NETRATINGS INC, 10-K405, 2000-03-30

NETRATINGS INC
10-K405, 2000-03-30
BUSINESS SERVICES, NEC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

(MARK ONE)

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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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COMMISSION FILE NUMBER: 000-27907

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NETRATINGS, INC.
(Exact name of Registrant as specified in its charter)

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DELAWARE 77-0461990
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)

890 HILLVIEW COURT
MILPITAS, CALIFORNIA 95035
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (408) 957-0699

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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None None
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/

The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant, based on the closing price of the Registrant's
Common Stock as quoted on the Nasdaq National Market on February 29, 2000, was
$235,227,244. Shares of Common Stock held by each officer and director and by
each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive determination for other
purposes.

The number of shares of the Registrant's Common Stock outstanding as of
February 29, 2000, was 32,167,686.

DOCUMENTS INCORPORATED BY REFERENCE

Parts of the definitive proxy statement for registrant's 2000 Annual Meeting
of Stockholders to be filed with the Commission pursuant to Regulation 14A not
later than 120 days after the end of the fiscal year covered by this Report are
incorporated by reference into Part III of this Report.

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PART I

ITEM 1. BUSINESS

EXCEPT FOR HISTORICAL INFORMATION, THE FOLLOWING DESCRIPTION OF THE
COMPANY'S BUSINESS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
SET FORTH IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF
FACTORS, INCLUDING THOSE SET FORTH IN THIS ANNUAL REPORT ON FORM 10-K UNDER THE
HEADING, "FACTORS THAT MAY AFFECT OUR PERFORMANCE."

OVERVIEW

We provide Internet audience measurement information and analysis. Our
products and services enable our customers to make informed business-critical
decisions regarding their Internet strategies. We deliver accurate and timely
Internet audience information, collected from a representative sample of
Internet users, and augment this information with detailed, flexible reporting
and in-depth analysis. Our customers include leading e-commerce companies,
advertising agencies, media companies, Internet companies and financial
institutions. We have formed strategic relationships with Nielsen Media
Research, the leading source of television audience measurement and related
services in the United States and Canada, and ACNielsen, a leading provider of
market research information and analysis to the consumer products and services
industries. We believe that these relationships allow us to offer the most
accurate Internet audience information currently available. Our proprietary
activity tracking and data collection technology gathers comprehensive and
detailed information regarding Internet user behavior, including both site and
advertising activity. We began providing Internet audience measurement products
and services under the brand name Nielsen//NetRatings in March 1999. We believe
that our Internet sampling methodologies, our real-time data collection
technology, our powerful, flexible reporting systems, and our strategic
relationships position us for leadership in the market for global Internet
audience measurement and analysis.

INDUSTRY BACKGROUND

GROWTH IN GLOBAL INTERNET USAGE, E-COMMERCE AND ONLINE ADVERTISING

The Internet has emerged as a significant global medium for communications,
information, and commerce. It is growing dramatically, based on key measures,
including total number of users, total number of Web sites, e-commerce
transaction volume and online advertising dollars.

Both content and e-commerce on the Internet are growing dramatically.
According to International Data Corporation, (IDC), the number of individual Web
site addresses, commonly referred to as "URLs," on the Internet has grown from
approximately 18 million at the end of 1995 to approximately 925 million at the
end of 1998, and is expected to grow to approximately 13 billion in 2003. Also,
according to IDC, the number of users buying goods and services on the Internet
has grown from approximately 3 million in 1995 to approximately 31 million in
1998, and is expected to grow to approximately 183 million in 2003. IDC
estimates that the total annual value of goods and services purchased over the
Internet has grown from approximately $296 million in 1995 to approximately
$50 billion in 1998, and is expected to grow to over $1.3 trillion by 2003.

As the Internet attracts larger numbers of users, spending for Internet
advertising is expected to increase. According to Forrester Research, global
annual online advertising expenditures are projected to increase from
approximately $1.5 billion in 1998 to approximately $24 billion in 2003.

In addition to the increasing number of Internet users, there has also been
a significant increase in the number of devices that can access the Internet.
While such devices originally consisted only of

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personal computers, there has been a recent emergence of a number of alternative
devices to access the Internet, including television set-top boxes, handheld
computing devices, Web-enabled phones and Internet gaming devices. According to
IDC, the number of devices worldwide that are capable of accessing the Internet
has grown from approximately 14 million at the end of 1995 to approximately
150 million at the end of 1998 and is expected to grow to approximately
722 million by the end of 2003.

UNIQUE CHARACTERISTICS OF ONLINE COMMERCE AND ADVERTISING

The Internet also presents advertisers and online businesses with a unique
opportunity to target prospective consumers and to measure the return on their
advertising or marketing investment. Using traditional media, such as
television, an advertiser must broadcast its advertisements to an entire
audience for a given program in a given market, even though the advertiser may
have desired to target only a portion of the overall audience. With the
Internet, on the other hand, users visiting the same Web page at the same moment
can be presented with different advertisements based on their Internet usage
behavior. In addition, while an advertiser using traditional media cannot
directly measure how an individual audience member reacts to an advertisement,
the Internet makes it possible for an advertiser or e-commerce company to track
how its audience interacts with an advertisement or an e-commerce site.

THE EXPECTED CONVERGENCE OF TELEVISION AND THE INTERNET

We believe that the convergence of television programming with Internet
content and interactivity represents a significant emerging trend. Today,
considerable advertising is being conducted in traditional media, such as
television, in order to drive traffic and commercial activity to Internet sites.
We believe that this trend toward the convergence of television and the Internet
will continue. For example, we believe that, in the future, television content
and advertising will include Internet links on which viewers can click to make a
direct response, such as making an online purchase. As this convergence takes
place, the ability to track television audiences as they use the Internet will
become an increasingly critical requirement for all major advertisers and their
agencies as they seek to capitalize on these cross-media opportunities.

THE NEED FOR INTERNET AUDIENCE MEASUREMENT AND ANALYSIS

As the Internet continues to evolve and online advertising and electronic
commerce continue their dramatic growth, companies conducting business online
are continually challenged to define and reach their target audiences as well as
develop sophisticated online business strategies. The unique dynamics of the
Internet require that online market participants understand their markets and
quickly recognize and adapt to changing conditions in their particular
industries. In order to remain competitive, these online companies demand
detailed audience measurement information and analysis that will enable them to
make informed business decisions in a timely manner. These companies are seeking
a trusted third party source for information that can provide them with the
following:

- ACCURATE AND TIMELY INFORMATION. To be useful, information derived from
audience samples must accurately reflect the size and behavior of the
overall Internet audience. Accordingly, such information must be gathered
from a large, representative sample using statistical methods that
eliminate as much bias as possible. The information must also be timely;
the faster the information can be analyzed and reported, the more
efficiently an online business can adapt to its target audience's changing
characteristics and preferences.

- DETAILED, FLEXIBLE REPORTING AND ANALYSIS. The usefulness of Internet
audience information can be significantly enhanced by detailed analysis
presented in a flexible format that allows customers to

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manipulate the information to meet their unique requirements. Presenting
information and analysis in this way could enable a customer to:

- track the demographic profiles and behavior of users that visit a
particular site or click on a particular banner advertisement, in order
to target advertising at users matching particular demographic
profiles;

- correlate user behavior on a site with the user's behavior on the
Internet before entering and after leaving the site, tracking other
sites visited and how the user behaved on those sites;

- track users' interactions with Web sites, such as the duration and
frequency of visits to a site and the proportion of visitors to a site
that make purchases during their visits, referred to as the
"look-to-book" ratio;

- track users' interactions with advertisements, such as the proportion
of clicks on a banner advertisement compared to the number of times the
advertisement appears, referred to as the "click-through rate," and the
proportion of users that make a purchase after clicking on a particular
advertisement, referred to as the "click-to-conversion" ratio;

- evaluate banner advertisements to compare the effectiveness of
different advertisements or to track a competitor's advertisement
placements;

- track streaming media usage on Web sites and actual connection speeds
of users; and

- identify significant trends relating to online companies and Internet
usage.

- CROSS-MEDIA AND CROSS-PLATFORM MEASUREMENT CAPABILITIES. To obtain a
comprehensive measurement of Internet audience usage, companies conducting
business online will require an Internet audience measurement solution
that is capable of capturing data from both television and Internet users
and across a wide range of Internet access devices. This requires
specialized technologies and expertise to adapt audience measurement
techniques to disparate emerging platforms. The data collection method
must not only be capable of operating on different types of devices, but
must also be capable of collecting and transmitting comparable streams of
data regardless of the device.

- A UNIFORM STANDARD OF MEASUREMENT. Internet audience measurement
statistics are of limited use, unless Internet site and advertisement
activity can be measured according to a common "yardstick." As has been
the case with Nielsen Media Research in the market for television audience
measurement and with Arbitron in the market for radio audience
measurement, we believe that the company that provides the highest quality
audience measurement information and analysis will eventually emerge as
the industry standard.

We believe that no standard has yet emerged because most companies offering
Internet measurement services have been unable to provide a comprehensive
solution that includes accurate and timely information, as well as detailed and
flexible reporting and analysis. Accordingly, a significant market opportunity
exists for a company that can provide customers with products and services that
meet these needs.

THE NETRATINGS SOLUTION

We deliver meaningful and timely information that enables our customers to
make informed business-critical decisions regarding their Internet strategies.
Our products, services and technology provide accurate Internet audience
information combined with detailed and flexible reporting and in-depth analysis.
We believe that our solution will enable us to become the standard for measuring
the

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size, profile and behavior of Internet audiences. Our solution, marketed under
the Nielsen//NetRatings brand, includes the following key components:

ESTABLISHED SAMPLING METHODOLOGIES. Our solution is designed to provide
reliable, independent information that customers need to make critical business
decisions. We believe that our strategic relationship with Nielsen Media
Research allows us to offer the most accurate Internet audience sampling
methodology currently available. Nielsen Media Research has set the standard for
television audience measurement over the past 50 years, utilizing an established
sampling methodology that is widely used throughout the major segments of the
audience measurement and media research industry. Nielsen Media Research
develops our panel using the same sampling methodology that it uses in
developing television audience panels. In addition, through our joint venture
with ACNielsen, we are providing solutions in international markets utilizing
ACNielsen's established audience sampling methodologies based upon its 76 years
of experience in consumer market research.

PROPRIETARY MEASUREMENT TECHNOLOGY. Our proprietary activity tracking and
data collection technology gathers comprehensive and detailed information
regarding Internet user behavior, including sites and pages visited, time spent
on each site, advertising exposure and effectiveness, e-commerce transactions
executed, bandwidth usage data, and streaming media usage. The software also
collects key information regarding activity on America Online's proprietary
service. Since our inception, all of our data is collected from the entire panel
and transmitted to our central database in real-time. The information is linked
to demographic profiles of Internet users to provide comprehensive products and
services for measuring Internet usage behavior. Once installed, our software
requires virtually no panelist intervention and software updates are automatic.

POWERFUL, FLEXIBLE REPORTING SYSTEMS. Our solution provides customers with
a variety of daily, weekly, and monthly reports that can be modified by our
customers, enabling them to easily manipulate data to meet their specific
information requirements. Our easy-to-use interface provides immediate access to
various levels of detailed information and enables custom queries on selected
information. Our service provides customers with two levels of information
access, which are available in weekly and monthly reports based on data that has
been uploaded to our database from our panel members' computers in real time.
Our Quick Looks feature provides customers with comprehensive pre-defined
Internet user behavior and demographic information. We also provide Select
Views, which are powerful, easy-to-use, menu-driven queries that respond to
specific information requests.

TIMELY, INSIGHTFUL ANALYSIS. Our solution delivers insightful analysis
based upon detailed Internet audience information. We augment our high-quality
audience behavior information with meaningful analysis delivered on a timely
basis, enabling our customers to take decisive action. The analytical services
we provide are structured to deliver information and commentary on a weekly,
monthly and quarterly timeframe. Additionally, we provide timely event-based
reports, such as Internet activity during the Super Bowl and holiday shopping
periods. Customers purchasing our analytical services are entitled to a fixed
number of consulting hours, during which they can have private access to our
analysts for strategic consultation or custom analysis.

COMPATIBLE, PORTABLE ARCHITECTURE. All of our information is collected
using proprietary software that is compatible with devices that operate on a
Java-enabled platform. Therefore, we believe that our architecture will
seamlessly integrate with most new types of Internet access devices, enabling us
to obtain useful data from most Internet users regardless of the access device
they use.

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STRATEGY

Our objective is to become the standard for Internet audience measurement
and the worldwide leader in Internet market research. We intend to establish
this leadership position through the following key strategies:

LEVERAGE OUR STRATEGIC RELATIONSHIPS. We intend to continue to leverage our
key strategic relationships with Nielsen Media Research and ACNielsen by using
their brands and industry relationships to facilitate the rapid deployment of
our service with leading companies. Since March 1999, we have marketed our
services under the Nielsen//NetRatings brand, and, combining our sales and
marketing efforts with those of Nielsen Media Research, we have deployed our
products and services to over 250 customers. We believe that the continued
adoption of our products and services by leading companies will help facilitate
the broad market acceptance of the Nielsen//NetRatings service as the industry
standard for Internet audience measurement. Similarly, we intend to leverage our
strategic relationship with ACNielsen to deploy our products and services into
multiple international markets.

INCREASE THE SIZE, SCOPE AND NUMBER OF OUR AUDIENCE MEASUREMENT PANELS. We
intend to expand the size, scope, and number of our worldwide audience
measurement panels in order to increase the depth of information that we can
provide our customers. We believe that expanding our panels will enable us to
provide more detailed information regarding e-commerce trends, as well as more
accurate information regarding smaller Internet sites and more focused
advertising campaigns. A significant percentage of Internet usage takes place at
the workplace, and our customers are increasingly requiring audience measurement
information from this user segment. Accordingly, we have recruited a high-
quality at-work panel through a number of initiatives including recruiting
companies directly and leveraging our current strategic relationships.

