than the covenants for payment of rent or additional rent;
or if the demised premises become vacant or deserted; or if any execution or
attachment shall be issued against Tenant or any of Tenant's property whereupon
the demised premises shall be taken or occupied by someone other than Tenant; or
if this lease be rejected under Section 235 of Title 11 of the U.S. Code
(bankruptcy code); or then, in any one or more of such events, upon Owner
serving a written 21 day notice upon Tenant specifying the nature of said
default and upon the expiration of said 21 days, if Tenant shall have failed to
comply with or remedy such default, or if the said default or omission
complained of shall be of a nature that the same cannot be completely cured or
remedied within said 21 day period, and if Tenant shall not have diligently
commenced curing such default within such 21 day period, and shall not
thereafter with reasonable diligence and in good faith, proceed to remedy or
cure such default, then Owner may serve a written three (3) days' notice of
cancellation of this lease upon Tenant, and upon the expiration of said three
(3) days this lease and the term thereunder shall end and expire as fully and
completely as if the expiration of such three (3) day period were the day herein
definitely fixed for the end and expiration of this lease and the term thereof
and Tenant shall then quit and surrender the demised premises to Owner but
Tenant shall remain liable as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been
given, and the term shall expire as aforesaid; or if Tenant shall make default
in the payment of the rent reserved herein or any item of additional rent herein
mentioned or any part of either or in making any other payment herein required;
then and in any of such events Owner may without notice, re-enter the demised
premises either by force or otherwise, and dispossess Tenant by summary
proceeding or otherwise, and the legal representative of Tenant or other
occupant of demised premises and remove their effects and hold the premises as
if this lease had not been made, and Tenant hereby waives the service of notice
of intention to re-enter or to institute legal proceedings to that end. If
Tenant shall make default hereunder prior to the date fixed as the commencement
of any renewal or extension of this lease, Owner may cancel and terminate such
renewal or extension agreement by written notice.
Remedies of Owner and Waiver of Redemption: 18. In case of any
such default, re-entry, expiration and/or dispossess by summary proceedings or
otherwise, (a) the rent shall become due thereupon and be paid up to the time of
such re-entry, dispossess and/or expiration, (b) Owner may re-let the premises
or any part or parts thereof, either in the name of Owner or otherwise, for a
term or terms, which may at Owner's option be less than or exceed the period
which would otherwise have constituted the balance of the term of this lease and
may grant concessions or free rent or charge a higher rental than that in this
lease, and/or (c) Tenant or the legal representatives of Tenant shall also pay
Owner as liquidated damages for the failure of Tenant to observe and perform
said Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and/or covenanted to be paid and the net amount, if any, of the rents
collected on account of the lease or leases of the demised premises for each
month of the period which would otherwise have constituted the balance of the
term of this lease. The failure of Owner to re-let the premises or any part or
parts thereof shall not release or affect Tenant's liability for damages. In
computing such liquidated damages there shall be added to the said deficiency
such expenses as Owner may incur in connection with re-letting, such as legal
expenses, attorneys' fees, brokerage, advertising and for keeping the demised
premises in good order or for preparing the same for re-letting. Any such
liquidated damages shall be paid in
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monthly installments by Tenant on the rent day specified in this lease and any
suit brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of Owner to collect the deficiency for any
subsequent month by a similar proceeding. Owner, in putting the demised premises
in good order or preparing the same for re-rental may, at Owner" option, make
such alterations, repairs, replacements, and/or decorations in the demised
premises as Owner, in Owner" sole judgement, considers advisable and necessary
for the purpose of re-letting the demised premises, and the making of such
alterations, repairs, replacements, and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Owner shall
in no event be liable in any way whatsoever for failure to re-let the demised
premises, or in the event that the demised premises are re-let, for failure to
collect the rent thereof under such re-letting, and in no event shall Tenant be
entitled to receive any excess, if any, of such net rents collected over the
sums payable by Tenant to Owner hereunder. In the event of a breach or
threatened breach by Tenant of any of the covenants or provisions hereof, Owner
shall have the right of injunction and the right to invoke any remedy allowed at
law or inequity as if re-entry, summary proceedings and other remedies were not
herein provided for. Mention in this lease of any particular remedy, shall not
preclude Owner from any other remedy, in law or in equity. Tenant hereby
expressly waives any and all rights of redemption granted by or under any
present or future laws in the event of Tenant being evicted or dispossessed for
any cause, or in the event of Owner obtaining possession of demised premises, by
reason of the violation by Tenant of any of the covenants and conditions of this
lease, or otherwise.
Fees and Expenses 19. If Tenant shall default in the
observance or performance of any term or covenant on Tenant's part to be
observed or performed under or by virtue of any of the terms or provisions in
any article of this lease, then, unless otherwise provided elsewhere in this
lease, Owner may immediately or at any time thereafter and without notice
perform the obligation of Tenant thereunder. If Owner, in connection with the
foregoing or in connection with any default by Tenant in the covenant to pay
rent hereunder, makes any expenditures or incurs any obligations for the payment
of money, including but not limited to attorney's fees, in instituting,
prosecuting or defending any action or proceeding, then Tenant will reimburse
Owner for such sums so paid or obligations incurred with interest and costs. The
foregoing expenses incurred by reason of Tenant's default shall be deemed to be
additional rent hereunder and shall be paid by Tenant to Owner within five (5)
days of rendition of any bill or statement to Tenant therefor. If Tenant's lease
term shall have expired at the time of making of such expenditures or incurring
of such obligations, such sums shall be recoverable by Owner as damages.
Building Alterations and Management: 20. Owner shall have the
right at anytime without the same constituting an eviction and without incurring
liability to Tenant therefore to change the arrangement and/or location of
public entrances, passageways, doors, doorways, corridors, elevators, stairs,
toilets or other public parts of the building and to change the name, number or
designation by which the building may be known. There shall be no allowance to
Tenant for diminution of rental value and no liability on the part of Owner by
reason of inconvenience, annoyance or injury to business arising from Owner or
other Tenants making any repairs in the building or any such alterations,
additions and improvements. Furthermore, Tenant shall not have any claim against
Owner by reason of Owner's imposition of such controls of the manner of access
to the building by Tenant's social or business visitors as the Owner may deem
necessary for the security of the building and its occupants.
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No Representations by Owner: 21. Except as otherwise provided
for herein neither Owner nor Owner's agents have made any representations or
promises with respect to the physical condition of the building, the land upon
which it is erected or the demised premises, the rents, leases, expenses of
operation or any other matter or thing affecting or related to the premises
except as herein expressly set forth and no rights, easements or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
the provisions of this lease. Tenant has inspected the building and the demised
premises and is thoroughly acquainted with their condition and agrees to take
the same "as is" and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
End of Term 22. Upon the expiration or other termination of
the term of this lease, Tenant shall quit and surrender to Owner the demised
premises, broom clean, in good order and condition, ordinary wear and damages
which Tenant is not required to repair as provided elsewhere in this lease
excepted, and Tenant shall remove all its property. Tenant's obligation to
observe or perform this covenant shall survive the expiration or other
termination of this lease. If the last day of the term of this Lease or any
renewal thereof, falls on Sunday, this lease shall expire at noon on the
preceding Saturday unless it be a legal holiday in which case it shall expire at
noon on the preceding business day.
Quiet Enjoyment: 23. Owner covenants and agrees with Tenant
that upon Tenant paying the rent and additional rent and observing and
performing all the terms, covenants and conditions, on Tenant's part to be
observed and performed, Tenant may peaceably and quietly enjoy the premises
hereby demised, subject, nevertheless, to the terms and conditions of this lease
including, but not limited to, Article 31 hereof and to the ground leases,
underlying leases and mortgages hereinbefore mentioned.
Failure to Give Possession: 24. If Owner is unable to give
possession of the demised premises on the date of the commencement of the term
hereof, because of the holding-over or retention of possession of any tenant,
undertenant or occupants or if the demised premises are located in a building
being constructed, because such building has not been sufficiently completed to
make the premises ready for occupancy or because of the fact that a certificate
of occupancy has not been precured or for any other reason, Owner shall not be
subject to any liability for failure to give possession on said date and the
validity of the lease shall not be impaired under such circumstances, nor shall
the same be construed in any wise to extend the term of this lease, but the rent
payable hereunder shall be abated (provided Tenant is not responsible for
Owner's inability to obtain possession) until after Owner shall have given
Tenant written notice that the premises are substantially ready for Tenant's
occupancy. If permission is given to Tenant to enter into the demised premises
prior to the date specified as the commencement of the term of this lease,
Tenant covenants and agrees that such occupancy shall
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be deemed to be under all the terms, covenants, conditions and provisions of
this lease except as to the covenant to pay rent. The provisions of this article
are intended to constitute "an express provision to the contrary" within the
meaning of Section 223-a of the New York Real Property Law.