CAPITALIZE ON OUR ACCESS TO INFORMATION TO DEVELOP NEW PRODUCTS AND ENTER
NEW MARKETS. We plan to continually innovate and introduce new products that
will capitalize on our access to the extensive Internet activity data that we
collect for our audience measurement products and services. We believe that our
current technological and analytical capabilities allow us to offer the most
accurate, complete and timely information on Internet usage available. As the
volume and complexity of Internet usage increases, we believe that users will
demand increasingly flexible and robust audience measurement products and
services. We intend to continue to devote significant resources to developing
additional technologies that will allow us to create solutions that meet these
requirements. Additionally, we believe that analysis of data is becoming
increasingly important to customers who use Internet audience information, and
we intend to continue to develop new ways to analyze and present the information
we collect. During the past year, we have created advanced reports and analyses
specifically targeted to the investment community, media segment, and e-commerce
providers, and we intend to introduce similar products for the online
business-to-business customers. We also intend to leverage our analytical
capabilities to expand and enhance our specialized consulting services.

EXPAND INTERNATIONALLY. We intend to capitalize on the global demand for
Internet usage information by establishing panels in major international markets
and expanding our customer base to include international companies. In
June 1999, we formed NetRatings Japan KK, a Japanese joint venture, to allow us
to provide our products and services to the Japanese market. NetRatings Japan KK
began delivering our Nielsen//NetRatings branded Audience Measurement Service in
Japan in February 2000. In September 1999, we entered into a joint venture with
ACNielsen to develop and maintain Internet audience measurement panels and to
market Nielsen//NetRatings products and services in other key international
markets. Through this joint venture, we plan to develop audience measurement
panels in Australia, Singapore, Ireland, New Zealand and the United Kingdom in
the first half of 2000 and in Austria, Brazil, Denmark, Finland, Germany,
Norway, and Sweden by the end of 2000. We believe that our Internet measurement
solution will provide global companies with the highest-quality information on
worldwide Internet usage and flexible tools to use this information to

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make critical business decisions. In January 2000, we established a joint
venture in France, Mediametrie eRatings.com, in which we currently hold a 30%
ownership interest. Mediametrie eRatings.com is responsible for building and
maintaining a French audience measurement panel and introducing our products and
services to the French market.

POSITION OURSELVES TO CAPITALIZE ON THE CONVERGENCE OF TELEVISION AND THE
INTERNET. We intend to position ourselves to become the audience measurement
standard for the converging market for television programming and the Internet.
We believe that the continued convergence of television and the Internet will
require sophisticated products and services that provide meaningful information
about usage behavior. We believe that we will be uniquely positioned for this
convergence through our relationship with Nielsen Media Research, with its
experience and expertise in television audience measurement, combined with our
own Internet measurement technology. We intend to devote substantial resources
and to work with Nielsen Media Research to develop the technologies and research
methodologies that will allow us to be the audience measurement standard for
this convergence.

STRATEGIC RELATIONSHIPS

STRATEGIC RELATIONSHIP WITH NIELSEN MEDIA RESEARCH

For nearly 50 years Nielsen Media Research's core business has been to
provide high-quality, comprehensive audience viewing information on the
television industry. The Nielsen ratings are vital to television program
production, distribution and scheduling decision making, and are the currency
for transactions between buyers and sellers of television advertising time.

In October 1998, we began a strategic relationship with Nielsen Media
Research to develop and market Internet audience measurement products and
services in the United States and Canada using our technology combined with
Nielsen Media Research's proprietary panel methodology. Through this
relationship, we began developing an expanded Internet audience panel based on
the Nielsen Media Research audience sampling methodology and enhanced versions
of our software, to be marketed under the Nielsen//NetRatings brand. Under our
agreement with Nielsen Media Research, we have the right to use the Nielsen name
in connection with audience measurement and e-commerce consulting services
derived from the panels developed and maintained by Nielsen Media Research. In
March 1999, we launched our Nielsen//NetRatings product and service offerings.
In August 1999, Nielsen Media Research made an equity investment in NetRatings.
In December 1999, following our initial public offering, Nielsen Media Research
exercised its right to make an additional equity investment and acquire a
controlling interest in our company, including the right to elect a majority of
our Board of Directors.

Under the operating agreement governing the relationship, which was entered
into in August 1999, Nielsen Media Research is responsible for the development
and maintenance of the at-home panel that generates the data for the
Nielsen//NetRatings audience measurement service. We are responsible for the
management, support and ongoing development of the data collection and reporting
system. Under the operating agreement, we have formed an operating committee
consisting of two representatives of Nielsen Media Research and two
representatives of NetRatings. The operating committee's responsibilities
include:

- review of proposed levels of expenses by us and Nielsen Media Research
related to sales and marketing, research and development and panel
maintenance;

- determination of the pricing of the Internet audience measurement
services;

- oversight of product quality control; and

- approval of panel size and other panel-related changes.

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Under the operating agreement, Nielsen Media Research is responsible for
marketing the service to traditional media customers, such as broadcast
television networks, nationally-circulated magazines, news agencies, advertising
agencies and other customers in the United States and Canada that are agreed to
from time to time by Nielsen Media Research and us. We are responsible for
selling to publishers, Internet-based businesses, Fortune 2000 corporations and
financial institutions. We receive 100% of customer billings derived from sales
of all of our products and services and pay Nielsen Media Research a commission
of 35% of our billings for products and services sold by them. For the year
ended December 31, 1999, we derived 18% of our total revenue from Nielsen Media
Research generated billings. In the future, we expect this percentage to
decrease, as we increase the size of our sales force and further expand into
international markets.

We pay Nielsen Media Research ongoing fees for the costs of maintaining the
at-home panel and the costs associated with any expansion of the panel. These
fees are charged at the same rates that Nielsen Media Research charges its own
internal divisions, which are based on Nielsen Media Research's actual cost plus
an allocated portion of its overhead costs. During the year ended December 31,
1999, these fees totaled approximately $5.2 million, representing approximately
76% of our cost of revenue during that year.

We have agreed not to sell advertising measurement data in the U.S. or
Canada in conjunction with any product or service provided by any third party
other than Nielsen Media Research. This restriction will terminate if Nielsen
Media Research fails to meet certain annual sales goals.

The relationship may be terminated in the event of any of the following:

- mutual agreement of the parties;

- either party committing a material breach of the agreement, which is not
defined in the agreement; or

- Nielsen Media Research's equity ownership of NetRatings falling below 5%
of NetRatings' outstanding Common Stock, assuming full exercise or
conversion of all outstanding options, warrants and convertible
securities.

Upon a termination of our strategic relationship other than by mutual
consent of the parties or as a result of our breach of the agreement, Nielsen
Media Research will be obligated to provide panel maintenance services for up to
one year thereafter. In addition, in such event, we will continue to have access
to Nielsen Media Research's panel methodology for purposes of maintaining our
at-home panel and the right to use Nielsen Media Research's trademarks for
purposes of marketing our Internet audience measurement products and services
for up to one year following the termination.

JOINT VENTURE WITH ACNIELSEN

Since its founding 76 years ago, ACNielsen has become a leading provider of
media research services outside North America. It is also a global leader in
providing business information, analysis and insights to consumer packaged goods
companies, their brokers and retail organizations. ACNielsen offers services to
customers in over 100 countries. Although ACNielsen and Nielsen Media Research
were originally part of the same corporate organization, the two companies are
no longer related.

In September 1999, we entered into a joint venture with ACNielsen to develop
and maintain audience measurement panels and to market Nielsen//NetRatings
products and services in international markets. The joint venture is operated
through a corporation in which we have a 19.9% voting interest and ACNielsen has
an 80.1% voting interest. These percentages were based on arm's-length
negotiations and estimates of the value of the cash and property that each party
has agreed to contribute to the joint venture. Through the joint venture, we
plan to release audience measurement data based in Australia, Ireland, New
Zealand and the United Kingdom in the first half of 2000 and in

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Austria, Brazil, Denmark, Finland, Germany, Norway and Sweden by the end of
2000. ACNielsen has agreed to permit the joint venture to use the Nielsen name
free of charge for so long as the joint venture agreement remains in effect. In
January 2000, we established a joint venture in France, Mediametrie
eRatings.com, in which we currently hold a 30% ownership interest. Mediametrie
eRatings.com is responsible for building and maintaining a French audience
measurement panel and introducing our products and services to the French
market.

The joint venture's products and services will be based on data collected
from Internet measurement panels that are established and maintained using
ACNielsen's proprietary sampling methodology. Panel members will collect and
deliver their Internet usage data using our proprietary collection software. The
joint venture or ACNielsen will be responsible for establishing and maintaining
the joint venture's audience measurement panels, and ACNielsen will pay the
costs associated with the establishment and maintenance of these panels in the
countries initially targeted by the joint venture. The countries to be targeted
by the joint venture will be determined from time to time by an operating
committee consisting of two representatives of NetRatings and two
representatives of the joint venture corporation. We will not be directly
obligated to pay any fees to the joint venture or ACNielsen related to the
establishment or maintenance of panels. However, we will be responsible for our
pro rata portion of the joint venture's capital requirements, based on our
proportionate voting interest, to the extent the joint venture requires capital
other than for the establishment and maintenance of these initial panels.

The joint venture has exclusive rights to market its Internet audience
measurement services in countries outside the United States, Canada and Japan.
We have exclusive rights to market these services in the United States, Canada
and Japan. Under this operating agreement, we have agreed not to offer any
Internet audience measurement service in countries outside the United States,
Canada and Japan. In addition, the joint venture and ACNielsen have agreed not
to offer any competing Internet audience measurement service anywhere in the
world. Notwithstanding the foregoing, the joint venture will have the right to
offer such a service in Japan should it not gain access to the Japanese Internet
usage data to which we have access, on the same terms to which we are subject.

Revenue from the joint venture's Internet audience measurement services will
be allocated between us and the joint venture depending on the location of the
customer and the location of the panel whose data is used in the service:

- The joint venture retains 100% of any revenue from services that the joint
venture sells to customers outside the United States and Canada based on
data from panels outside those countries; provided, however, that during
the five year period commencing October 1, 1999, the joint venture shall
pay to NetRatings a fee of 10% of such revenues, subject to a minimum fee
of $7.5 million and a maximum fee of $15 million for such five year
period.

- We and the joint venture each retain 50% of any revenue from services that
we sell to customers in the United States and Canada based on data from
panels outside those countries or services that the joint venture sells to
customers outside the United States and Canada based on panel data from
those countries.

- The joint venture retains 35% of any revenue from services that the joint
venture sells to customers inside the United States and Canada based on
data from panels inside those countries, and we retain 65% of any revenue
from such services.

- If either we or the joint venture sells services based on data from a
combination of panels located both inside and outside the United States
and Canada, the allocation of revenue is determined by an operating
committee consisting of two representatives of each company, with any
decisions requiring a unanimous vote of those present, which must include
at least one representative of each company.

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The joint venture was initially capitalized through contributions of $1,990
by us for the purchase of common stock and $1,000 by ACNielsen for the purchase
of preferred stock. To complete the initial capitalization of the joint venture,
ACNielsen has agreed to contribute cash to fund the initial roll-out costs,
consisting of the costs incurred to establish Internet audience measurement
panels in each of the countries initially targeted by the joint venture, as such
costs are incurred by the joint venture, and we have granted an exclusive
license with respect to our data collection technology for the covered
territory, subject to specified performance criteria. The schedule for
establishing panels in each country is subject to determination from time to
time by an operating committee consisting of two representatives of NetRatings
and two representatives of the joint venture corporation. ACNielsen has publicly
announced that it expects to spend approximately $50 million by the end of 2001
to fund the initial roll-out costs of the joint venture. The preferred stock
initially purchased by ACNielsen, together with any additional preferred stock
purchased as part of the funding of the initial roll-out costs, will continue to
have an 80.1% voting interest and be convertible into 80.1% of the common stock
of the joint venture. All preferred stock issued by the joint venture will have
a liquidation preference equal to the original purchase price.

We have entered into a stockholders agreement with ACNielsen setting forth
procedures for funding the ongoing operations of the joint venture. Apart from
the initial roll-out costs, the capital requirements of the joint venture will
be the responsibility of both companies in proportion to their relative voting
interests in the joint venture. Prior to September 23, 2001, however, ACNielsen
has agreed to advance these capital requirements by either purchasing additional
stock, making loans to the joint venture bearing interest at the prime rate, or
arranging loans from third parties. At the end of this period, the joint venture
must repay any such loans from ACNielsen, and we must reimburse ACNielsen for
our pro rata portion of any such stock purchases, after which the additional
stock issued to ACNielsen will be retired.

After the funding of the initial roll-out costs, beginning September 23,
2001, the board of directors of the joint venture may make capital calls on the
outstanding shares, acting in its sole discretion. If, after a capital call,
either company defaults on its capital contribution, then the joint venture will
issue to the other company shares of a senior class of preferred stock having a
value equal to that company's capital contribution. Beginning September 23,
2002, NetRatings has the right to require a capital call if it can demonstrate
that such capital is necessary in order for the joint venture to exploit
commercial opportunities that would be in the best interests of the joint
venture partners. Such a capital call is subject to the default provisions
described above, except that if these provisions would result in ACNielsen
having insufficient equity ownership to include the joint venture in its
consolidated tax returns during 2003 or 2004, then ACNielsen can require that
NetRatings receive convertible debt securities in lieu of the senior class of
preferred stock.

Under the stockholders agreement, the joint venture and ACNielsen have a
right of first refusal to purchase any shares of the joint venture that we wish
to sell to a third party. If the joint venture does not effect an initial public
offering within five years, we have the right to require ACNielsen to purchase
our equity interest at its fair market value at that time.

10
<PAGE>
PRODUCTS AND SERVICES

Our products and services provide our customers with the ability to
accurately track and analyze Internet audience behavior, in addition to in-depth
research reports across a variety of Internet-related subjects. Our products and
services, which are marketed under the Nielsen//NetRatings brand, include:

- INFORMATION SERVICES. These services provide information such as
comprehensive traffic measures for Web sites, audience exposure and
response to advertising banners and audience demographics linked directly
to site and advertising data;

- ANALYTICAL SERVICES. These services are comprised of market research
reports and analysis for specific markets such as the e-commerce and
investment communities, and related analyst consultation; and

- CUSTOM RESEARCH. This research is performed on an as-requested basis in
support of customers' special projects.

INFORMATION SERVICES

We provide a range of syndicated weekly and monthly Internet audience
measurement reports that can be accessed online. We currently offer two
categories of reports. Our Quick Looks reports provide customers with
comprehensive, pre-defined Internet user behavior and demographic information.
Our Select Views reports provide customers with specific audience information
generated by a powerful, menu-driven interface.

QUICK LOOKS REPORTS

- - WEB SITE REPORTS. These reports provide key measures of Internet users' site
activity. Each report contains information on the size and demographic
composition of the unique audience, the percent of the total Internet audience
that can be reached at each site, the sites ranked by audience size or other
criteria, total page views, and pages viewed and time spent per person.

<TABLE>
<CAPTION>
REPORT DESCRIPTION
------ -----------
<S> <C>
Top Web Sites by Property............ Reports key information for all Web sites owned by
the same entity. For example, a report for Time
Warner would include all activity information for
all of the Time Warner-owned properties including
Warner Brothers and CNN Web Sites.

Top Web Sites by Domain.............. Reports key information for activity on individual
domains. For example, WWW.YAHOO.COM is considered
one domain, and may consist of numerous individual
Web Sites.

Top Web Sites by Unique Site......... Reports key information by individual site and top
pages within a site. For example,
WWW.QUOTE.YAHOO.COM is a unique site within the
WWW.YAHOO.COM domain.

Top Web Sites by Category............ Categorizes sites and domains by content groupings
such as sports, finance, news and information,
allowing comparison of similar sites.

Custom Property...................... Provides alternative customized site consolidations
based on client requests.
</TABLE>

- - BANNERTRACK REPORTS. These reports provide detailed audience information
about Internet banner advertising for use in competitive research, advertising
and creative analysis, as well as an overall view of current advertisers and
where they are advertising. These reports allow advertising planners

11
<PAGE>
to evaluate the creative content of advertising and how effectively
advertising reaches various audiences. Key measures include the number of
actual advertising images, banner rank, unique audience size and demographic
composition, percent of the Internet audience that can be reached by each
advertisement, and click rate.

<TABLE>
<CAPTION>
REPORT DESCRIPTION
------ -----------
<S> <C>
Top Banner Advertisements by
Impression......................... Ranks the top viewed banner advertisements and
sponsorship buttons.

Advertising by Domain................ Ranks the top advertising sites with information
showing the advertisers and their respective
advertising that appeared on individual sites.

Advertising by Company............... Ranks the top advertisers with detailed information
showing the sites on which they advertised and
identifying their top advertisements.
</TABLE>

- - AUDIENCE SUMMARY REPORTS. These reports provide a comprehensive profile of
the entire Internet audience including size and demographic composition of the
unique audience, total page views, number of usage sessions and time spent per
person.

<TABLE>
<CAPTION>
REPORT DESCRIPTION
------ -----------
<S> <C>
Audience Profile..................... Displays overview information for the total U.S.
Internet population.

Daily/Hourly Traffic................. Details Audience Profile report information by
specific day and hour.

Average Usage........................ Displays summary statistics on overall Internet
usage.

AOL Audience......................... Displays audience size, audience demographic
composition and average time spent within the
America Online proprietary service.
</TABLE>

12
<PAGE>
SELECT VIEWS REPORTS

Our Select Views reports provide customers with the ability to pinpoint
specific audience information via easy-to-use, menu-driven queries into the
Nielsen//NetRatings database.

<TABLE>
<CAPTION>
REPORT DESCRIPTION
------ -----------
<S> <C>
Site Reports

Demographic Targeting.............. Allows customers to identify the best sites to reach
a specific demographic population on the Web.
Information includes the size of the audience and
the percent of the audience at a given site meeting
the demographic targeting criteria.

Audience Profile................... Provides a detailed side-by-side demographic
comparison of audiences at different sites.

Unduplicated Audience.............. Provides an analysis of the audience overlap across
multiple sites. Details the size and demographic
composition of the site's shared and exclusive
audience.

Trend.............................. Allows graphical comparison of audience statistics
for multiple sites across user-selected time
periods.

BannerTrack Advertising Reports

Demographic Targeting.............. Allows customers to identify which advertising has
been the most effective in reaching particular
demographic groups.

Audience Profile................... Allows customers to compare the audience size and
demographic composition for selected advertisements
in the same campaign, or across different
advertisers.
</TABLE>

ANALYTICAL SERVICES

We leverage the information gathered in our core database by offering
analysis that places the data into context, geared toward the specific research
needs of the e-commerce and investment communities. Subscribers to our
analytical services also receive direct access to a NetRatings analyst for a
specific number of hours of private consultation. Our analytical services
include:

E-COMMERCE STRATEGIES SERVICE

This series of reports focuses on strategic opportunities with an emphasis
on success factors in particular segments of the e-commerce market.

INTERNET INVESTMENT STRATEGIES SERVICE

This series of reports provides research information for the investment
community, geared to meet the specific needs of market analysts, institutional
investors, brokers and venture capitalists.

INTERNET MEDIA STRATEGIES SERVICE

This series of reports investigates issues pertinent to media and content
sectors, such as usage of streaming media, impact of bandwidth on Internet usage
and local market usage.

13
<PAGE>
CUSTOM RESEARCH

We make research services available to our customers on an as-requested
basis. Because we utilize real-time data collection, we can provide overnight
analysis on a custom basis. In one custom research project, for example, we
analyzed the usage activities of visitors to a selected group of portal sites in
order to learn the percentage of a particular portal's audience that also
visited the other portals. Another custom project studied differences in online
behavior between a site's registered users and unregistered users.

AUDIENCE MEASUREMENT METHODOLOGY

Our Internet measurement products and services extend to the Internet the
Nielsen Media Research sampling methodology for television audiences by
collecting, aggregating and correlating Internet usage data with demographic
profiles of panel members. The resulting information is organized in a manner
consistent with traditional media research data so that the advertiser or
marketer can integrate Nielsen//NetRatings information into the development of
comprehensive media, marketing and product plans. As of March 15, 2000 our
at-home Internet panel consisted of more than 43,000 persons, and we are in the
process of substantially increasing the size of this panel.

We have also developed a high quality panel of at-work Internet users to
enable us to collect data regarding the significant proportion of Internet usage
that takes place at the workplace. We began developing this panel in
September 1999. In February 2000 we began reporting data from this panel and
expect to recruit more than 10,000 panel members by the middle of 2000.

In addition, we have recruited a high quality panel of international users
as part of our worldwide expansion in conjunction with our joint venture with
ACNielsen. As of March 15, 2000, this joint venture had over 38,000 people under
measurement.

We believe that the quality of information derived from a sample is directly
related to the quality of the sample. To assure quality, our panel sampling
methodology includes the following critical components:

ENUMERATION. Enumeration studies are conducted to determine the total size
and demographic makeup of the Internet user population and are used as the basis
for ensuring that sample behaviors are representative of the total audience
population. In order to more accurately gauge the size and shape of the rapidly
changing Internet user universe, we conduct our independent enumeration studies
on a monthly basis.

SAMPLE DESIGN. For a sample to be representative of the total Internet user
population, the selection process must be random. In addition, the higher the
cooperation rate among selected individuals, the more representative the sample
and the more reliable the sample data. Our at-home panel is constructed using a
process called random digit dialing, which involves recruiting panel members by
calling randomly selected telephone numbers. Telephone numbers are randomly and
systematically selected with equal probability, with adjustments made to account
for households with more than one phone number. To maximize the cooperation
rate, households are called up to 15 times in an attempt to make contact.
Eligible households, namely, those with a PC and Internet access, are recruited
to participate in the panel. Those that agree to participate are mailed a
membership packet that includes tracking software and installation instructions
and are given a small incentive in the form of a savings bond for their
participation. Eligible households that decline to participate in the panel,
households without Internet access, non-residential telephone numbers and
non-working or non-contacted telephone numbers are called again at six-month
intervals.

SAMPLE MANAGEMENT. Given the continuing rapid growth of the Internet, the
online population changes in size and composition faster than audiences of other
major media. Our sample management process strives for ongoing cooperation from
existing panel members. We also recontact previous non-Internet households to
ensure that new telephone numbers are included in the random sampling process.

14
<PAGE>
TECHNOLOGY

Through the use of our proprietary tracking software, we developed the
following audience measurement capabilities:

- daily and weekly activity reports made possible by collection of user
activity data in real time;

- advertising banner tracking and reporting by banner, advertiser and
domain;

- tracking e-commerce purchase activity and related audience behavior; and

- tracking of streaming media usage and user bandwidth consumption.

NetRatings audience tracking software has the following characteristics:

- collects real-time, comprehensive Web activity and AOL proprietary online
service activity;

- collects the same data in the same way, regardless of whether the user is
accessing the Internet via a PC, Macintosh, UNIX or other platform, and
provides portability to non-PC Internet access devices such as television
set-top boxes and Internet gaming devices;

- automatically measures banner advertisement viewing and clicking,
e-commerce activity, cached page views and page loading times;

- requires virtually no panelist intervention once installed and can be
automatically upgraded, allowing functional enhancement without panelist
interaction; and

- automatically encrypts all panelist activity data prior to transmission.

We have also designed the NetRatings reporting system for flexibility of
information delivery and ease of use. We publish weekly as well as monthly data.
Our reporting schedule is 72 hours after the end of the period for weekly data
and 10 days after the end of the period for monthly data. Information is
organized in consistently formatted, easy-to-use tables with extensive
drill-down capabilities and search utilities. Additional "self-service" custom
queries are supported via the menu-driven interface. Online help accompanies all
tables. The Web-based design ensures continual access to information regardless
of the user's location.

CUSTOMERS

More than 250 customers currently use our services for a wide range of
purposes including planning, buying and selling Internet-based advertising;
planning and developing e-commerce strategies; gaining competitive intelligence;
understanding Internet user behavior; and analyzing and tracking Internet
investment opportunities. The following table is a list of our top four
customers based on contract value in each of our principal customer sectors.

<TABLE>
<CAPTION>
CUSTOMER SECTOR REPRESENTATIVE CUSTOMERS
- --------------- ------------------------
<S> <C> <C>
Advertising Agencies...................... Avenue A Grey
True North TBWA/Chiat/Day

E-Commerce Companies...................... Best Buy Gateway
Drugstore.com REI

Media Companies........................... Knight Rider Universal
Time Warner Univision

Internet Companies........................ America Online Microsoft
Lycos Real Networks

Financial Services Companies.............. C.E. Unterberg, Towbin CIBC World Markets
Chase Manhattan American Express
</TABLE>

15
<PAGE>
SALES AND MARKETING

Nielsen//NetRatings products and services are sold by NetRatings and Nielsen
Media Research in their respective markets. Under the operating agreement
governing our strategic relationship with Nielsen Media Research, NetRatings has
responsibility for selling to publishers, Internet-based business, Fortune 2000
corporations and financial institutions. As of December 31, 1999, we had
sales representatives located in Milpitas, California; Chatham, New
Jersey; Boston, Massachusetts; Chicago, Illinois; and Los Angeles, California.
The Nielsen Media Research sales effort is focused on its traditional customers:
advertising agencies, television and cable networks, and local station
affiliates. Nielsen Media Research is also responsible for selling to companies
with whom it has strategic relationships, including such companies as Procter &
Gamble, America Online, Microsoft and Viacom. NetRatings sales representatives
receive a base salary and are eligible for commissions based on revenue and
sales goals. Nielsen Media Research is paid a commission for its sales of the
Nielsen//NetRatings services.

Our primary marketing objective is to leverage and build upon the
brand-awareness of the Nielsen//NetRatings name throughout our target audiences.
We use public relations activities to gain extensive mention of our products and
services as well as use of, and/or reference to, our data by both traditional
and Internet press, and financial and industry analysts. Further company and
product visibility is gained through speaking engagements and participation at
industry events by our executive officers. In addition, we provide daily updates
on unique audience size at top Internet sites to the Bloomberg service that
distributes online financial information to 140,000 terminals worldwide. Each
week, Advertising Age magazine features an entire page of audience and
advertising data from our service. We generate additional brand-awareness by
providing our data for the acknowledgement of ownership through partnerships
with other publishers, media services and Internet companies such as AdAuction,
AdKnowledge and Reuters. In January 2000, we initiated a print media advertising
campaign to market and promote the Nielsen//NetRatings brand and products.

INTERNATIONAL OPERATIONS

In June 1999, we commenced our international expansion by establishing a
joint venture, NetRatings Japan KK, in which we currently hold a minority
interest with several Japanese investors holding the remaining interests.
NetRatings Japan KK is responsible for building and maintaining a Japanese
audience measurement panel and introducing our products and services to the
Japanese market. We have licensed our data collection and reporting technology
to NetRatings Japan KK for use in Japan. NetRatings Japan KK has modified this
technology for use in Japan, has recruited a Japan-market panel of 14,000
members as of March, 2000, and is currently reporting data.

In September 1999, we entered into a joint venture with ACNielsen to develop
and maintain Internet audience measurement panels and to market products and
services under the Nielsen//NetRatings brand in other key international markets.
See "--Strategic Relationships--Joint Venture with ACNielsen."

In January 2000, we established a joint venture in France, Mediametrie
eRatings.com, in which we currently hold a 30% ownership interest. Mediametrie
eRatings.com is responsible for building and maintaining a French audience
measurement panel and introducing the Nielsen//NetRatings branded products and
services to the French Market.