No Waiver: 25. The failure of a party to seek redress for
violation of, or to insist upon the strict performance of any covenant or
condition of this lease or of any of the Rules or Regulations, set forth or
hereafter adopted by Owner, shall not prevent a subsequent act which would have
originally constituted a violation from having all the force and effect of an
original violation. The receipt by Owner of rent with knowledge of the breach of
any covenant of this lease shall not be deemed a waiver of such breach and no
provision of this lease shall be deemed to have been waived by Owner unless such
waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or statement of any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Owner may accept such check or
payment without prejudice to Owner's right to recover the balance of such rent
or pursue any other remedy in this lease provided. No act or thing done by Owner
or Owner's agents during the term hereby demised shall be deemed an acceptance
of a surrender of said premises, and no agreement to accept such surrender shall
be valid unless in writing signed by Owner. No employee of Owner or Owner's
agent shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
See paragraph 65(b).
Waiver of Trial by Jury: 26. It is mutually agreed by and
between Owner and Tenant that the respective parties hereto shall and they
hereby do waive trial by jury in any action, proceeding or counter-claim brought
by either of the parties hereto against the other (except for personal injury or
property damage) on any matters whatsoever arising out of or in any way
connected with this lease, the relationship of Owner and Tenant, Tenant's use of
or occupancy of said premises, and any emergency statutory or any other
statutory remedy. It is further mutually agreed that in the event Owner
commences any summary proceeding for possession of the premises, Tenant will not
interpose any counterclaim of whatever nature or description in any such
proceeding including a counterclaim under Article 4.
Inability to Perform 27. This Lease and the obligation of
Tenant to pay rent hereunder and perform all of the other covenants and
agreements hereunder on part of Tenant to be performed shall in no wise be
affected, impaired or excused because Owner is unable to fulfill any of its
obligations under this lease or to supply or is delayed in supplying any service
expressly or impliedly to be supplied or is unable to make, or is delayed in
making any repair, additions, alterations or decorations or is unable to supply
or is delayed in supplying any equipment or fixtures if Owner is prevented or
delayed from so doing by reason of strike or labor troubles or any cause
whatsoever including, but not limited to, government preemption in connection
with a National Emergency or by reason of any rule, order or regulation of any
department or subdivision thereof of any government agency or by reason of the
conditions of supply and demand which have been or are affected by war or other
emergency.
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Bills and Notices: 28. Except as otherwise in this lease
provided, a bill, statement, notice or communication which Owner may desire or
be required to give to Tenant, shall be deemed sufficiently given or rendered
if, in writing, delivered to Tenant personally or sent by registered or
certified mail addressed to Tenant at the building of which the demised premises
form a part or at the last known residence address or business address of Tenant
or left at any of the aforesaid premises addressed to Tenant, and the time of
the rendition of such bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same is delivered to
Tenant, mailed, or left at the premises as herein provided. Any notice by Tenant
to Owner must be served by registered or certified mail addressed to Owner at
the address first hereinabove given or at such other address as Owner shall
designate by written notice.
Services Provided by Owners: 29. Owner shall provide: (a)
necessary elevator facilities on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m. and have one elevator subject to call at all
other times; (b) heat to the demised premises when and as required by law, on
business days from 8 a.m. to 6 p.m. and on Saturdays from 8 a.m. to 1 p.m.; (c)
water for ordinary lavatory purposes, but if Tenant uses or consumes water for
any other purposes or in unusual quantities (of which fact Owner shall be the
sole judge), Owner may install a water meter at Tenant's expense which Tenant
shall thereafter maintain at Tenant's expense in good working order and repair
to register such water consumption and Tenant shall pay for water consumed as
shown on said meter as additional rent as and when bills are rendered; (d)
cleaning service for the demised premises on business days at Owner's expense
provided that the same are kept in order by Tenant. If, however, said premises
are to be kept clean by Tenant, it shall be done at Tenant's sole expense, in a
manner satisfactory to Owner and no one other than persons approved by Owner
shall be permitted to enter said premises or the building of which they are a
part for such purpose. Tenant shall pay Owner the cost of removal of any of
Tenant's refuse and rubbish from the building; (e) If the demised premises are
serviced by Owner's air conditioning/cooling and ventilating system, air
conditioning/cooling will be furnished to tenant from May 15th through September
30th on business days (Mondays through Fridays, holidays excepted) from 8:00
a.m. to 6:00 p.m., and ventilation will be furnished on business days during the
aforesaid hours except when air conditioning/cooling is being furnished as
aforesaid. If Tenant requires air conditioning/cooling or ventilation for more
extended hours or on Saturdays, Sundays or on holidays, as defined under Owner's
contract with Operating Engineers Local 94-94A, Owner will furnish the same at
Tenant's expense. RIDER to be added in respect to rates and conditions for such
additional service; [HAND GRAPHIC] (f) Owner reserves the right to stop
services of the heating, elevators, plumbing, air-conditioning, power systems or
cleaning or other services, if any, when necessary by reason of accident or for
repairs, alterations, replacements or improvements necessary or desirable in the
judgement of Owner for as long as may be reasonable required by reason thereof.
If the building of which the demised premises are a part supplies
manually-operated elevator service, Owner at any time may substitute
automatic-control elevator service and upon ten days' written notice to Tenant,
proceed with alterations necessary therefore without in any wise affecting this
lease or the obligation of Tenant hereunder. The same shall be done with a
minimum of inconvenience to Tenant and Owner shall pursue the alteration with
due diligence.
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Captions 30. The Captions are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this lease nor the intent of any provisions thereof.
Definitions: 31. The term "office", or "offices", wherever
used in this lease, shall not be construed to mean premises used as a store or
stores, for the sale or display, at any time, of goods, wares or merchandise, of
any kind, or as a restaurant, shop, booth, bootblack or other stand, barber
shop, or for other similar purposes or for manufacturing. The term "Owner" means
a landlord or lessor, and as used in this lease means only the owner, or the
mortgagee in possession, for the time being of the land and building (or the
owner of a lease of the building or of the land and building) of which the
demised premises form a part, so that in the event of any sale or sales of said
land and building or of said lease, or in the event of a lease of said building,
or of the land and building, the said Owner shall be and hereby is entirely
freed and relieved of all covenants and obligations of Owner hereunder, and it
shall be deemed and construed without further agreement between the parties or
their successors in interest, or between the parties and the purchaser, at any
such sale, or the said lessee of the building, or of the land and building, that
the purchaser or the lessee of the building has assumed and agreed to carry out
any and all covenants and obligations of Owner, hereunder. The words "re-enter"
and "re-entry" as used in this lease are not restricted to their technical legal
meaning. The term "business days" as used in this lease shall exclude Saturdays
(except such portion thereof as is covered by specific hours in Article 29
hereof), Sundays and all days observed by the State or Federal Government as
legal holidays and those designated as holidays by the applicable building
service union employees service contract or by the applicable Operating
Engineers contract with respect to HVAC service.
Adjacent Excavation--Shoring: 32. If an excavation shall be
made upon land adjacent to the demised premises, or shall be authorized to be
made, Tenant shall afford to the person causing or authorized to cause such
excavation, license to enter upon the demised premises for the purpose of doing
such work as said person shall deem necessary to preserve the wall or the
building of which demised premises form a part from injury or damage and to
support the same by proper foundations without any claim for damages or
indemnity against Owner, or diminution or abatement of rent.
Rules and Regulations: 33. Tenant and Tenant's servants,
employees, agents, visitors, and licensees shall observe faithfully, and comply
strictly with, the Rules and Regulations and such other and further reasonable
Rules and Regulations as Owner or Owner's agents may from time to time adopt.