RESEARCH AND DEVELOPMENT

We believe that our future success and our ability to become the standard
for Internet audience measurement information and analysis will depend in large
part on our ability to continually develop new and enhanced products and
services. Accordingly, we are committed to the investment of significant
resources in research and product development activities. Our research and
development

16
<PAGE>
activities are organized into three functional areas: measurement and data
collection technology development, reporting systems development and operations,
and panel operations and support.

During 1997, 1998 and 1999, our research and development expenses were
$994,000, $1.2 million and $3.1 million, respectively. As of December 31, 1999,
we had 36 employees engaged in research and development activities.

INTELLECTUAL PROPERTY

Our success and ability to compete is dependent in part on the protection of
our proprietary technology and information. We rely on a combination of patent,
copyright, trademark and trade secret laws, as well as confidentiality
agreements and licensing arrangements, to establish and protect our proprietary
rights. Although we have filed for a patent on certain aspects of our
technology, we cannot assure you that a patent will issue as a result of this
pending application or that any patent that may be issued will be upheld.
Despite our efforts to protect our proprietary rights, existing patent,
copyright, trademark and trade secret laws afford only limited protection, and
there can be no assurance that our intellectual property rights, if challenged,
will be upheld as valid or will be adequate to protect our proprietary
technology and information. In addition, the laws of some foreign countries may
not protect our proprietary rights to the same extent as do the laws of the
United States. Attempts may be made to copy or reverse engineer aspects of our
technology or to obtain and use information that we regard as proprietary.
Litigation may be necessary in the future to enforce our intellectual property
rights or to determine the validity and scope of the proprietary rights of
others. This litigation could result in substantial costs and diversion of
resources and could significantly harm our business.

To date, we have not been notified that our technology infringes the
proprietary rights of third parties. However, in the future third parties may
assert patent, copyright, trademark and other intellectual property rights to
technologies that are important to our business. Any claims asserting that our
products infringe or may infringe proprietary rights of third parties, if
determined adversely to us, could significantly harm our business. Any claims,
with or without merit, could be time-consuming, result in costly litigation,
divert the efforts of our technical and management personnel or require us to
enter into royalty or licensing agreements, any of which could significantly
harm our business. Royalty or licensing agreements, if required, may not be
available on terms acceptable to us, if at all. In the event a claim against us
was successful and we could not obtain a license to the relevant technology on
acceptable terms or license a substitute technology to avoid infringement, our
business would be significantly harmed.

COMPETITION

The market for Internet audience measurement and analysis is new and rapidly
evolving and becoming increasingly competitive. In the market for Internet
audience measurement services, our principal competitor is Media Metrix.
Competition in Internet audience measurement is also offered by PCData, Inc in
the United States. Internationally, we face competition from NetValue, a French
company which has begun providing audience measurement services in Europe and
has announced that it will soon begin providing such services in the United
States. We are not aware of any other significant competitors in this market,
although we expect competition in this market to intensify in the future. With
respect to provision of analytical services, we compete with companies such as
Forrester Research, Gartner Group and Jupiter Communications that provide
Internet market research and industry analysis based on data derived from
surveys.

17
<PAGE>
Metrix has provided Internet audience measurement services since 1995 and, as
the "first mover" in this market, has a head start in becoming the industry
standard for such services.

We believe that the principal competitive factors in our market are:

- the development of independent, reliable measurement panels worldwide that
are representative of the entire target audience;

- the timeliness of reported results;

- the breadth and depth of measurement services offered and their
flexibility and ease of use;

- the ability to provide quality analytical services derived from Internet
audience measurement information;

- the ability to offer products and services in international markets; and

- pricing.

Most of our competitors have longer operating histories, larger customer
bases, greater brand recognition and significantly greater marketing resources
than we have. In addition, some of our competitors may be able to:

- devote greater resources to marketing and promotional campaigns;

- adopt more aggressive pricing policies; or

- devote more resources to technology and systems development.

In light of these factors, we may be unable to compete successfully in our
market.

EMPLOYEES

As of December 31, 1999, we had 88 full-time employees. Our future success
is substantially dependent on the performance of our senior management and key
technical personnel, and our continuing ability to attract and retain highly
qualified technical and managerial personnel.

Our employees are not covered by a collective bargaining agreement. We have
never experienced an employment-related work stoppage and consider our employee
relations to be good.

ITEM 2. PROPERTIES

Our corporate headquarters are located in Milpitas, California. We lease
approximately 47,500 square feet for our headquarters which includes research
and development, sales and marketing and general and administrative operations,
under leases expiring between April 2000 and February 2005. We currently
sublease approximately 2,500 square feet to our joint venture partner under a
sublease expiring September 2000. We also lease a sales office in Chatham, New
Jersey.

ITEM 3. LEGAL PROCEEDINGS

18
<PAGE>
partial answer and a partial motion to dismiss the complaint. PaineWebber has
filed a motion for Summary Judgment as to liability on all of its claims. We
believe, based on consultation with our counsel, that we have substantial
defenses to PaineWebber's claims, and we intend to defend the lawsuit
vigorously. We expect to incur substantial legal fees and expenses in connection
with the litigation, and it may also result in the diversion of our internal
resources. As a result, our defense of this litigation, regardless of its
eventual outcome, will likely be costly and time consuming. The litigation is in
the preliminary stage, and we are unable to predict its final outcome. However,
an adverse outcome could materially affect our results of operations and
financial position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

In the quarter ended December 31, 1999, the following matters were submitted
to our stockholders:

In December 1999, prior to our initial public offering, we obtained written
consents of our stockholders to approve amendments to our Certificate of
Incorporation, the adoption of our 1999 Employee Stock Purchase Plan, the form
of Indemnification Agreement to be entered into with directors and executive
officers and an amendment to our 1998 Stock Plan to increase the share reserve
by 2,000,000 shares. Written consents of these proposals was provided by the
holders of 9,089,381 shares of Common Stock, representing 86.4% of our
outstanding Common Stock, in each case assuming full conversion of our
then-outstanding Preferred Stock.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Our common stock began trading on the Nasdaq Stock Exchange on December 8,
1999 under the symbol "NTRT". Before that time, there was no market for our
common stock. On December 31, 1999, the 32,082,671 shares of our common stock
outstanding were held by approximately 79 holders of record. This does not
reflect persons or entities who hold their stock in nominee or "street" name
through various brokerage firms.

As of March 28, 2000, the last sales price per share of our common stock, as
reported by the Nasdaq Stock Market, was $31.50.

The following table presents the range of high and low prices for our common
stock for the period indicated:

<TABLE>
<CAPTION>
FISCAL QUARTER ENDED HIGH LOW
- -------------------- -------- --------
<S> <C> <C>
December 31, 1999
(commencing December 8, 1999)............................. $53.75 $24.87
</TABLE>

DIVIDENDS

The Company has never paid cash dividends on its capital stock. It is the
present policy of the Company to retain earnings to finance the growth and
development of its business and, therefore, the Company does not anticipate
paying any cash dividends in the foreseeable future.

19
<PAGE>
USE OF PROCEEDS OF INITIAL PUBLIC OFFERING

The effective date of the our first registration statement, filed on
Form S-1 under the Securities Act of 1933 (No. 333-87717) relating to the our
initial public offering of our common stock, was December 8, 1999. A total of
4,600,000 shares of our common stock were sold at a price of $17.00 per share,
for an aggregate offering price of $78,200,000 to an underwriting syndicate led
by Lehman Brothers, Banc of America Securities, LLC, CIBC World Markets, and
C.E. Unterberg, Towbin. The offering commenced on December 8, 1999. The initial
public offering resulted in net proceeds of $71.1 million after deducting
$5.0 million in underwriting discounts and offering expenses of $1.6 million.
From the time of receipt through December 31, 1999, we did not use any of the
proceeds from such offering and all such proceeds are included with cash, cash
equivalents and short-term investments. None of the proceeds were used to make
payments, either direct or indirect, to directors or officers of NetRatings or
their associates, or, 10% stockholders or affiliates of NetRatings.

RECENT SALES OF UNREGISTERED SECURITIES

(a) During the year ended December 31, 1999, NetRatings issued and sold the
following unregistered securities:

1. NetRatings issued options to purchase an aggregate of 2,423,160 shares
of common stock under its 1998 Stock Plan and issued 608,256 shares of
common stock upon exercise of such options.

2. In July 1999, NetRatings sold 1,477,151 shares of its Series B Preferred
Stock to certain employees, officers, and accredited investors at a
purchase price of $0.63 per share, for an aggregate purchase price of
$935,037, and issued to these investors warrants to purchase an
additional 706,950 shares of Series B Preferred Stock at an exercise
price of $0.63 per share.

3. In August 1999, NetRatings sold an aggregate of 6,413,751 shares of its
Series C Preferred Stock to Nielsen Media Research and Trans Cosmos
U.S.A. Inc. at a purchase price of $3.11 per share, for an aggregate
purchase price of $20,000,000, and issued to Nielsen Media Research a
warrant to purchase 553,054 shares of Common Stock at an exercise price
of $7.20 per share and a warrant to purchase 6,000,000 shares of Common
Stock at an exercise price of $12.00 per share or 60% of the public
offering price in the Company's initial public offering, whichever is
lower.

4. In September 1999, NetRatings sold an aggregate of 4,887,050 shares of
its Series D Preferred Stock to Nielsen Media Research and Trans Cosmos
U.S.A. Inc. at a purchase price of $3.14 per share, for an aggregate
purchase price of $15,342,893.

5. In December 1999, we sold 10,039,740 shares of common stock to Nielsen
Media Research for a purchase price of $17.00 per share pursuant to
rights of Nielsen Media Research to purchase additional shares in
connection with our initial public offering. At that time, we sold an
additional 6,553,054 shares of common stock to Nielsen Media Research
upon exercise of warrants with a weighted average exercise price of $9.95
per share.

There were no underwriters employed in connection with any of the
transactions set forth in items 1--5 above.

The issuances described in Items 2 through 5 above were deemed exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act as transactions by an issuer not involving a public offering. The
recipients of securities in each such transaction represented their intention to
acquire the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed to
the share certificates and other instruments issued in such transactions. All
recipients either received adequate information about

20
<PAGE>
NetRatings or had access, through employment or other relationships, to such
information. The issuances described in Item 1 above were deemed exempt from
registration under the Securities Act in reliance on Rule 701 promulgated
thereunder as transactions pursuant to compensatory benefit plans and contracts
relating to compensation.

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the
financial statements and the notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
PERIOD FROM
YEARS ENDED JULY 2, 1997
DECEMBER 31, (INCEPTION) TO
------------------- DECEMBER 31,
1999 1998 1997
-------- -------- --------------
($ IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenue..................................................... $ 3,040 $ 237 $ --
Gross profit (loss)......................................... (3,883) (824) --
Total operating expenses.................................... 14,908 2,944 1,787
Operating loss.............................................. (18,791) (3,768) (1,787)
Net loss.................................................... (17,866) (3,879) (1,781)
Basic and diluted net loss per common share................. $ (5.01) $ (2.78) $ (2.03)
Weighted average shares outstanding used in computing basic
and diluted net loss per share............................ $ 3,563 $ 1,393 $ 878
Pro forma basic and diluted net loss per share
(unaudited)............................................... $ (3.19) $ (1.67)
Shares used in computing pro forma basic and diluted net
loss per share (unaudited)................................ 5,603 2,319
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $319,325 $ 1,343 $551
Short-term investments...................................... 12,931 -- --
Working capital (deficit)................................... 327,418 (2,791) 78
Total assets................................................ 336,799 1,965 980
Deferred revenue............................................ 3,444 280 --
Long-term debt and capital lease obligation, net of current
portion................................................... 265 130 --
Total stockholders' equity (deficit)........................ $328,261 $(2,448) $472
</TABLE>

ITEM 7. MANAGEMENT'S DICUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER SUBSTANTIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY
FACTORS, INCLUDING THOSE SET FORTH UNDER "FACTORS THAT MAY AFFECT OUR
PERFORMANCE" AND ELSEWHERE IN THIS ANNUAL REPOT ON FORM 10-K. THE FOLLOWING
DISCUSSION SHOULD BE READ TOGETHER WITH OUR FINANCIAL STATEMENTS AND RELATED
NOTES THERETO INCLUDED ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

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OVERVIEW

We were incorporated in July 1997 to provide Internet audience measurement
information and analysis. From our founding through the launch of our initial
NetRatings service offering in March 1998, we were primarily engaged in research
activities, developing our initial products and services, raising capital, and
building our business infrastructure. Our initial service offering utilized a
Web-based panel selection methodology, a relatively small audience panel, and an
early version of our data collection software. In October 1998, we established
our strategic relationship with Nielsen Media Research. Through this
relationship, we began developing an expanded Internet audience panel based on
the Nielsen Media Research audience sampling methodology and enhanced versions
of our software. In March 1999 we launched our Nielsen//NetRatings brand of
product and service offerings in the United States and in January 2000 we
announced plans to develop an Internet audience panel in Canada.

In June 1999, we commenced our international expansion efforts by
establishing a joint venture, NetRatings Japan KK, in which we held a 32%
ownership interest as of December 31, 1999. NetRatings Japan KK is responsible
for building and maintaining a Japanese audience measurement panel and
introducing our products and services to the Japanese market. In
September 1999, we entered into a joint venture with ACNielsen to develop and
maintain Internet audience measurement panels and to market products and
services under the Nielsen//NetRatings brand in other key international markets.
Through the joint venture, in which we currently hold a 19.9% ownership
interest, we have developed Internet audience measurement panels based in
Australia, Ireland, New Zealand, Singapore, and the United Kingdom and currently
plan to establish audience panels in Austria, Brazil, Denmark, Finland, Germany,
Norway, and Sweden by the end of 2000. In January 2000, we established a joint
venture in France, Mediametrie eRatings.com, in which we currently hold a 30%
ownership interest. Mediametrie eRatings.com is responsible for building and
maintaining a French audience measurement panel and introducing our products and
services to the French market. The joint venture plans to introduce
Nielsen//NetRatings branded products and services to the French market in the
second quarter of 2000.