Notice of any additional rules or regulations shall be given in such manner as
Owner may elect. In case Tenant disputes the reasonableness of any additional
Rule or Regulation hereafter made or adopted by Owner or Owner's agents, the
parties hereto agree to submit the question of the reasonableness of such Rule
or Regulation for decision to the New York office of he American Arbitration
Association, whose determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation upon Tenant's part shall be deemed waived unless the same shall be
asserted by service of a notice, in writing upon Owner within ten (10) days
after the giving of notice thereof. Nothing in this lease contained shall be
construed to impose upon Owner any duty or obligation to enforce the Rules and
Regulation or terms, covenants or conditions in any other lease, as against any
other tenant and Owner shall not be liable to Tenant for violation of the same
by any other tenant, its servants, employees, agents, visitors or licensees.
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Security: 34. Tenant has deposited with Owner the sum of
[HAND GRAPHIC] $ _____ as security for the faithful performance and observance
by Tenant of the terms, provisions and conditions of this lease; it is agreed
that in the event Tenant defaults in respect of any of the terms, provisions and
conditions of this lease, including, but not limited to, the payment of rent and
additional rent, Owner may use, apply or retain the whole or any part of the
security so deposited to the extent required for the payment of any rent and
additional rent or any other sum as to which Tenant is in default or for any sum
which Owner may expend or may be required to expend by reason of Tenant's
default in respect of any of the terms, covenants and conditions of this lease,
including but not limited to, any damages or deficiency in the re-letting of the
premises, whether such damages or deficiency accrued before or after summary
proceedings or other re-entry by Owner. In the event that Tenant shall fully and
faithfully comply with all of the terms, provisions, covenants and conditions of
this lease, the security shall be returned to Tenant after the date fixed as the
end of the Lease and after delivery of entire possession of the demised premises
to Owner. In the event of a sale of the land and building or leasing of the
building, of which the demised premises form a part, Owner shall have the right
to transfer the security to the vendee or lessee and Owner shall thereupon be
release by Tenant from all liability for the return of said security, and it is
agreed that the provisions hereof shall apply to every transfer or assignment
made of the security to a new Owner. Tenant further convenants that it will not
assign or encumber or attempt to assign or encumber the monies deposited herein
as security and that neither Owner nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
Estoppel Certificate: 35. Tenant, at any time, and from time
to time, upon at least 10 days' prior notice by Owner, shall execute,
acknowledge and deliver to Owner, and/or to any other person, firm or
corporation specified by Owner, a statement certifying that this Lease is
unmodified and in full force and effect (or, if there have been modifications,
that the same is in full force and effect as modified and starting the
modifications), stating the dates to which the rent and additional rent have
been paid, and stating whether or not there exists any default by Owner under
this Lease, and, if so, specifying each such default.
Successors and Assigns: 36. The covenants, conditions and
agreements contained in this lease shall bind and inure to the benefit of Owner
and Tenant and their respective heirs, distributees, executors, administrators,
successors, and except as otherwise provided in this lease, their assigns.
In Witness Whereof, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
Witness for Owner: RENAISSANCE 627 BROADWAY LLC,
By: Kenneth Fishel, Member
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Witness for Tenant: JUPITER COMMUNICATIONS, LLC,
- -------------------------------- ---------------------------------
By:
ACKNOWLEDGEMENTS
CORPORATE OWNER
STATE OF NEW YORK, ss.:
County of NY
On this 25th day of January, 1999, before me personally came
Kenneth Fishel to me known, who being by me duly sworn, did depose and say that
he reside in NY NY that he is the Managing Member of Renaissance 627 Broadway
LLC the corporation described in and which executed the foregoing instrument, as
OWNER: that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation, and that he signed his name thereto by like
order.
- ------------------------------------------
INDIVIDUAL OWNER
STATE OF NEW YORK, ss.:
County of NY
On this day ,1999, before me personally
came to me known and known to me to me to be the
individual described in and who, as TENANT, executed
the foregoing instrument and acknowledged to me that
the executed the same.
- ------------------------------------------
CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of NY
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On this 25th day of January, 1999, before me personally came
Kurt Abrahmson to me known, who being by me duly sworn, did depose and say that
he reside in NY NY that he is the COO of Jupiter Communications LLC the
corporation described in and which executed the foregoing instrument, as TENANT:
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of Directors of said corporation, and that he signed his name thereto by like
order.
- ------------------------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK, ss.:
County of NY
On this day ,1999, before me personally
came to me known and known to me to me to be the
individual described in and who, as TENANT, executed
the foregoing instrument and acknowledged to me that
the executed the same.
- ------------------------------------------
GUARANTY
FOR VALUE RECEIVED, and in consideration for, and as an
inducement to Owner making the within lease with Tenant, the undersigned
guarantees to Owner, Owner's successors and assigns, the full performance and
observance of all the covenants, conditions and agreements, therein provided to
be performed and observed by Tenant, including the "Rules and Regulations" as
therein provided, without requiring any notice of non-payment, non-performance,
or non-observance, or proof, or notice, or demand, whereby to charge the
undersigned therefore, all of which the undersigned hereby expressly waives and
expressly agrees that the validity of this agreement and the obligations of the
guarantor hereunder shall in no wise be terminated, affected or impaired by
reason of the assertion by Owner against Tenant of any of the rights or remedies
reserved to Owner pursuant to the provisions of the within lease. The
undersigned further covenants and agrees that this guaranty shall remain and
continue in full force and effect as to any renewal, modification or extension
of this lease and during any period when Tenant is occupying the premises as a
"statutory tenant." As a further inducement to Owner to make this lease and in
consideration thereof, Owner and the undersigned covenant and agree that in any
action or proceeding brought by either Owner or the undersigned against the
other on any matters whatsoever arising out of, under, or by virtue of the term
of this lease or of this guarantee that Owner and the undersigned shall and do
hereby waive trial by jury.
16
<PAGE> 17
Dated: 19
________________________________________________________ ____________
Guarantor
______________________________________________________________________
Witness
________________________________________________________________________
Guarantor's Residence
__________________________________________________________
Business Address
_______________________________________________________________
Firm Name
______________________________________________________________________
STATE OF NEW YORK ) ss.:
COUNTY OF )
On this day of , 19 ,
before me personally came to me known and known to me to be the
individual described in, and who executed the foregoing Guaranty and
acknowledged to me that he executed the same.
---------------------------------------
Notary
IMPORTANT- PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN
ACCORDANCE WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts,
elevators, vestibules, stairways, corridors or halls shall not be obstructed or
encumbered by any Tenant or used for any purpose other than for ingress or
egress from the demised premises and for delivery of merchandise and equipment
in a prompt and efficient manner using elevators and passageways designated for
such delivery by Owner. There shall not be used in any space, or in the public
hall of the building, either by any Tenant or by jobbers or others in the
delivery or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and sideguards. If said premises are situated on the ground floor
of the building, Tenant thereof shall further, at
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<PAGE> 18
Tenant's expense, keep the sidewalk and curb in front of said premises clean and
free from ice, snow, dirt and rubbish.
2. The water and wash closets and plumbing fixtures shall not
be used for any purposes other than those for which they were designed or
constructed and no sweepings, rubbish, rags, acids or other substances shall be
deposited therein, and the expense of any breakage, stoppage, or damage
resulting from the violation of this rule shall be borne by the Tenant who, or
whose clerks, agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out
of any window of the building; and no Tenant shall sweep or throw or permit to
be swept or thrown from the demised premises any dirt or other substances into
any of the corridors or hall, elevators, or out of the doors or windows or
stairways of the building and Tenant shall not use, keep or permit to be used or
kept any foul or noxious gas or substance in the demised premises, or permit or
suffer the demised premises to be occupied or used in a manner offensive or
objectionable to Owner or other occupants of the building by reason of noise,
odors, and/or vibrations, or interfere in any way with other Tenants or those
having business therein, nor shall any animals or birds be kept in or about the
building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the building is prohibited.