We generate revenue from the sale of our Internet audience measurement
products and services. Through December 31, 1999, our information and analytical
products and services, which include our Audience Measurement Service,
E-Commerce Service, Internet Investment Strategy service, and Internet Media
Strategies service have accounted for substantially all of our revenue. We
primarily sell these products and services pursuant to one-year subscription
agreements and bill our customers in advance, typically on a quarterly or annual
basis. We recognize revenue from the sale of our information and analytical
products and services ratably over the term of the subscription agreement.
Prepaid subscription fees are recorded as deferred revenue until earned. We also
derive a small portion of our revenue from the sale of custom research services.
Revenue from these custom services is recognized in the period in which the
service is provided. We sell our products and services to customers in a wide
range of industries. Our customer base has increased from 53 customers as of
December 31, 1998 to 255 as of December 31, 1999. To date, substantially all of
our sales have been made to customers in North America. In future periods, we
also expect to derive royalties and other revenue from our joint ventures in
international markets.

Cost of revenue consists primarily of expenses related to the recruitment
and maintenance of our audience measurement panels. Accordingly, cost of revenue
is not directly related to revenue or subscriptions generated in a given period
and is higher in periods in which we are involved in significant panel
development activities. We believe that the continued development and
enhancement of audience panels is essential to the long-term expansion of our
business. We are currently working with Nielsen Media Research to expand the
scope and size of our existing panel of at-home Internet users from
approximately 43,000 at March 15, 2000 to approximately 50,000 by December 31,
2000. In addition, we have developed a panel of at-work users which consisted of
approximately 7,500 users at

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March 15, 2000 and is projected to increase to approximately 10,000 members by
December 31, 2000. We expect that costs of revenue will increase in future
periods as we continue to develop and enhance our audience measurement panels.

Research and development expenses consist primarily of compensation and
related costs for personnel associated with our product development activities.
These costs are expensed as incurred. We believe that continued investment in
product development is critical to achieving our strategic objectives. We also
anticipate that additional development resources will be required to support the
planned international activities of our joint ventures. Accordingly, we expect
that research and development expenses will increase in absolute dollars in
future periods.

Sales and marketing expenses consist primarily of salaries, benefits and
commissions to our salespeople, commissions paid to Nielsen Media Research, as
well as costs related to seminars, promotional materials, public relations,
advertising, and other sales and marketing programs. We intend to expand our
sales force in conjunction with our domestic expansion and to support our
international joint ventures. We also intend to increase our marketing
activities to enhance the awareness of the Nielsen//NetRatings brand and our
products and services. We therefore expect that sales and marketing expenses
will increase significantly in future periods.

General and administrative expenses consist primarily of salaries and
related costs for executive, finance, accounting, and other administrative
personnel, in addition to professional fees, provisions for doubtful accounts,
and other general corporate expenses. We expect that general and administrative
expenses will increase in absolute dollars in the future as we add personnel and
information systems to support expanding operations, incur additional costs
related to the growth of our business, complete our facility move in the first
quarter of 2000, and assume the reporting requirements of a public company.

Interest income consists primarily of interest earned from our cash and cash
equivalents and short-term investments balances. Interest expense relates
primarily to the interest charges incurred in connection with our credit
facilities. As a result of our initial public offering and private placement
transactions in 1999, we currently anticipate that interest income will increase
significantly in 2000.

In connection with the grant of certain stock options to employees, we
recorded non-cash stock-based compensation charges of $254,000 as of the year
ended December 31, 1998 and $3.9 million as of the year ended December 31, 1999,
representing the difference between the exercise price of these options and the
fair value of our common stock as of the date of grant. These amounts are being
amortized over the respective vesting periods of the options using a graded
vesting method. Simultaneously with the Series C Preferred Stock financing in
August 1999, we entered into additional agreements with Nielsen Media Research
governing our strategic relationship with it. We also issued two warrants to
Nielsen Media Research, with respect to which we recorded non-cash stock based
compensation charges of $46.7 million for the year ended December 31, 1999
representing the Black-Scholes value of these warrants. These charges are being
amortized over five years. We recognized non-cash amortization of these stock
compensation charges of $25,000 in the year ended December 31, 1998 and
$5.3 million in the year ended December 31, 1999. As of December 31, 1999, the
remaining non-cash stock based compensation was scheduled to be amortized at the
rate of approximately $10.7 million, $9.8 million, $9.4 million, $9.1 million,
and $7.6 million in the years ended December 31, 2000, 2001, 2002, 2003 and
2004, respectively. The actual amount of these charges to be recognized in
future periods could decrease if options for which accrued compensation has been
recorded are terminated before they vest.

We have recorded no provision for federal or state income taxes for any
period since our inception as we have incurred losses in each period. As of
December 31, 1999, we had approximately $16.2 million of net operating loss
carryforwards for federal and state income tax purposes available to reduce
future taxable income, expiring in 2005. Utilization of the net operating loss
and tax credit

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<PAGE>
carryforwards may be subject to a substantial annual limitation due to the
ownership change limitations provided by the Internal Revenue Code of 1986 and
similar state provisions. The annual limitation may result in the expiration of
the net operating loss and tax credit carryforwards before utilization. See
Note 11 of Notes to Financial Statements.

We have a limited operating history upon which investors may evaluate our
business and prospects. We incurred net losses of $1.8 million for the period
from July 2, 1997 (inception) through December 31, 1997, $3.9 million for the
year ended December 31, 1998, and $17.9 million for the year ended December 31,
1999. Our accumulated deficit at December 31, 1999 was $23.5 million. We intend
to invest heavily to expand our audience panels, strengthen our direct sales
force, enhance our product and service offerings, and develop the infrastructure
requirements necessary to grow the Company. As a result, we expect to continue
to incur net losses for the foreseeable future. In view of the rapidly evolving
nature of our business and our limited operating history, we believe that
period-to-period comparisons of our operating results are not necessarily
meaningful and should not be relied upon as an indication of our future
performance. See "Factors That May Affect Our Performance--We have incurred
losses since inception and we may be unable to achieve profitability."

RESULTS OF OPERATIONS

The following table sets forth for the years indicated certain financial
data as a percentage of revenue:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------
1999 1998
---- ----
<S> <C> <C>
Revenue.................................................... 100% 100%
Costs of revenue....................................... 228% 448%
---- ------
Gross profit (loss).................................... (128)% (348)%

Operating expenses:
Research and development......................... 100% 500%
Sales and marketing.............................. 153% 478%
General and administrative....................... 61% 253%
Stock-based compensation......................... 176% 11%
---- ------
Total operating expenses....................... 490% 1,242%
---- ------

Operating loss..................................... (618)% (1,590)%
Interest income (expense),net...................... 30% (47)%
---- ------
Net loss........................................... (588)% (1,637)%
==== ======
</TABLE>

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1999

REVENUE. Revenue increased 1,183% from $237,000 for the year ended
December 31, 1998 to $3.0 million for the year ended December 31, 1999. Sales of
our information and analytical products and services accounted for substantially
all of the revenue for each year. The increase in revenue was primarily due to
the introduction of our Nielsen//NetRatings service in March 1999 and additional
product and service offerings that resulted in a substantial increase in the
number of our customers. For the year ended December 31, 1999, our audience
measurement service comprised 83% of our revenue and our suite of analytical
services accounted for the remaining 17%. During the year ended December 31,
1999, no customer accounted for more than 10% of our revenue.

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COST OF REVENUE. Cost of revenue increased 552% from $1.1 Million, or 448%
of revenue for the year ended December 31, 1998 to $6.9 million, or 228% of
revenue for the year ended December 31, 1999. This increase primarily reflected
costs incurred in 1999 relating to the development of both the
Nielsen//NetRatings home audience measurement panel from 5,800 members at
January 1, 1999 to 39,000 at December 31, 1999 and initial development costs
related to our work panel.

RESEARCH AND DEVELOPMENT. Research and development expenses increased 158%
from $1.2 million, or 500% of revenue for the year ended December 31, 1998 to
$3.1 million, or 100% of revenue for the year ended December 31, 1999. The
increase was primarily due to a three-fold increase in the number of employees
engaged in research and development.

SALES AND MARKETING. Sales and marketing expenses increased 311% from
$1.1 million, or 478% of revenue for the year ended December 31, 1998 to
$4.7 million, or 153% of revenue for the year ended December 31, 1999. This
increase was primarily attributable to sales commissions related to a
significant increase in revenue, a six-fold increase in the number of direct
sales and marketing employees and increased costs related to the promotion of
our products and services.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
209% from $600,000, or 253% of revenues for the year ended December 31, 1998 to
$1.9 million, or 61% of revenues for the year ended December 31, 1999. This
increase was primarily related to an increase in the number of administrative
personnel to support our expanded operations, expansion of our facilities, and
non-recurring legal fees. The decrease in general and administrative costs as a
percentage of revenues was due primarily to revenues increasing at a greater
rate than expenses.

INTEREST INCOME (EXPENSE), NET. Interest income (expense), net, increased
from $111,000 of net interest expense for the year ended December 31, 1998 to
$925,000 of net interest income for the year ended December 31, 1999. Interest
expense increased due to interest paid to Nielsen Media Research and other
investors under short-term promissory notes and increased borrowings under our
credit facilities. Interest expense was more than offset by increases in
interest income related to the addition of $331 million in cash and cash
equivalents and short-term investments resulting from our initial public
offering and private placement transaction with Nielsen Media Research. See
further discussion of these transactions in "Liquidity and Capital Resources."

NET LOSS. Net loss increased 361% from $3.9 million, or 1,637% of revenue
for the year ended December 31, 1998 to $17.9 million, or 588% of revenue for
the year ended December 31, 1999. This increase was primarily due to costs
associated with the development of the Nielsen//NetRatings audience measurement
panels, a four-fold increase in headcount to support our expanded operations,
and an increase in stock based compensation expenses.

PERIOD FROM JULY 2, 1997 (INCEPTION) TO DECEMBER 31, 1997 COMPARED TO YEAR ENDED
DECEMBER 31, 1998

REVENUE. We had no revenue in the period from July 2, 1997 (inception) to
December 31, 1997, or the "inception period." In the year ended December 31,
1998 we had revenue of $237,000 from sales of our initial NetRatings Internet
audience measurement products and services.

COST OF REVENUE. We had no cost of revenue in the inception period. In the
year ended December 31, 1998, our cost of revenue was $1.1 million, representing
panel development expenses related to the introduction of our initial NetRatings
Internet audience measurement products and services and, beginning in
November 1998, initial panel development expenses related to our Nielsen//
NetRatings product and service offerings.

RESEARCH AND DEVELOPMENT. Research and development expenses increased 19%
from $994,000 in the inception period to $1.2 million in the year ended
December 31, 1998. This increase was primarily due to a full year of operations
in 1998.

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SALES AND MARKETING. Sales and marketing expenses increased 151% from
$452,000 in the inception period to $1.1 million in the year ended December 31,
1998. This increase was primarily attributable to increased marketing and
promotion of our initial NetRatings Internet audience measurement service as
well as an increase in the number of direct sales and marketing employees. In
addition, sales and marketing expenses during 1998 reflected a full year of
operations.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
76% from $341,000 in the inception period year to $600,000 in the year ended
December 31, 1998. This increase was due to an increase in the number of
administrative personnel to support our expanded operations. In addition,
general and administrative expenses during 1998 reflected a full year of
operations.

INTEREST INCOME (EXPENSE), NET. Interest income, net, was $6,000 in the
inception period. Interest expense, net, of $111,000 in the year ended
December 31, 1998 was primarily the result of interest paid on promissory notes
issued in 1998, which were converted to preferred stock in July 1999 and
amortization of the fair value of the warrants issued in conjunction with those
promissory notes.

NET LOSS. Net loss increased 118% from $1.8 million in the inception period
to $3.9 million for the year ended December 31, 1998. This increase was
primarily due to costs associated with panel development initiated in 1998 as
well as one full year of operations.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and short-term investments increased from
$1.3 million at December 31, 1998 to $332.3 million at December 31, 1999, an
increase of $331 million. The increase is primarily a result of our initial
public offering in December 1999, which generated net proceeds of $
71.1 million, as well as a private placement in December 1999 with Nielsen Media
Research, which resulted in net cash proceeds of $235.9 million. The private
placement included the exercise of warrants by Nielsen Media Research as well as
the purchase of 10,040,000 shares of our common stock at the initial public
offering price of $17.00 per share.

Investing activities used cash of $13.9 million in 1999 due to capital
expenditures of $893,000 and net purchases of short-term investments of
$13.0 million. Our investing activities used cash of $173,000 in 1998 primarily
for the purchase of capital equipment. Although we had no material capital
expenditure commitments at December 31, 1999 we anticipate that capital
expenditures will increase significantly in 2000 due to the anticipated growth
in operations, infrastructure, and personnel both domestically and
internationally.

Financing activities provided cash of $340.7 million in 1999, arising
primarily from proceeds from the issuance of common stock in conjunction with
our initial public offering and our private placement transaction with Nielsen
Media Research. These activities were partially offset by principal payments on
notes payable and capital lease obligations. Financing activities provided cash
of $3.9 million for 1998 primarily due to the issuance of convertible preferred
stock and promissory notes.

We have a total $1.2 million equipment line of credit with Venture
Lending & Leasing. Funds borrowed under the line of credit are secured by all of
our tangible assets and bear interest at an annual rate of 8%. As of
December 31, 1999 we had utilized approximately $500,000 under the line of
credit. In addition, we have a $1 million commercial line of credit with
Heritage Bank of Commerce. Borrowings under this line are secured by our
business assets other than those securing our equipment loans and bear interest
at the bank's prime interest rate, which was 8.5% as of December 31, 1999. We
also have a $350,000 line of credit with Heritage Bank of Commerce to fund
equipment purchases. Any advances under this equipment line mature 36 months
following funding and bear interest at the bank's prime rate. Our credit
agreement with Heritage Bank contains certain financial covenants, including
minimum liquidity at or above $5 million, tangible net worth of $10 million, and
debt to tangible net worth ratio of 1-to-1. As of December 31, 1999, we were in
compliance with all of these covenants. As

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of December 31, 1999, we had no outstanding balances on the credit facilities
with Heritage Bank of Commerce.