4. No awnings or other projections shall be attached to the
outside walls of the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any Tenant on any part of the
outside of the demised premises or the building or on the inside of the demised
premises if the same is visible from the outside of the premises without the
prior written consent of Owner, except that the name of Tenant may appear on the
entrance door of the premises. In the event of the violation of the foregoing by
any Tenant, Owner may remove same without any liability, and may charge the
expense incurred by such removal to Tenant or Tenants violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted or
affixed for each Tenant by Owner at the expense of such Tenant, and shall be of
a size, color and style acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way
deface any part of the demised premises or the building of which they form a
part. No boring, cutting or stringing of wires shall be permitted, except with
the prior written consent of Owner, and as Owner may direct. No Tenant shall lay
linoleum, or other similar floor covering, so that the same shall come in direct
contact with the floor of the demised premises, and, if linoleum or other
similar floor covering is desired to be used an interlining of builder's
deadening felt shall be first affixed to the floor, by a paste or other
material, soluble in water, the use of cement or other similar adhesive material
is expressly prohibited.
7. No additional locks or bolts of any kind shall be placed
upon any of the doors or windows by any Tenant, no shall any changes be made in
existing locks or mechanism thereof. Each Tenant must, upon the termination of
his Tenancy, restore to Owner all keys of stores, offices and toilet rooms,
either furnished to, or otherwise procured by, such Tenant, and
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<PAGE> 19
in the event of the loss of any keys, so furnished, such Tenant shall pay to
Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and
bulky matter of any description shall be delivered to and removed from the
premises only on the freight elevators and through the service entrances and
corridors, and only during hours and in a manner approved by Owner. Owner
reserves the right to inspect all freight to be brought into the building and to
exclude from the building all freight which violates any of these Rules and
Regulations of the lease or which these Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is
prohibited and each Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building
between the hours of 6 P.M. and 8 A.M. and at all hours on Sundays, and legal
holidays all persons who do not present a pass to the building signed by Owner.
Owner will furnish passes to persons for whom any Tenant request same in
writing. Each Tenant shall be responsible for all persons for whom he requests
such pass and shall be liable to Owner for all acts of such persons.
11. Owner shall have the right to prohibit any advertising by
any Tenant which in Owner's opinion, tends to impair the reputation of the
building or is desirability as a building for offices, and upon written notice
from Owner, Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in
or on the demised premises, any inflammable, combustible or explosive fluid,
material, chemical or substance, or cause or permit any odors of cooking or
other processes, or any unusual or other objectionable odors to permeate in or
emanate from the demised premises.
13. If the building contains central air conditioning and
ventilation, Tenant agrees to keep all windows closed at all times and to abide
by all rules and regulations issued by the Owner with respect to such services.
If Tenant required air conditioning or ventilation after the usual hours, Tenant
shall give notice in writing to the building superintendent prior to 3:00 P.M.
in the case of services required on week days, and prior to 3:00 P.M. on the day
prior in the case of after hours service required on weekends or on holidays
14. Tenant shall not move any safe, heavy machinery, heavy
equipment, bulky matter, or fixtures into or out of the building without Owner's
prior written consent. If such safe, machinery, equipment, bulky matter or
fixture requires special handling, all work in connection therewith shall comply
with the Administrative Code of the City of New York and all other laws and
regulations applicable thereto and shall be done during such hours as Owner may
designate.
19
<PAGE> 20
RIDER TO LEASE BETWEEN
RENAISSANCE 627 BROADWAY LLC,
AND
JUPITER COMMUNICATIONS, LLC,
DATED: January 25, 1999
36. The annual base rent during the term of the Lease shall be
as set forth in the following table. In addition, the tenant shall pay a monthly
sprinkler charge of $150/00. a , monthly extermination charge of $200.00 and a
monthly water and sewer charge of $500.00. Said sprinkler, extermination and
water charge may be raised in the event-the rate at which Landlord is charged
for sprinkler, extermination and/or water service is raised. Any such raise
shall be equal to the same percentage as Landlord's rate is raised. Landlord
shall provide, at Tenant's request, evidence of such increased charges. The
first month's rent, the first month's sprinkler charge and the security shall be
paid on the signing of this Lease. Landlord represents that the demised premises
are serviced by an operating sprinkler system.
<TABLE>
<CAPTION>
PERIOD ANNUAL BASE RENT MONTHLY INSTALLMENT
- ------ ---------------- -------------------
<S> <C> <C>
03/01/99-02/28/2000 $400,000.00 $ 33,333.33
03/01/00-02/28/2001 $420,000.00 $ 35,000.00
03/01/01-02/28/2002 $540,800.00 $ 45,066.67
03/01/02-02/28/2003 $562,432.00 $ 46,869.33
03/01/03-02/28/2004 $584,929.28 $ 48,744.11
</TABLE>
37. The Landlord agrees that the Tenant shall have rent
concession of $20,833.33 per month for the months of March 1999 and April 1999.
The within rent concession shall apply only to base rent, but shall not include
the sprinkler, water and sewer nor any "additional rent" as hereinafter
provided. Moreover, the concessions granted pursuant to this paragraph are
intended to be amortized over the term of this Lease, notwithstanding the fact
that they are realized by the Tenant at the inception of this Lease. In the
event this Lease is terminated or possession surrendered before the expiration
date as a result of Tenant's default hereunder, the full concession shall become
immediately due and payable and debt to be charged against the Tenant as
additional rent otherwise.
Therefore, at the date of execution of this Lease, the Tenant
shall pay to Landlord, and Landlord acknowledges receipt of the following:
<TABLE>
<CAPTION>
4TH FLOOR
<S> <C>
May 1, 1999 Rent.......................................................................$20,833.33
May 1, 1999 Water and Sewer...............................................................$250.00
May 1, 1999 Sprinkler......................................................................$75.00
May 1, 1999 Extermination.................................................................$100.00
Security Deposit.......................................................................$49,594.10
TOTAL DUE UPON SIGNING.......................................$70,852.42
2ND FLOOR
Additional Security Deposit............................................................$29,277.94
GRAND TOTAL UPON SINGING OF LEASE...........................$100,130.36
</TABLE>
<PAGE> 21
Therefore, upon payment, the Tenant will have security deposit
equal to:
<TABLE>
<S> <C>
2nd Floor existing security deposit..................................................................$20,316.16
2nd Floor payment as per above.......................................................................$29,277.94
4th Floor payment as per above.......................................................................$49,594.10
TOTAL SECURITY DEPOSIT......................................................$99,188.20
</TABLE>
Rent: Method of Payment: Landlord will deliver a rent bill to the
Tenant's premises. This bill will usually be delivered before the First (1st) of
each month. the rent is due, in the Landlord's office , on the First (1st) day
of each and every month. On the First (1st) day of each month (or, if that is a
non-business day, on the first business day thereafter), a messenger from the
Landlord will pick up the rent from the Tenant's premises. Tenant agrees to have
the rent ready for the Landlord to pick up before 2:00 p.m. on the First (1st)
day of each and every month. Rent shall be paid in U.S. currency in good funds
in cash or check drawn on a bank with an office in New York City.
Rent: Late Payment: Rent not received by the Landlord by
3:00 p.m. on the Seventh (7th) calendar day of each month shall be deemed in
default. In addition, in the event the full rent is not received by the owner
by the Seventh (7th ) calendar day of each month, the Tenant shall pay a late
charge equal to four (4%) percent of the outstanding balance.
In the event any check given by Tenant to Landlord is dishonored by
Tenant's bank, for any reason, Tenant shall forthwith deliver a certified or
bank check to Landlord in the amount of the dishonored check together with any
applicable late payment charge, plus a charge of Twenty-five Dollars ($25), upon
receipt of which Landlord will return the dishonored check to Tenant.
The charges herein set forth shall be deemed reimbursement to
Landlord for expenses incurred and lost income which may result from such late
payments and not as a penalty. The charges herein shall be in addition to and
not in lieu of any other rights of Landlord granted by this Lease or by law.
All security deposits will be held in an interest-bearing "lease
security" account in Marine Midland Bank. Interest is to be paid annually to
Tenant by March 30 of each year, less a one (1%) percent administrative fee to
be retained by Landlord. Landlord reserves the right to change the bank in which
the deposit is mentioned and shall notify Tenant of any such change. Landlord
shall not be required to obtain an interest rate above that normally given by
the bank for ordinary lease security accounts.
38. (a) For the purpose of this Paragraph, it is agreed that the
area occupied by Tenant under this Lease represents Twenty (20%) Percent of the
total rentable area of the building, of which the demised premises are a part
(hereinafter referred to as the building); that the "lease year" shall mean the
twelve (12) month period commencing with the first day of the term and each
twelve (12) month period thereafter; that the "Base" tax year for determining
the increase in Real Estate Taxes and vault charges, shall be the tax year
1999/2000. The "Base" year for determining all charges in subparagraph (b) below
shall be Calendar year 1999.
(b) In addition to all other rent charges payable by Tenant under
this Lease, Tenant agrees to pay Twenty (20%) percent of the amount of any
increase in Landlord's expense on the building for real estate taxes, common
vault charges and fuel charges imposed on the building (including the land
thereunder) in any subsequent year over the amount of the fuel costs and taxes,
common vault charges paid or required to be paid by Landlord for the Base tax
year by reason of any
2
<PAGE> 22
increase in the assessed valuation or increase in the tax rate, or both, or by
the levy, assessment or imposition of any new or additional real estate tax or
assessment on the building and/or appurtenances (including the land thereunder )
to the extent that same shall be in lieu of or in addition to any of aforesaid
taxes or assessments upon or against said building and/or appurtenances
(including the land thereunder) or by any increase in the vault charges. The
Tenant agrees to pay the amount of any such increase within twenty (20) days
following receipt of Landlord's bill for same. If any such increase shall be
applicable to less than a full lease year, the increase shall be pro-rated.
Landlord shall, at the time it sends Tenant bill for the aforesaid tax increase,
enclose a copy of the most recent fuel bill and the most recent tax and related
bills from the City of New York and indicate how Landlord computes Tenant's
share of any tax increase.
(c) In addition to the above, Tenant shall be responsible for
Tenant's proportionate share Twenty (20%) Percent of any Business Improvement
District Charge (B.I.D.) or tax imposed upon the building.
39. Electric current is supplied by Landlord and is submetered to
the Tenant who shall purchase same from Landlord or Landlord's agent at the same
base rate which Landlord pays to Consolidated Edison Company plus Twenty-five
Percent (25%).
landlord shall not be liable to tenant for any loss or damage or
expense which tenant may sustain or incur if either the quantity or character of
electric service is changed or is no longer available or suitable for tenant's
requirements as a result of causes beyond landlord's reasonable control. Any
riser or risers to supply Tenant's electrical requirements, upon written request
of Tenant, and written approval of Landlord may be installed by Tenant, at the
sole cost and expense of Tenant, if, in landlord's sole reasonable judgement,
the same are necessary and will not cause permanent damage injury to the
building or demised premises or cause or create a dangerous or hazardous
condition or entail excessive or unreasonable alterations, repairs or expense or
interfere with or disturb other tenants or occupants. In addition to the
installation of such riser or risers, Tenant will also at the sole cost and
expense of Tenant, install all other equipment proper and necessary in
connection therewith subject to the aforesaid terms and conditions. Tenant
covenants and agrees that at all times its use of electrical current shall never
exceed the capacity of existing feeders to the building or the risers or wiring
installations.
Landlord represents that the present amperage is adequate for
Tenant's intended normal office usage.
Bills shall be rendered at such times as Landlord may elect. In the
event that such bills are not paid within five (5) business days after they are
rendered, Landlord may, after five (5) business days written notice to Tenant in
accordance with paragraph 59, discontinue the service electric current to the
demised premises. Since landlord is liable to Con Edison for payment of the
bills even in the event tenant defaults, landlord's election to employ this
remedy shall not be considered a breach of agreement and shall not entitle
tenant to any offset of rent.
Landlord may also discontinue service of electric current to the
demised premises without cause upon thirty (30) days notice to Tenant, however,
in such event, Landlord will continue to supply electric service until tenant
has had a reasonable time to obtain same directly from the Utility. In the event
of discontinuance of electric service by the landlord, as hereinabove provided,
landlord shall have the option to install a meter at its sole cost and expense
and other appropriate wiring to insure that tenant's electrical service is not
interrupted.
3
<PAGE> 23
In such event tenant shall not be released from any liability under
this Lease. Such discontinuance shall not be deemed to be a lessening of
services within the meaning of any law, rule, or regulation now or hereafter
enacted, promulgated or issued. In the event of such discontinuance, tenant
shall arrange to receive such service directly from said public utility
corporation.
If any tax is imposed upon landlord's receipt from the sale or
resale of electrical energy or gas or telephone service to the tenant by any
Federal, State or Municipal Authority, Tenant covenants and agrees that, where
permitted by law, tenant's prorata share of such taxes shall be passed on to, an
included in bill of, and paid by, tenant to landlord.
40. It is understood and agreed that this Lease may not be assigned
nor may the demised premises be sub-leased without the prior written consent of
Landlord, whose consent shall not be unreasonable withheld and/or delayed.
Furthermore, it is understood and agreed that in the event Tenant sells,
assigns, or transfers more than more than forty-nine (49%) percent ownership
through private offerings or placement of any shares of its stock to any person
or entity without the prior written consent of Landlord, whose consent shall not
be unreasonably withheld and/or delayed, same shall be deemed an unauthorized
assignment. However, it is understood and agreed that in the event Landlord
consents to any such assignment, sublet of transfer same shall not diminish
tenant's obligation to perform all the terms, warranties, and covenants. Such
assignment shall not relieve tenant of its obligations or duties hereunder.
In the event Tenant does sell, assign or transfer this Lease or
sublet any part of the demised premises with Landlord's consent as hereinbefore
provided for a sum in excess of base rent as herein provided Landlord shall be
entitled to receive one-half (1/2) of any such excess base rent, less of any
expense which Tenant may incur in renting same, including, without limitation,
brokerage commissions legal fees and the cost of tenant's leasehold
improvements. Such excess shall be determined by dividing the rent (base and
additional) paid by tenant by the number of square feet of the demised premises
in order to determine a rent per square foot. If the rent per square foot
pursuant to the sublease or lease assignment exceeds the rent per square foot
pursuant to this Lease less the aforementioned expenses, Landlord shall be
entitled to one-half (1/2) if such excess.
In the event of an assignment to a subsidiary, parent, parent,
partner, affiliated company or other alter-ego of Tenant, Tenant shall remain
liable for the performances of all obligations pursuant to this Lease. Any such
assignment shall be permitted without Landlord's consent, except Landlord must
be notified in advance of such assignment and such assignment shall not relieve
either the tenant or any Guarantor from its obligations hereunder.
Any other assignment must be done in strict compliance with
paragraph.
41. Tenant shall, at its sole cost and expense, provide and keep in
full force and effect for the benefit of Landlord and Tenant, a liability
insurance policy (naming Landlord as additional insured) in the amount of Two
Million ($2,000,000) Dollars for any one loss - Said policy shall be in standard
form written by good and solvent insurance companies reasonably satisfied to
Landlord, protecting Landlord and Tenant against any and all liabilities due to
or occasioned by negligence, occurrence, accident or disaster on or about the
demised premises.
42. All certificates of insurance shall be delivered to and left in
the possession of Landlord prior to the commencement of this lease or the
commencement of any work performed in or on the demised premises whichever date
shall be earlier. Such insurance shall be reasonably satisfactory to Landlord
and shall contain a clause requiring notification in writing by Certified Mail,
4
<PAGE> 24
Return Receipt Requested, on ten (10) days notice to Landlord in the event of
cancellation thereof for any reason whatsoever.
Said policies of insurance shall contain provision waiving rights
of subrogation as against Landlord.
43. It is understood and that in the event an insurance company
providing Landlord with insurance for the building in which the demised premises
constitutes a part shall at any time after the commencement of this lease
increase the annual premium for the amount of coverage then in place because of
Tenant's manner of use of the demised premises, other than for office space,
Tenant shall pay to Landlord as "Additional Rent" , collectible in the same
manner and method as Rent is collected hereunder, One Hundred (100%) Percent of
such increase, due and payable on the first day of the first month subsequent to
Landlord's notification to Tenant that Landlord has received notification of
such increase. This paragraph shall not apply to changes in insurance rates due
to the premises being occupied rather than vacant , but refers to any increases
due to Tenant's activities or use of the premises.