In November 1999, we agreed to lease a 39,000 square foot facility in
Milpitas, California. The related cost of this lease is expected to be
approximately $96,000 per month. The lease has a term of 60 months.

We believe that our existing balances of cash and cash equivalents and our
available credit facilities will be sufficient to meet our cash needs for
working capital and capital expenditures for at least the next 12 months,
although we could elect to seek additional funding prior to that time. We could
require additional capital prior to the end of this period if, for example, we
were to experience greater than expected losses from operations or if we were to
pursue one or more business acquisitions or investments. At present we do not
have any commitments or agreements for business acquisitions or investments. If
we do require additional financing, however, we cannot be certain that it will
be available when required, on favorable terms, or at all. If we are not
successful in raising additional capital as required, our business could be
harmed. If additional funds are raised through the issuance of equity
securities, the percentage ownership of our then-current stockholders would be
reduced.

FACTORS THAT MAY AFFECT OUR PERFORMANCE

WE HAVE INCURRED LOSSES SINCE INCEPTION AND WE MAY BE UNABLE TO ACHIEVE
PROFITABILITY

We have experienced operating losses in each quarter and annual period since
inception. We incurred net losses of $3.9 million for the year ended
December 31, 1998 and $17.9 million for the year ended December 31, 1999, and as
of December 31, 1999, our accumulated deficit was $23.5 million. We intend to
make significant expenditures related to panel development and maintenance,
marketing, hiring of additional personnel, and further development of our
technology and infrastructure. As a result, we will need to generate significant
revenue to achieve and maintain profitability. Although our revenue has grown in
recent periods, we may not be able to achieve significant revenue growth in the
future. Our operating results for future periods are subject to numerous
uncertainties and we may not achieve sufficient revenue to become profitable.

WE HAVE A LIMITED OPERATING HISTORY IN THE EVOLVING MARKET FOR INTERNET AUDIENCE
MEASUREMENT

We were incorporated in July 1997 and did not start generating revenue until
the quarter ended March 31, 1998. We introduced our Nielsen//NetRatings Internet
audience measurement service in the quarter ended March 31, 1999. Accordingly,
we are still in the early stages of development and have only a limited
operating history upon which to evaluate our business. One should evaluate our
likelihood of financial and operational success in light of the risks,
uncertainties, expenses, delays and difficulties associated with an early-stage
business in an evolving market, many of which may be beyond our control,
including:

- the risk that a competing company's Internet audience measurement service
will become the accepted standard for Internet audience measurement;

- our potential inability to successfully manage any significant growth we
achieve in the future;

- our potential inability to develop our brand; and

- the risks associated with our international expansion.

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<PAGE>
FLUCTUATIONS IN OUR QUARTERLY REVENUES AND OPERATING RESULTS MIGHT LEAD TO
REDUCED PRICES FOR OUR STOCK

Due to our limited operating history and the evolving nature of the market
in which we compete, our future revenue is difficult to forecast. Factors that
may cause fluctuations in our revenues or operating results on a quarterly basis
include the following, many of which are beyond our control:

- the amount and timing of operating costs and capital expenditures related
to the expansion of our business;

- the amount and timing of costs related to changes in the size or
composition of our panel, particularly as a result of turnover among panel
members;

- changes in demand for our products and services due to the announcement or
introduction of new products and services by us or our competitors;

- changes in the pricing of our products and services in light of the
services and pricing offered by our competitors;

- the impact of possible acquisitions both on our operations and on our
reported operating results due to associated accounting charges; and

- technical difficulties or service interruptions that significantly harm
our ability to deliver our products and services on schedule.

BECAUSE OUR EXPENSE LEVELS ARE BASED IN LARGE PART ON OUR ESTIMATES OF FUTURE
REVENUES, AN UNEXPECTED SHORTFALL IN REVENUE WOULD SIGNIFICANTLY HARM OUR
OPERATING RESULTS

Our expense levels are based largely on our investment plans and estimates
of future revenue. We may be unable to adjust our spending to compensate for an
unexpected shortfall in revenue. Accordingly, any significant shortfall in
revenue relative to our planned expenditures in a particular quarter would harm
our results of operations and could cause our stock price to fall sharply,
particularly following quarters in which our operating results fail to meet the
expectations of securities analysts or investors.

THE MARKET FOR INTERNET AUDIENCE MEASUREMENT AND ANALYSIS IS HIGHLY COMPETITIVE,
AND IF WE CANNOT COMPETE EFFECTIVELY, OUR REVENUES WILL DECLINE

The market for Internet audience measurement and analysis is new, rapidly
evolving and becoming increasingly competitive. In the market for Internet
audience measurement services, our principal competitor is Media Metrix. We are
not aware of any other significant competitors in this market, although we
expect competition to intensify in the future. With respect to the provision of
analytical services, we compete with companies such as Forrester Research,
Gartner Group and Jupiter Communications that provide Internet market research
and industry analysis based on data derived from surveys.

We believe that the market for Internet audience measurement services will
eventually gravitate toward a uniform standard, based on data collected by a
single service provider, that will allow companies to make meaningful decisions
regarding online advertising. We therefore believe that one leading provider is
likely to emerge in the market for Internet audience measurement services. Media
Metrix has provided Internet audience measurement services since 1995 and, as
the "first mover" in this market, has a head start in becoming the industry
standard for such services.

We believe that the principal competitive factors in our market are:

- the development of independent, reliable measurement panels that are
representative of the entire target audience;

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- the timeliness of reported results;

- the breadth and depth of measurement services offered and their
flexibility and ease of use;

- the ability to provide quality analytical services derived from Internet
audience measurement information;

- the ability to offer products and services in international markets; and

- pricing.

Most of our competitors have longer operating histories, larger customer
bases, greater brand recognition, and significantly greater marketing resources
than we have. In addition, some of our competitors may be able to:

- devote greater resources to marketing and promotional campaigns;

- adopt more aggressive pricing policies; or

- devote more resources to technology and systems development.

In light of these factors, we may be unable to compete successfully in our
market.

WE ARE DEPENDENT ON NIELSEN MEDIA RESEARCH FOR THE DEVELOPMENT AND MAINTENANCE
OF PANELS OF INTERNET USERS IN THE UNITED STATES AND CANADA AND ON ACNIELSEN
FOR THE DEVELOPMENT AND MAINTENANCE OF SUCH PANELS IN INTERNATIONAL MARKETS

Our audience measurement data is collected from randomly-selected groups of
Internet users that are generally referred to as audience measurement panels.
Our at-home Internet audience measurement panel in the United States is, and in
Canada will be, developed and maintained by Nielsen Media Research as part of
our strategic relationship with that company. Similarly, our Internet audience
measurement panels and other sampling methodologies which we intend to employ in
geographic locations outside of the United States, Canada, and Japan will be
developed and maintained by ACNielsen as part of our joint venture with that
company. Any failure on the part of Nielsen Media Research or ACNielsen to
devote adequate resources to the development or maintenance of such panels or
other sampling methodologies, or to maintain the overall quality of these
methodologies, will harm our business. In addition, Nielsen Media Research may
terminate its obligations with respect to Internet audience measurement panels
in the event it no longer holds at least 5% of our outstanding stock on a
fully-diluted basis.

NIELSEN MEDIA RESEARCH CONTROLS A MAJORITY OF OUR OUTSTANDING STOCK AND ITS
REPRESENTATIVES CONSTITUTE A MAJORITY OF OUR BOARD OF DIRECTORS

Nielsen Media Research's majority stock ownership position and its control
of a majority of our board enable it to control the direction and policies of
NetRatings, including the election of our board of directors, amendment of our
certificate of incorporation, and decisions regarding mergers, consolidations,
and the sale of all or substantially all of our assets. This control may have
the effect of discouraging certain types of transactions involving a change of
control, including transactions in which the other holders of our common stock
might otherwise receive a premium for their shares over the then current market
price.

During any time that Nielsen Media Research is a majority stockholder, its
parent company, VNU N.V., will be required to consolidate our operating results
with its own for financial reporting purposes. Our business strategy will
require us to incur significant losses as we attempt to establish our brand by
increasing our marketing efforts and establishing strategic relationships.
Incurring large expenses for these purposes may conflict with the interests of
VNU in maximizing its net earnings, and VNU, acting through Nielsen Media
Research's representatives on our board, may therefore attempt to influence

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our expenditures in order to limit our losses in the short term to the detriment
of our long-term strategies.

In addition, Nielsen Media Research, through its majority positions, can
control or influence the terms of our important commercial transactions,
including our strategic relationship with it. We expect Nielsen Media Research's
representatives on our board to recuse themselves from deliberations in which
they have a clear conflict of interest. These directors may take actions that
favor Nielsen's interests over our own, as a result, for instance, of conflicts
of interest that are not apparent at the time of such actions. It is also
possible that future actions taken by Nielsen Media Research may adversely
affect our other stockholders. For example Nielsen Media Research could take
actions which would increase the number of our customers for whom it is entitled
to receive sales commissions, increase the amount paid to it for maintenance of
audience measurement panels, decrease the sales goals that it must achieve in
order to prevent us from selling advertising expenditure measurement data from
third parties, or take other action detrimental to our other stockholders.

WE CANNOT FORECAST THE RATE AT WHICH SUBSCRIPTIONS FOR OUR SERVICES MAY BE
RENEWED AND WE MAY NOT ACHIEVE SUFFICIENTLY-HIGH RENEWAL RATES TO BECOME
PROFITABLE

We derive substantially all of our revenue from annual subscriptions for our
services. As our business becomes more established, we expect subscription
renewals to account for an increasing proportion of our revenue. Any
unexpectedly-low renewal rates would harm our operating results and could
prevent us from becoming profitable. Because of our limited operating history,
our historical renewal rates are not meaningful, and accordingly, we have no
historical basis for projecting the rate at which our customers will renew their
subscriptions. Additionally, because most Internet-related businesses are still
in the early stages of development, consolidations in our customer base or the
failure of a significant number of our customers could cause a decline in
renewal rates for our products and services.

WE MAY NOT BE SUCCESSFUL IN DEVELOPING OUR BRAND, WHICH COULD PREVENT US FROM
REMAINING COMPETITIVE

We believe that our future success will depend on our ability to maintain
and strengthen the Nielsen//NetRatings brand, which will depend, in turn,
largely on the success of our marketing efforts and our ability to provide our
customers with high-quality products. To promote the Nielsen//NetRatings brand,
we intend to increase our marketing expenses, and we may incur other types of
expenses in order to create and maintain brand loyalty among our clients.
However, we cannot assure you that our efforts will succeed in maintaining and
strengthening our brand. If we fail to successfully promote and maintain our
brand, or incur excessive expenses attempting to promote and maintain our brand,
our business will be harmed.

OUR BRAND IS DEPENDENT ON THE REPUTATIONS OF THIRD PARTIES OVER WHICH WE HAVE NO
CONTROL

The strength of the Nielsen//NetRatings brand is also closely dependent on
the reputations of Nielsen Media Research and ACNielsen and the strength of
their brands. Therefore, any negative publicity generated by Nielsen Media
Research or ACNielsen, whether or not directly related to any
Nielsen//NetRatings branded products or services, as well as any erosion of the
strength of either of their brands, will adversely affect our own brand
identity.

COSTS TO DEVELOP AND MAINTAIN ACCURATE AUDIENCE MEASUREMENT PANELS ARE
SIGNIFICANT AND MAY INCREASE

The expense of recruiting and maintaining our audience measurement panels
comprises substantially all of the cost of revenue reported on our financial
statements and, therefore, any increase in this expense will result in a
corresponding decrease in our gross margin. We believe that the

30
<PAGE>
expansion of the number of our panels as well as the size and scope of our
panels is critical to the success of our business. This expansion is likely to
increase our expenses for recruiting and maintaining our panels. These costs are
dependent on many factors beyond our control, including the cooperation rate of
potential panel members and turnover among existing panel members, and
accordingly we cannot control these costs to match increases or decreases in
revenue. To the extent that such additional expenses are not accompanied by
increased revenue, our results of operations will be harmed. We have limited
experience in developing Internet panels, and we could experience lower
cooperation rates or higher turnover rates in the future.

THE DEVELOPMENT OF HIGH-QUALITY AT-WORK MEASUREMENT PANELS IS PARTICULARLY
DIFFICULT, AND IF WE ARE UNABLE TO DEVELOP SUCH A PANEL, WE MAY BE UNABLE TO
COMPETE WITH OTHER INTERNET AUDIENCE MEASUREMENT SERVICES

A significant percentage of Internet usage takes place at the workplace, and
as such, our customers are increasingly requiring audience measurement
information from this user segment. We may encounter difficulties in the further
development of these panels. Participation in our audience measurement panels
requires that the panel member install our data collection software on the
member's PC. Information technology managers are often reluctant to permit
employees to install software obtained outside the workplace due to concerns
about exposing the employer's network to computer viruses and concerns about
incompatibilities between such software and the existing configuration of
hardware and software on employees' personal computers. Employers may also
object to their employees providing us with data regarding their Internet usage
because such data could compromise the confidentiality of sensitive activities
that involve Internet research.

WE MAY NOT BE ABLE TO RECRUIT OR RETAIN QUALIFIED PERSONNEL

Our future success depends on our ability to attract, retain and motivate
highly skilled employees. Competition for employees in Internet-related
industries, particularly management, technical, sales and marketing personnel,
is intense. Although we provide compensation packages that include stock
options, cash incentives, and other employee benefits, and although we have
experienced no significant turnover to date, we may be unable to retain our key
employees or to attract, assimilate and retain other highly qualified employees
in the future, which would harm our business.