44. Intentionally Omitted
45. The Landlord will provide steam heat to the premises between
October 15 and May 15 and from 7:00 a.m. to 6:00 p.m., Monday through Friday,
when the outside temperature falls below 55(degree)F. On Saturday, Sunday, legal
Holidays, and between the hours of 5:00 p.m. to 7:00 a.m., the Landlord will
provide heat only if the outside temperature falls below 40(degree)F. In the
event of mechanical breakdown of the heating equipment, the owner shall not be
responsible for any loss of income or damages sustained by the Tenant. The owner
agrees to make prompt repairs to the heating equipment, provided same is within
the owner's reasonable control, provided further that the technical problem is
remedied by Landlord as soon as practical and without unnecessary delay.
The Tenant may install a supplementary heating system, which is
capable of heating the entire demised premises when steam heat is not provided
by the owner. The Tenant's use of the supplementary heat shall be at the sole
option, control, and expense of the Tenant. the heating system shall be
installed operated in accordance with any and all governmental laws and
regulations pertaining thereto. In the event the Tenant desires to use gas for
said supplementary heating system, the Tenant will first obtain a "blue card"
and Con Edison gas meter through the services of a licensed plumber.
In no respect is Landlord required to maintain the premises at a
specified temperature and the Tenant agrees to accept such heat as is normally
supplied in office buildings.
In no event shall the Landlord's failure to provide heat due to
technical problems be a cause for diminution or suspension of Tenant's rental
obligations. In no respect is Landlord required to maintain the premises at a
specified temperature.
46. In order to properly service and maintain the sprinkler system
for the entire building, the Landlord must gain access to certain sprinkler
valves within Tenant's premises. The Tenant shall permit reasonable access by
Landlord's agents or employees to the valves during normal business hours .
Tenant agrees that nothing may be attached to or hung from any sprinkler pipes.
Tenant expressly grants Landlord an easement to permit access as set forth
above.
47. Except as otherwise provided herein, no services shall be
provided by Landlord on legal holidays including, but not necessary limited to,
New Years Day, President Day,
5
<PAGE> 25
Thanksgiving Day, Labor Day, Columbus Day, election Day, Independence Day,
Memorial Day, Martin Luther King's Birthday and Christmas Day. Notwithstanding
above tenant may use the premises and passenger elevator.
48. It is understood and agreed that any and all supplies,
materials, services,equipment, and labor required for any work performed by
Tenant or performed by Landlord on Tenant's behalf to the demised premises shall
be supplied by Tenant at Tenant's sole cost and expense, unless specifically
excepted herein. Furthermore, it is understood and agreed that Tenant shall make
no demands upon Landlord for provision of any supplies, materials, services,
equipment, or labor, nor shall Tenant request from Landlord any form of
compensation for Tenant's Expenditures, unless specifically provided for herein.
49. It is understood and agreed that any and all work done by
Tenant to the demised premises shall be in accordance with all laws,
regulations, and ordinances of all governmental or municipal agencies having
jurisdiction therein.
50. Tenant, and it's assigns, shall indemnify and hold Landlord
harmless from and against all liabilities, obligations, damages, penalties,
claims, costs, and expenses, including reasonable attorneys' fees paid,
suffered, or incurred arising out of or from any occurrence, accident, or
disaster in the demised premises, or in and about or adjacent to the exterior of
the building in which the demised premises constitutes a part, causing injury or
damage to any person, entity, or property, due to any neglectful act or neglect
of Tenant, its agents servants, employees, customers, or visitors to comply with
and perform each and every requirement and provision of lease on its part to be
performed or due or claimed to be due to any use made by Tenant of the demised
premises. The foregoing indemnity shall not apply to the extent that Landlord
shall be determined to be contributorily negligent in respect of any occurrence,
accident or disaster in or about the demised premises.
51. Tenant agrees to use its best efforts to maintain the demised
premises free of any violations that may be imposed by the Department of
Buildings and/or any other governmental or municipal agency having jurisdiction
over the demised premises, arising out of Tenant's manner of use of the demised
premises hereunder which affect Landlord's building, provided the premises are
free of such violations upon commencement of the Lease, except as concerns the
Second Floor.
52. It is understood and agreed that Tenant will only use the
demised premises for General Office use and for no other purpose. Tenant
acknowledges that any breach of the foregoing provision will cause Landlord
substantial and irreparable harm and damage. In addition to all other remedies
available to Landlord, it is understood and agreed that this Lease and the term
hereof shall end, expire, and terminate in the event such breach is not cured
within Twenty (20) days after notice by Landlord to Tenant to cure said breach
as served pursuant to paragraph 60 hereof. In the event such notice is given,
Tenant hereby agrees to vacate and surrender the demised premises to Landlord
forthwith. If tenant fails to do so landlord may seek an eviction by summary
proceeding.
53. It is understood and agreed that in the event Tenant shall
"Hold Over" and fail to deliver the demised premises to Landlord vacant and in
"Broom Clean" condition at the expiration of this Lease, at the expiration of
any extensions of this Lease, or at any time Landlord shall gain legal
possession of the demised premises by reason of Court Order, Tenant's default,
or for any other reason whatsoever, such "Holding Over" thereafter shall
continue upon the covenants and conditions herein set forth except that the
charge for the use and occupancy of such "Holding Over" for each calendar month
or part thereof (even if such part shall be a small fraction of a calendar
month) shall be at the rate of 2 times the aggregate rent and additional rent
payable hereunder during the last month of
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<PAGE> 26
Tenant's legal occupancy, which total sum Tenant agrees to pay Landlord promptly
upon demand, in full, without set-off or deduction. In the event Tenant shall
fail to pay Landlord such charge for "Holding Over" promptly upon Landlord's
demand, as provided for hereinabove, it is understood and agreed that Landlord
shall be entitled to interest calculated at a daily periodic rate of .0411, an
annual percentage rate of Fifteen (15%) percent. Neither the billing nor the
collection of use and occupancy charges in the above amount shall be deemed a
waiver of any right of Landlord to collect damages for Tenant's failure to
vacate the demised premises after the expiration or sooner termination of this
Lease. The foregoing shall survive the term of this Lease and any renewals or
extensions thereof.
54. It is understood and agreed that the demised premises is used
commercially and any refuse or garbage generated from such commercial
establishment will not be removed by the New York City Department of Sanitation.
Therefore, Tenant understands and agrees that Tenant shall, at its sole cost and
expense, hire a licensed garbage removal service to remove Tenant's garbage from
the demised premises.
55. It is understood and agreed that Tenant, at Tenant's sole cost
and expense, shall provide Landlord with complete access as is reasonable to the
demised premises and every part within the demised premises, provided that
Tenant shall receive reasonable advance notice thereof and that Landlord and its
agents and employees and all such persons shall use their best efforts not to
unreasonably interfere with the conduct of Tenant's business and Tenant's
occupancy of the demised premises. Tenant's failure to comply with this
provision shall be deemed a substantial breach of this Lease and sufficient
grounds for the summary termination of this Lease. Landlord agrees that except
in the event of an emergency requiring immediate entry, it will give Tenant
reasonable notice if Landlord desires to inspect or otherwise gain access to the
demised premises, provided that Tenant shall receive reasonable advance notice
thereof and that Landlord and its agents and employees and all such persons
shall use their best efforts not to unreasonably interfere with the conduct of
Tenant's business and Tenant's occupancy of the demised premises.
Furthermore, in the event Tenant shall fail to provide Landlord
with access as provided for hereinabove and in the event Landlord, in its sole
and reasonable discretion, shall deem it necessary to enter the demised premises
forcibly for any reason whatsoever, Landlord may forcibly enter the demised
premises without any liability to Tenant in the event of any emergency and
Landlord shall repair any damage caused by such forcible entry with whatever
workmen an d and with whatever materials and in whatever manner Landlord, in its
reasonable discretion, may deem advisable provided such repairs are done in a
workmen like manner. Landlord shall use reasonable efforts not to damage the
demised premises and the property of Tenant located therein provided that Tenant
shall receive reasonable advance notice thereof and that Landlord and its agents
and employees and all such persons shall use their best efforts not to
unreasonably interfere with the conduct of Tenant's business and Tenant's
occupancy of the demised premises.
56. Tenant has inspected the premises and it is understood and
agreed that except for building systems, facilities, electric heating,
ventilation or as provided in paragraph 4, or as otherwise provided in this
Lease, Tenant will accept the said premises under this Lease, "AS IS" vacant and
broom clean, in their present state and condition, and Landlord will have no
obligations to undertake any alterations, decoration, installments, additions,
improvements, or repairs except as herein contained in or to the demised
premises during the term of this Lease.
Notwithstanding the above Landlord agrees to do the following work
on the 4th Floor:
1. Provide two (2) 15 ton air conditioning units. Tenant
to install, file & ductwork
7
<PAGE> 27
as necessary.
2. Renovate the existing bathrooms.
3. Install a new kitchen, which includes sink, countertop,
refrigerator & dishwasher.
4. Refinish wood floor.
5. Paint entire premises white, or give Tenant $5000
painting credit, at Tenant's option.
6. Raise existing lights - if lights left by vacating
tenants.
7. Remove steel gate in East stairwell.
All work to be done in accordance with New York City Building
Regulations and Code.
Landlord represents that it has no knowledge of any pending
violations or hazardous wastes at the premises.
No work whatsoever is required on the second floor which Tenant
currently occupies.
57. Tenant hereby expressly grants to Landlord an easement and
shall permit Landlord to erect,and use, maintain and repair pipes, ducts,
cables, conduits, plumbing, vents and wires in, to and through the premises as
and to the extent that Landlord may now or hereafter deem to be necessary or
appropriate for the proper operation and maintenance of the building in which
the demised premises are located or to the extent necessary to accommodate the
requirements of other Tenants in the building. All such work shall be done, so
far as practicable, in a good and workmanlike manner consistent with the then
existing decor of the demised premises in such a manner as to avoid unreasonable
interference with Tenant's use of the premises. Landlord shall grant Tenant
access to the plumbing and electrical systems in the building to the extent that
it can so as to allow the hookup of the Tenant's plumbing and electrical
installations.
58. The parties represent that no broker was instrumental in
consummating this Lease. Landlord and Tenant each agree to indemnify and to gold
the other armless against any claims for brokerage commissions arising out of
any conversations or negotiations had by the indemnifying party with any broker
regarding these premises. This indemnity shall include any claim and any of the
indemnified party's expenses arising out of such claims, including, but not
limited to, attorneys' fees.
59. Notwithstanding any provision to the contrary, all notices
required to be sent under this lease shall be sent by Certified Mail, Return
Receipt Requested. If to the Tenant, the notice shall be addressed to the Tenant
at the demised premises with a copy to Erik Kahn, Esq., Khan & Block, LLP, 110
Greene Street, New York, New York 10012, (212) 431-6884, 627 Broadway, New York,
New York with a copy to Richard J. Pilson, Esq., c/o Berliner & Pilson, Esqs., 3
New York Plaza, 18th Floor, New York, New York 10004, Fax no. (212) 425-6444.
Wither the Landlord or the Tenant may designate another address for notices by
sending the other party a notice of same. All notices shall be effective as of
the date mailed, if mailed from a Post Office with proof of mailing.
60. In the event of any conflict between the provisions of
this rider and the printer "Boilerplate" Lease, the provisions of the rider
shall prevail.
61. The failure of any part to insist upon the strict
performance of a party to exercise any right, opinion or remedy hereby reserved
shall not be construed as a waiver for the future of any such provision, right,
option or remedy or as a waiver if a subsequent breach hereof. The consent or
approval by the Landlord of any act by tenant requiring the Landlord's consent
or approval of any subsequent similar act by the Tenant. The receipt and
acceptance by the Landlord of rent or
8
<PAGE> 28
other payments, charges or sums with knowledge of a breach of any provision of
this Lease Agreement shall not be deemed a waiver of such breach. No provision
of this Lease Agreement shall be deemed to have been waived unless such waiver
shall be in writing signed by the party to be charged. No payment by the Tenant
or receipt by the Landlord of a lesser amount than the rents, charges and other
sums hereby reserved shall be deemed to be other than on account of the earliest
rents, charges and other sums hereby reserved shall be deemed to be other than
on account of the earliest rents, additional rents due hereunder, charges and
other sums then unpaid, nor shall any endorsement or statement on any check or
any letter accompanying any payment by Tenant be deemed an accord and
satisfaction, and such rents, charges and such rents, charges and other sums
shall remain due and Landlord may pursue any other remedy in this Lease
Agreement provided or by law permitted, and no waiver by Landlord in favor of
any other Tenant or occupant shall constitute a waiver in favor of the Tenant
herein. No agreement to accept a surrender of all or any part of demised
premises or this Lease Agreement shall be valid unless in writing and signed by
the Landlord and the Tenant. No delivery of keys shall operate as a termination
of this Lease Agreement or a surrender of the demised premises.
62. Tenant agrees not to use or permit the demised premises to
be used for parties of any kind, except office parties, nor to permit the
maintenance of any pets or permit the demised premises to be used as residential
space or living quarters.
63. Tenant may install only such locks on the demised premises
as are approved by law, rule or ordinance for premises of the type designated in
the use clause of this lease and further agrees to see to It that all fire exits
remain unobstructed at all times. Tenant further agrees to enforce all laws,
rules or ordinances regulating permitted smoking areas in the demised premises.
Tenant shall be responsible for installation and the cost and expense of all
locks and security devices (i.e. alarms, etc.), and the maintenance thereof.
Landlord is not responsible for any damage or loss to tenant by theft,
vandalism, etc.
64. Landlord shall provide, at no cost to Tenant, two (2) keys
to the passenger elevator. Additional elevator keys are available, but there
shall be a fifteen ($15) dollar deposit for each extra key. In addition,
Landlord shall five Tenant two (2) listings on the building directory without
charge. Up to two (2) additional listings may be had at Twenty-Five ($25)
Dollars per line.
65. (a) Landlord and Tenant agree to give up the right to a
trial by jury in any court action, proceeding or counterclaim on any matters
concerning this Lease, the relationship of Tenant and Landlord or Tenant's use
or occupancy of the demised premises.
(b) If Landlord begins any court action or proceeding against
Tenant in a non-payment or holdover proceeding, Tenant may not make any
counterclaim in such action or proceeding, other than a compulsory or mandatory
counterclaim. Tenant agrees that the rents and additional rents due hereunder
shall be due and payable and not subject to any offset of counterclaims of any
kind.
66. Notwithstanding anything to the contrary in this lease it
is agreed that any demand for rent may be made orally and no written notice of
any kind shall be necessary as a condition precedent to commencement of a
non-payment petition:
67. In any action or proceeding brought by Landlord for
non-payment of rent, additional rent and/or holdover, Landlord shall of it is
the prevailing party either by court decision or settlement, be entitled to
recover the reasonable legal fees incurred in the prosecution or defense of such
action or proceeding.
9
<PAGE> 29
68. Tenant has been expressly advised and acknowledges that
there is currently an existing Tenant in the Fourth (4th) floor space, who has
simultaneously surrendered its leasehold effective February 28, 1999. Landlord
shall have no obligation to Tenant should the current Tenant of the Fourth (4th)
floor hold over, except to diligently pursue recovery of possession for Tenant
of said Fourth (4th) floor. However, should Tenant's possession of the Fourth
(4th) floor be delayed by reason of the current Tenant's holding over, the
Tenant concessions set forth in Paragraph 37 of this Rider shall be applicable
to the first two (2) months in which Tenant is in possession, with any partial
month being pro-rated accordingly. For example, if possession is not delivered
until March 15, 1999, then the concession will apply in April and May 1999
instead of March and April 1999, and Tenant shall pay a pro-rated portion of the
March 1999 rent for the period March 15-31, 1999, including pro-ration of all
additional rent schedule set forth in paragraph 36.
In addition, in such event any advance payments made on
signing of this lease, other than security deposits, shall be deemed
attributable to the next full month following delayed concession period.
However, notwithstanding the delay in Landlord's delivery of
possession of the Fourth (4th) floor, all other terms of the Lease, except as
stated above, shall remain unchanged, including the anniversary dates, scheduled
rent increases, base year for escalations, and termination date.