OUR PLANNED INTERNATIONAL EXPANSION COULD FAIL

Our current strategy includes expansion of our services to measure Internet
audiences outside the United States and Canada. Through our joint venture with
ACNielsen, we have developed audience measurement panels in Australia, Ireland,
New Zealand, Singapore, and the United Kingdom and we plan to develop panels in
Austria, Finland, France, Germany, Norway, and Sweden by the end of 2000. Our
expansion into international markets will require management attention and
resources. In addition, there can be no assurance of the continued growth of
Internet usage in international markets. The international markets for audience
measurement services have historically been localized and difficult to
penetrate. The success of our international expansion will depend on our ability
to:

- recruit and maintain at-home and at-work panels that are representative of
a geographic area;

- control costs and effectively manage foreign operations; and

- effectively develop, market, and sell new products and services in new,
unfamiliar markets.

In addition, if we are successful in establishing our international
operations, we will be subject to a number of inherent risks, including:

- changes in regulatory requirements;

31
<PAGE>
- deficiencies in the telecommunications infrastructure in some countries;

- reduced protection for intellectual property rights in some countries;

- more rigorous levels of privacy protection in some countries;

- potentially adverse tax consequences;

- economic and political instability; and

- fluctuations in currency exchange rates.

THE SUCCESS OF OUR INTERNATIONAL EXPANSION WILL BE LARGELY DEPENDENT ON THE
EFFORTS OF ACNIELSEN AND OUR WORKING RELATIONSHIP WITH ACNIELSEN

The challenges we face in expanding internationally require skills and
expertise in foreign countries that we do not currently have. To enable us to
expand globally in a rapid timeframe, we have entered into a joint venture with
ACNielsen, which will control 80.1% of the joint venture. ACNielsen has agreed
to fund all of the venture's panel development costs in the countries initially
targeted by the joint venture, which will be determined by an operating
committee consisting of two representatives of NetRatings and two
representatives of the joint venture corporation. After this initial stage,
however, we may be required to either contribute additional capital to the joint
venture or to allow ACNielsen to make such capital contributions unilaterally
with resulting dilution of our ownership interest in the venture. Moreover,
because all of the initial countries to be targeted by the joint venture have
not yet been determined by the operating committee, we cannot predict what
proportion of overall panel development costs we will be required to contribute.
Accordingly, we could be subject to unanticipated costs or dilution of our
ownership interest as a result of actions by the operating committee to limit
the countries that are part of the initial roll-out of the joint venture's
operations. Furthermore, if we encounter significant problems in our working
relationship with ACNielsen, or if our joint venture is ineffectively managed,
our international expansion is likely to fail.

WE MIGHT NOT BE SUCCESSFUL IN THE DEVELOPMENT OR INTRODUCTION OF NEW PRODUCTS
AND SERVICES TO KEEP UP WITH THE PROLIFERATION OF ALTERNATIVE INTERNET ACCESS
DEVICES AND TECHNOLOGIES RELATED TO THE EXPECTED CONVERGENCE OF THE INTERNET
AND TELEVISION

We believe that an increasing proportion of Internet use will involve
alternative Internet access devices such as Web-enabled phones and that there
will eventually be a convergence of Internet content and television programming.
Accordingly, in order to continue to provide information about audience behavior
throughout all major segments of the Internet, we will be required to develop
new products and services that address these evolving technologies. We may be
unsuccessful in identifying new product and service opportunities or in
developing or marketing new products and services in a timely or cost-effective
manner. In addition, product innovations may not achieve the market penetration
or price stability necessary for profitability. Finally, we may not be
successful in adapting our data collection software to evolving types of
Internet access devices or content. If we are unable to provide audience
measurement information regarding any significant segments of Internet use,
demand for our product and service offerings may suffer.

BECAUSE THE INTERNET AUDIENCE MEASUREMENT INDUSTRY IS IN ITS INFANCY, THE
PRICING AND ACCEPTANCE OF OUR PRODUCTS AND SERVICES IS UNCERTAIN

We may be forced for competitive or technical reasons to reduce prices for
some of our products or services or to offer them free of charge. Such
circumstances would reduce our revenue and could harm our business.
Additionally, our market is still evolving, and we have little basis to assess
demand for different types of products or services or to evaluate whether our
products and services will be

32
<PAGE>
accepted by the market. If our products and services do not gain broad market
acceptance, our business may fail.

THE ACCEPTANCE AND EFFECTIVENESS OF INTERNET ADVERTISING IS UNCERTAIN, AND IF
THE MARKET FOR INTERNET ADVERTISING FAILS TO DEVELOP OR DEVELOPS MORE SLOWLY
THAN WE EXPECT, OUR BUSINESS WILL SUFFER

Our future success will depend in part on an increase in the use of the
Internet as an advertising medium. The Internet advertising market is new and
rapidly evolving, and the effectiveness of Internet advertising is uncertain. As
a result, there is also uncertainty about the demand and market acceptance for
Internet advertising. Many of our current or potential customers have little or
no experience using the Internet for advertising purposes. The adoption of
Internet advertising, particularly by entities that have historically relied on
traditional media for advertising, requires the acceptance of a new way of
conducting business. These companies may find Internet advertising to be less
effective than traditional advertising for promoting their products and
services. In addition, most current and potential publishers of content on the
Internet have little or no experience in generating revenue from the sale of
advertising space on their Internet sites. Because of the foregoing factors,
among others, the market for Internet advertising may not continue to emerge or
become sustainable. If the market for Internet advertising fails to develop or
develops more slowly than we expect, our business will suffer.

A SALE BY NIELSEN MEDIA RESEARCH OF ITS STAKE IN NETRATINGS COULD ADVERSELY
AFFECT OUR STOCK PRICE AS A RESULT OF A CHANGE IN CONTROL OF NETRATINGS

Other than a 180-day lock-up agreement entered into at the time of our
initial public offering, there are no contractual restrictions on the ability of
Nielsen Media Research to sell shares of our common stock, although sales in the
public market will be subject to the volume limitations of SEC Rule 144.
Pursuant to these volume limitations, a controlling stockholder may sell shares
under Rule 144 only if the shares to be sold, together with the shares sold
during the past three months, do not exceed the greater of 1% of the issuer's
outstanding shares or the average weekly trading volume of the issuer's shares
during the preceding four calendar weeks. Nielsen Media Research and several of
our other stockholders have the right, under certain circumstances, to require
us to register their stock for sale on the public market. Should Nielsen Media
Research decide to sell its stake in NetRatings, it could adversely affect our
stock price. Additionally, as a majority stockholder, Nielsen Media Research
will have the ability to transfer control of NetRatings, possibly at a premium
over the then-current market price. Because Nielsen Media Research will have the
ability to effect such a transfer of control unilaterally, other stockholders
could be denied an opportunity to participate in the transaction and receive a
premium for their shares.

NIELSEN MEDIA RESEARCH'S AUDIENCE MEASUREMENT SERVICES MAY EVENTUALLY HAVE
FEATURES THAT OVERLAP WITH FEATURES OF OUR INTERNET AUDIENCE MEASUREMENT
SERVICES AS A RESULT OF CONVERGENCE OF TELEVISION AND THE INTERNET

Nielsen Media Research's principal business consists of providing television
audience measurement services based on audience panels that it develops
independent of its strategic relationship with us. If television and the
Internet converge in the future as expected, any Internet audience information
that is reported by Nielsen Media Research's television audience measurement
services may overlap with the audience information that is reported by the
Nielsen//NetRatings Internet audience measurement services. In the event of such
overlap, Nielsen Media Research's services could begin competing with our
services for the same research budgets among customers in the marketplace, and
its offering of such services could conflict with its obligation to develop and
maintain our Internet audience panels.

33
<PAGE>
OUR BUSINESS MAY BE HARMED IF WE SUPPLY INACCURATE INFORMATION TO OUR CUSTOMERS

If we furnish inaccurate information to our customers, our brand may be
harmed. The information in our databases, like that in any database, may contain
inaccuracies that our customers may not accept. Any dissatisfaction by our
customers with our measurement methodologies or databases could have an adverse
effect on our ability to attract new customers and retain existing customers and
could ultimately harm our brand. Our customer contracts generally provide that
each customer must indemnify us for any damages arising from the use of data,
reports or analyses by the customer or the performance of any consulting,
analytic or other services by us. However, we cannot be certain that our
contract provisions provide sufficient protection. Any liability that we incur
or any harm to our brand that we suffer because of irregularities or
inaccuracies in the data we supply to our customers could harm our business. To
date, we have not been notified of any liability claims or customer
dissatisfaction relating to such problems with our data.

OUR BUSINESS COULD SUFFER IF WE LOSE THE SERVICES OF ANY OF OUR EXECUTIVE
OFFICERS

Our future success depends to a significant extent on the continued service
of our executive officers, who currently consist of David J. Toth, Charles L.
("Tim") Meadows, Simon Chen, Jack R. Lazar and Frank Sammann. The loss of the
services of any of our executive officers could harm our business. We have no
employment agreements with any of our key personnel, and should we enter into
such agreements in the future, they may be ineffective in preventing a key
employee from leaving our company.

SYSTEM FAILURES OR DELAYS MAY HARM OUR BUSINESS, AND OUR FACILITIES AND INTERNAL
COMPUTER OPERATIONS ARE VULNERABLE TO NATURAL DISASTERS AND OTHER UNEXPECTED
LOSSES

Our success depends on the efficient and uninterrupted operation of our
computer and communications systems. A failure of our network could impede the
processing of data, customer orders and day-to-day management of our business
and could result in the corruption or loss of data. To date, we have not
experienced any significant system failures.

Our internal computer operations are located in leased facilities in San
Jose, California, in an area that is susceptible to earthquakes. We do not have
a backup facility to provide redundant network capacity in the event of a system
failure. Accordingly, if this location experienced a system failure, our online
services would become unavailable to our customers until we were able to bring
an alternative facility online, a process which could take several weeks. These
systems are also vulnerable to damage from fire, floods, power loss,
telecommunications failures, break-ins and similar events. If we seek to
replicate our systems at other locations, we will face a number of technical
challenges, particularly with respect to database replications, which we may not
be able to address successfully. Although we carry property and business
interruption insurance, our coverage may not be adequate to compensate us for
all losses that may occur. Our servers may also be vulnerable to computer
viruses, physical or electronic break-ins and similar disruptions.

A DELAY OR DISCONTINUATION OF OUR SERVER HOSTING SERVICE COULD HARM OUR BUSINESS

The servers on which we collect panel members' data are maintained by
AboveNet at its facilities located in San Jose, California. AboveNet continually
monitors our current utilization rate and the extent of our system capacity
needs. We believe we are currently operating at utilization levels that do not
require additional capacity. Accordingly, our ability to collect Internet
audience data in real time is dependent upon the efficient and uninterrupted
operation of AboveNet's computer and communications hardware and software
systems. Despite any precautions we may take, the occurrence of a natural
disaster or other unanticipated problems at AboveNet's facility could result in
interruptions in the flow of data to our servers. In addition, any failure by
AboveNet to provide our required data

34
<PAGE>
communications capacity could result in interruptions in our service. In the
past, we have experienced occasional minor interruptions in service from
AboveNet, although we have never experienced a significant interruption in
service. In the event of a delay in the delivery of data from AboveNet, or if
AboveNet should discontinue its services to us, we would be required to transfer
our data collection operations to an alternative provider of server hosting
services. Such a transfer could result in significant delays in our ability to
deliver our products and services to our customers, which could damage our
reputation and harm our business.

WE ARE SUBJECT TO A PENDING LEGAL PROCEEDING

On November 4, 1999, PaineWebber Incorporated filed a lawsuit against us in
the Supreme Court of the State of New York for the County of New York. The suit
involves an agreement entered into in May 1999 in which we engaged PaineWebber
to act as our financial advisor with respect to a potential strategic
transaction. The specific transaction for which PaineWebber was engaged was not
consummated. However, the lawsuit alleges that we have breached our obligations
under the agreement by failing to pay PaineWebber a fee based upon our
subsequent sale of equity securities to Nielsen Media Research and by failing to
retain PaineWebber as a managing underwriter for our initial public offering.
The complaint seeks damages in the aggregate amount of not less than
$1.9 million and reimbursement for PaineWebber's attorneys' fees relating to the
dispute. At this stage of the litigation, we have filed a partial answer and a
partial motion to dismiss the complaint. PaineWebber has filed a motion for
summary judgment as to liability on all of its claims. We intend to defend the
lawsuit vigorously. We expect to incur substantial legal fees and expenses in
connection with the litigation, and it may also result in the diversion of our
internal resources. As a result, our defense of this litigation, regardless of
its eventual outcome, will likely be costly and time consuming. The litigation
is in the preliminary stage, and we are unable to predict its final outcome.
However, an adverse outcome could materially affect our results of operations
and financial position.

WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS

We regard our intellectual property as critical to our success. We rely on
patent, trademark, copyright and trade secret laws to protect our proprietary
rights. Notwithstanding these laws, we may be unsuccessful in protecting our
intellectual property rights or in obtaining patents or registered trademarks
for which we apply. We have applied for U.S. patents with respect to our
BannerTrack advertising tracking technology. We have applied to register the
NetRatings, NetRatings Insight, NetRatings Online Observer, BannerTrack and
CommerceTrack trademarks in the United States. We have not undertaken any
actions to protect our trademarks, servicemarks or tradenames outside of the
United States, nor have we registered our copyrights. Our patent applications or
trademark registrations may not be approved or, even if approved, could be
challenged by others or invalidated through administrative process or
litigation. If our patent applications or trademark registrations are not
approved because third parties own rights to the technology we are trying to
patent or the trademarks we are trying to register, our use of such technology
or trademark would be restricted unless we enter into arrangements with the
third-party owners, which might not be possible on commercially reasonable terms
or at all.

WE MIGHT FACE INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT MIGHT BE COSTLY TO
RESOLVE

We may from time to time be subject to claims of infringement of other
parties' proprietary rights or claims that our own trademarks, patents or other
intellectual property rights are invalid. To date, we have not been subject to
any such claims. However, any claims of this type, with or without merit, could
be time-consuming to defend, result in costly litigation, divert management
attention and resources or require us to enter into royalty or license
agreements. License agreements may not be

35
<PAGE>
available on reasonable terms, if at all, and the assertion or prosecution of
any infringement claims could significantly harm our business.