In the further event of a delay in possession, Tenant shall
continue to be liable for the portion of rent and additional rent attributable
to the second floor pursuant to the following Schedule:
<TABLE>
<CAPTION>
Year Term Annual Rent Monthly Rent
- ---- ---- ----------- ------------
<S> <C> <C> <C>
1. 03/01/99-02/28/00 $150,000.00 $12,500.00
2. 03/01/00-02/28/01 $160,000.00 $13,333.33
3. 03/01/01-02/28/02 $270,400.00 $22,533.33
4. 03/01/02-02/28/03 $281,216.00 $23,434.67
5. 03/01/03-02/28/04 $292,464.64 $24,372.05
</TABLE>
Additional Monthly Charges
<TABLE>
<S> <C>
Water & Sewer $250.00
Sprinkler Protection $75.00
Extermination $100.00
Electric Submetered
</TABLE>
In the event that possession of the fourth floor never
happens, or if the delay exceeds three (3) months, prior lease shall be
reinstated and this Lease shall have no effect, and any monies advanced in
excess of what would have been due pursuant to the prior lease shall be refunded
or credited to Tenant.
10
<PAGE> 30
69. Upon the execution of this Lease, the prior lease between
the parties dated April 1, 1993, as modified by agreement dated May 26, 1995,
shall be a nullity and neither party shall have any obligations thereunder.
RENAISSANCE 627 BROADWAY LLC.
Landlord,
By:
Kenneth Fishel
JUPITER COMMUNICATIONS, LLC,
Tenant,
By:
11
<PAGE> 31
RIDER TO LEASE BETWEEN
RENAISSANCE 627 BROADWAY LLC.
AND
JUPITER COMMUNICATIONS, LLC.
SUPPLEMENTAL RIDER TO LEASE
RENAISSANCE 627 BROADWAY LLC
AND
JUPITER COMMUNICATIONS, LLC
1. In the event of any inconsistency between the provisions of this Supplemental
Rider and those contained in the printed form Lease and Rider to which this
Supplemental Rider is appended, the provisions of this Supplemental Rider shall
govern and be binding.
2. The parties shall notify each other of any claims for which they will claim
indemnification from the other party to this lease. In such event the
indemnifying party shall have the right to defend any such claim with counsel of
its own at its sole cost and expense, but may not agree to any settlement
without first obtaining the indemnifying parties written consent thereto.
3. Owner represents that the building in which the demised premises are located
does not require a certificate of occupancy and that the use of the demised
premises for offices is a permitted use of the premises.
4. Paragraph 20 of the printed portion of this lease is hereby amended to
provide that in the event the landlord exercises its right to make the
alterations, changes and modifications set forth in said paragraph it may do so
without Tenant's consent provided that same do not substantially affect Tenant's
access to the demised premises, the size or layout of the demised premises or
the services provided to the demised premises and are done in a workmanlike
manner.
5. Paragraph 9 of the printed portion of this lease is hereby amended to provide
that notwithstanding anything in clause (d) thereof to the contrary, in the
event of a fire or other casualty not caused by the negligent or willful act of
Tenant, Tenant's agents, contractors, employees, invitees or licensees, (i) if
the demised premises are rendered wholly untenantable and if owner reasonably
determines that such damage can not be repaired within 9 months or if Owner
shall not complete the repairs on Owner's part to be performed hereunder
sufficiently to restore the demised premises by nine (9) months after the date
of such occurrence (including any period of force majeure), then Tenant may
elect to terminate this lease by notice given to Owner within fifteen (15) days
of the above-mentioned deadline for the completion by Owner of repairs, time
being of the essence, or (ii) if the casualty causing such complete untenability
shall occur during the last twelve (12) months of the term of this lease, and if
Owner shall not complete the repairs on Owner's part to be performed hereunder
sufficiently to restore the demised premises by three (3) months after the date
of such occurrence (including any period of force majeure), then Tenant may
elect to terminate this lease by notice given to Owner within fifteen (15) days
of the above mentioned deadline for the completion by Owner of repairs, time
being of the essence. If Tenant shall give any such notice in accordance with
this section, this lease shall terminate on the date such notice is received by
Owner, provided that any rent owing under the terms of this lease shall be paid
up to said date.
<PAGE> 32
6. Tenant shall be entitled to claim, prove and receive in any condemnation
proceeding such awards as may be allowed for the value of its lease hold estate,
moving expenses, fixtures and other property installed by it in the demised
premises if such awards shall be made by the condemnation court or authority in
addition to the award made by it for the land and buildings so taken. In the
event of a temporary taking of the use of the demised premises, Tenant may, if
it elects, remain liable in accordance with the terms of this lease, and in such
case, there shall be no abatement of rent, but Owner shall assign to Tenant any
award made for any temporary taking of the use of the demised premises. Any such
election on the part of Tenant shall be exercised by the service of written
notice on Owner within thirty (30) days after the actual taking of such use for
a temporary period.
7. Owner represents that there is an existing sprinkler system, that will be in
working order on the Commencement Date of this Lease and that it is in
compliance with all rules, regulations and requirements of the N.Y. Board of
Fire Underwriters, the Insurance Service Office or any government entity having
jurisdiction thereof.
8. Landlord agrees that the Rules and Regulations hereinafter set forth and any
additions and modifications thereto will be uniformly enforced as against all
Tenants in the building.
9. Anything herein contained to the contrary notwithstanding, paragraph 3 of
this lease is amendable to provide that upon vacating the premises at the
termination of this lease or any renewals thereof, the Tenant shall leave the
HVAC system but shall remove all of its personal property and trade fixtures and
leave the premises free of trash, garbage and debris in a broom clean condition.
10. Owner hereby represents that Kenneth Fishel is duly authorized to execute
this lease as managing agent. For purposes of this lease the words "Owner" and
"Landlord" shall be used interchangeably.
11. Paragraph 4 of the printed portion of this lease is hereby amended to
provide that Landlord shall have no liability to Tenant by reason of its failure
to make repairs only if said repairs are commenced and diligently proceeded with
within thirty (30) days of written notice from Tenant.
12. Landlord hereby represents that it maintains adequate fire and casualty
insurance on the building in which the demised premises are located.
13. Landlord represents that the use of the demised premises as offices does not
violate Landlord's present insurance nor require an increase in premium.
However, Landlord does not represent that the manner of use of the demised
premises by Tenant or the equipment to be used or installed by tenant will not
cause an increase in said premium.
14. Non-Disturbance. Landlord represents that the demised premises are not
subject to a mortgage, security interest or other encumbrance. In the event the
Landlord sells, assigns, mortgages, encumbers, hypothecates or otherwise
transfers (a "Transfer") the demised premises, Landlord will execute 30 days
prior to such transfer, with 15 days written notice to
2
<PAGE> 33
Tenant prior to execution, a non-disturbance agreement with the holder of such
interest in the following form and substance:
If, at any time, the holder of an interest in the demised
premises ("Lender") or any person or entity or any of their
successors or assigns who shall acquire the interest of the
Landlord under the lease through a foreclosure of a security
instrument, the exercise of power of sale under a security
instrument, a deed-in-lieu of foreclosure, an
assignment-in-lieu of foreclosure or through a Transfer, as
the term is defined above, or otherwise (each a "New Owner")
shall succeed to the interests of Landlord under the Lease, so
long as 1) the Lease is then in full force and effect, 2)
Tenant complies with this Agreement and is not in default
which cannot be cured, and 3) the Lease shall continue in full
force and effect as a direct lease between the new Owner and
Tenant, upon and subject to all of the terms, covenants and
conditions of the lease, for the balance of the term thereof.
Tenant hereby agrees to atorn and accept any such New Owner as
landlord under the Lease and to be bound by and perform all of
the obligations imposed by the Lease, and Lender, or any such
new Owner of the Property, agrees that it will not disturb the
possession of Tenant and will bound by all of the obligations
imposed on the Landlord by the Lease.
Nothing contained herein shall prevent Lender from naming or
joining Tenant in any foreclosure or other action or
proceeding initiated by Lender pursuant to the Security
Instrument to the extent necessary under applicable law in
order for Lender to avail itself of and complete the
foreclosure or other remedy, but such naming or joinder shall
not be in derogation of the rights of Tenant as set forth in
this Agreement.
RENAISSANCE 627 BROADWAY LLC, Landlord,
By: ___________________________________
Kenneth Fishel
JUPITER COMMUNICATIONS, LLC, Tenant,
By: ____________________________________
Kurt Abrahamson
3
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Jupiter Communications, LLC
The audits referred to in our report dated March 18, 1999, included the
related financial statement schedule for each of the years in the three year
period ended December 31, 1998, included in the registration statement. The
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statement schedule
based on 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 reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
KPMG LLP
New York, New York
September 2, 1999