ANY MISAPPROPRIATION OF PERSONAL INFORMATION ABOUT OUR PANELISTS THAT IS STORED
ON OUR COMPUTERS COULD HARM OUR REPUTATION OR EXPOSE US TO CLAIMS ARISING FROM
DAMAGES SUFFERED BY THOSE PANELISTS

Personal information regarding our panelists is included in the data that
our software captures from a panelist's Internet use. Our panel data are
released only in an aggregated format or in a form that is not identifiable on
an individual basis. However, if a person were to penetrate our network security
or otherwise misappropriate sensitive data about our panel members, our
reputation could be harmed or we could be subject to claims or litigation
arising from damages suffered by panel members as a result of such
misappropriation.

ANY ACQUISITIONS THAT WE UNDERTAKE COULD BE DIFFICULT TO INTEGRATE, DISRUPT OUR
BUSINESS, DILUTE STOCKHOLDER VALUE OR HARM OUR OPERATING RESULTS

We may acquire or make investments in complementary businesses,
technologies, services or products if appropriate opportunities arise. The
process of integrating any acquired business, technology, service or product
into our business and operations may result in unforeseen operating difficulties
and expenditures. Integration of an acquired company also may consume much of
our management's time and attention that would otherwise be available for
ongoing development of our business. Moreover, the anticipated benefits of any
acquisition may not be realized. We currently do not have any commitments or
agreements with respect to any acquisition. We may be unable to identify,
negotiate or finance future acquisitions successfully, or to integrate
successfully any acquisitions with our current business. Future acquisitions
could result in potentially dilutive issuances of equity securities or the
incurrence of debt, contingent liabilities or amortization expenses related to
goodwill and other intangible assets, any of which could harm our business.

DEMAND FOR OUR PRODUCTS AND SERVICES MIGHT DECREASE IF GROWTH IN THE USE OF THE
INTERNET OR E-COMMERCE DECLINES

Our future success depends in part upon the continued growth in the use of
the Internet and e-commerce. Rapid growth in the use of the Internet and
e-commerce is a recent phenomenon and may not continue, or the Internet may not
be adopted as a medium of commerce by a broad base of consumers. If the Internet
does not continue to grow, or if e-commerce is not adopted as a medium of
commerce by a broad base of consumers, our business may not grow or may grow at
a slower rate.

GOVERNMENTAL REGULATION OF THE INTERNET MIGHT HARM OUR BUSINESS

The applicability to the Internet of existing laws governing issues such as
property ownership, libel and personal privacy is uncertain. In addition,
governmental authorities in various countries may seek to further regulate the
Internet with respect to issues such as user privacy, pornography, acceptable
content, e-commerce, taxation, and the pricing, characteristics and quality of
products and services. Finally, the global nature of the Internet could subject
us to the laws of a foreign jurisdiction in an unpredictable manner. Any new
legislation regulating the Internet could inhibit the growth of the Internet and
decrease the acceptance of the Internet as a communications and commercial
medium, which might harm our business.

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<PAGE>
DELAWARE LAW AND OUR CHARTER DOCUMENTS CONTAIN PROVISIONS THAT COULD DISCOURAGE
OR PREVENT A POTENTIAL TAKEOVER OF OUR COMPANY THAT MIGHT OTHERWISE RESULT IN
OUR STOCKHOLDERS RECEIVING A PREMIUM OVER THE MARKET PRICE OF THEIR SHARES

Provisions of Delaware law and our certificate of incorporation and bylaws
could make more difficult the acquisition of us by means of a tender offer, a
proxy contest, or otherwise, and the removal of incumbent officers and
directors. These provisions include:

- Section 203 of the Delaware General Corporation Law, which prohibits a
merger with a 15%-or-greater stockholder, such as a party that has
completed a successful tender offer, until three years after that party
became a 15%-or-greater stockholder;

- the authorization in the certificate of incorporation of undesignated
preferred stock, which could be issued without stockholder approval in a
manner designed to prevent or discourage a takeover; and

- provisions in our bylaws eliminating stockholders' rights to call a
special meeting of stockholders and requiring advance notice of any
stockholder nominations of director candidates or any stockholder proposal
to be presented at an annual meeting, which could make it more difficult
for stockholders to wage a proxy contest for control of our board or to
vote to repeal any of the antitakeover provisions contained in our
certificate of incorporation and bylaws.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of December 31, 1999, we had cash and cash equivalents and short-term
investments of $332.3 million consisting of cash and highly liquid, short-term
investments. Our short-term investments will decline by an immaterial amount if
market interest rates increase, and therefore, our exposure to interest rate
changes has been immaterial. Declines of interest rates over time will, however,
reduce our interest income from our cash and cash equivalents and short-term
investments. Our outstanding notes payable and capital lease obligations are all
at fixed interest rates and therefore have minimal exposure to interest rate
fluctuations.

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<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

NETRATINGS, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... 39

Balance Sheets.............................................. 40

Statements of Operations.................................... 41

Statements of Stockholders' Equity (Deficit)................ 42

Statements of Cash Flows.................................... 43

Notes to Financial Statements............................... 44
</TABLE>

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<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders,
NetRatings, Inc.:

We have audited the accompanying balance sheets of NetRatings, Inc. as of
December 31, 1998 and 1999, and the related statements of operations,
stockholders' equity (deficit), and cash flows for the period from July 2, 1997
(inception) to December 31, 1997, and for the years ended December 31, 1998 and
1999. These financial statements are the responsibility of NetRatings, Inc.'s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of NetRatings, Inc. at
December 31, 1998 and 1999, and the results of its operations and its cash flows
for the period from July 2, 1997 (inception) to December 31, 1997, and for the
years ended December 31, 1998 and 1999, in conformity with accounting principles
generally accepted in the United States.

/s/ ERNST & YOUNG LLP

January 21, 1999
Palo Alto, California

39
<PAGE>
NETRATINGS, INC.

BALANCE SHEETS

($ IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $319,325 $ 1,343
Short-term investments.................................... 12,931 --
Accounts receivable, net.................................. 2,550 133
Prepaid expenses and other current assets................. 885 16
-------- -------
Total current assets.................................... 335,691 1,492
Property and equipment, net................................. 916 394
Other assets................................................ 192 79
-------- -------
$336,799 $ 1,965
======== =======

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable.......................................... $ 1,646 $ 353
Accrued liabilities....................................... 1,393 210
Deferred revenue.......................................... 3,444 280
Capital lease obligations, current portion................ 165 77
Notes payable............................................. 88 --
Amounts due to Nielsen Media Research..................... 1,537 2,539
Convertible notes payable................................. -- 824
-------- -------
Total current liabilities............................... 8,273 4,283
Capital lease obligations, long-term portion................ 171 130
Notes payable, long-term portion............................ $ 94 $ --
Commitments and contingencies............................... -- --

STOCKHOLDERS' EQUITY (DEFICIT):
Convertible preferred stock, $0.001 par value, Series A:
Authorized shares: 1,900,000
Issued and outstanding shares: 1,900,000 at December
31, 1998 and none at December 31, 1999.............. $ -- $ 2
Common stock, par value $0.001:
Authorized shares: 86,851,000
Issued and outstanding shares: 3,112,000 at December
31, 1998 and 32,118,000 at December 31, 1999........ 32 3
Additional paid-in capital................................ 398,457 3,436
Deferred compensation and other costs..................... (46,574) (229)
Notes receivable from stockholder......................... (128) --
Accumulated deficit....................................... (23,526) (5,660)
-------- -------
Total stockholders' equity (deficit).................... 328,261 (2,448)
-------- -------
$336,799 $ 1,965
======== =======
</TABLE>

See accompanying notes to financial statements.

40
<PAGE>
NETRATINGS, INC.

STATEMENTS OF OPERATIONS

($ IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PERIOD FROM
JULY 2, 1997
YEAR ENDED YEAR ENDED (INCEPTION) TO
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenue...................................... $ 3,040 $ 237 $ --
Cost of revenue.............................. 6,923 1,061 --
-------- ------- -------
Gross profit (loss).......................... (3,883) (824) --
Operating expenses:
Research and development................... 3,052 1,185 994
Sales and marketing........................ 4,660 1,134 452
General and administrative................. 1,852 600 341
Stock-based compensation................... 5,344 25 --
-------- ------- -------
Total operating expenses................. 14,908 2,944 1,787
-------- ------- -------
Loss from operations......................... (18,791) (3,768) (1,787)
Interest income (expense), net............... 925 (111) 6
-------- ------- -------
Net loss..................................... $(17,866) $(3,879) $(1,781)
======== ======= =======
Basic and diluted net loss per common
share...................................... $ (5.01) $ (2.78) $ (2.03)
======== ======= =======
Shares used to compute basic and diluted net
loss per common share...................... 3,563 1,393 878
======== ======= =======
Pro forma basic and diluted net loss per
common share (unaudited)................... $ (3.19) $ (1.67)
======== =======
Shares used to compute pro forma basic and
diluted net loss per common share
(unaudited)................................ 5,603 2,319
======== =======
</TABLE>

See accompanying notes to the financial statements.

41
<PAGE>
NETRATINGS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CONVERTIBLE NOTE DEFERRED
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE COMPENSATION
------------------- ------------------- PAID-IN FROM AND OTHER
SHARES AMOUNT SHARES AMOUNT CAPTIAL STOCKHOLDER COSTS
-------- -------- -------- -------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock to
founders at $0.002 per share in
July 1997 for Cash............... -- $-- 3,200 $ 3 $ 3 $ -- $ --
Issuance of common stock at $0.002
per share to employees and
consultants for cash in 1997..... -- -- 675 1 1 -- --
Contribution to capital............ -- -- -- -- 2,245 -- --
Net loss, and comprehensive loss,
from July 2, 1997 (inception).... -- -- -- -- -- -- --
------ --- ------ ---- -------- ----- --------
Balances at December 31, 1997...... -- -- 3,875 4 2,249 -- --

Repurchase of common stock from
founders and employees at $0.002
per share........................ -- -- (763) (1) (1) -- --
Issuance of Series A convertible
preferred stock at $0.18 per
share in January 1998 for cash,
net of issuance
costs of $21..................... 1,900 2 -- -- 327 -- --
Issuance of warrant in conjunction
with issuance of convertible
notes payable.................... -- -- -- -- 106 -- --
Contribution to capital............ -- -- -- -- 501 -- --
Deferred compensation related to
grant of stock options........... -- -- -- -- 254 -- (254)
Amortization of deferred
compensation..................... -- -- -- -- -- -- 25
Net loss, and comprehensive loss... -- -- -- -- -- -- --
------ --- ------ ---- -------- ----- --------
Balances at December 31, 1998...... 1,900 2 3,112 3 3,436 -- (229)

Exercise of common stock options,
warrants, and other.............. -- -- 833 1 146 (128) --
Compensation related to stock
options granted to consultants... -- -- -- -- 1,019 -- --
Issuance of warrant in conjunction
with financing agreement......... -- -- -- -- 177 -- --
Issuance of warrant in connection
with Series C redeemable
convertible preferred stock...... -- -- -- -- 184 -- --
Deferred compensation and other
costs............................ -- -- -- -- 50,670 -- (50,670)
Amortization of deferred
compensation and other costs..... -- -- -- -- -- -- 4,325
Reclassification of Series A
convertible preferred stock to
redeemable convertible preferred
stock due to addition of
mandatory redemption features
(Note 4)......................... (1,900) (2) -- -- (327) -- --
Conversion of Series A,B,C and D
Redeemable Convertible Preferred
Stock into common stock.......... 6,980 7 36,192
Initial Public Offering of common
stock, net of offering costs of
$1,582........................... -- -- 4,600 5 71,140 -- --
Exercise of common stock warrant by
Nielsen Media Research........... -- -- 6,553 6 65,154 -- --
Purchase of common stock by Nielsen
Media Research................... -- -- 10,040 10 170,666 -- --
Net loss and comprehensive loss.... -- -- -- -- -- --
------ --- ------ ---- -------- ----- --------
Balances at December 31, 1999...... -- $-- 32,118 $ 32 398,457 (128) $(46,574)
====== === ====== ==== ======== ===== ========

<CAPTION>
TOTAL
STOCKHOLDERS'
ACCUMULATED EQUITY
DEFICIT (DEFICIT)
------------ -------------
<S> <C> <C>
Issuance of common stock to
founders at $0.002 per share in
July 1997 for Cash............... $ -- $ 6
Issuance of common stock at $0.002
per share to employees and
consultants for cash in 1997..... -- 2
Contribution to capital............ -- 2,245
Net loss, and comprehensive loss,
from July 2, 1997 (inception).... (1,781) (1,781)
-------- --------
Balances at December 31, 1997...... (1,781) 472
Repurchase of common stock from
founders and employees at $0.002
per share........................ -- (2)
Issuance of Series A convertible
preferred stock at $0.18 per
share in January 1998 for cash,
net of issuance
costs of $21..................... -- 329
Issuance of warrant in conjunction
with issuance of convertible
notes payable.................... -- 106
Contribution to capital............ -- 501
Deferred compensation related to
grant of stock options........... -- --
Amortization of deferred
compensation..................... -- 25
Net loss, and comprehensive loss... (3,879) (3,879)
-------- --------
Balances at December 31, 1998...... (5,660) (2,448)
Exercise of common stock options,
warrants, and other.............. -- 19
Compensation related to stock
options granted to consultants... -- 1,019
Issuance of warrant in conjunction
with financing agreement......... -- 177
Issuance of warrant in connection
with Series C redeemable
convertible preferred stock...... -- 184
Deferred compensation and other
costs............................ -- --
Amortization of deferred
compensation and other costs..... -- 4,325
Reclassification of Series A
convertible preferred stock to
redeemable convertible preferred
stock due to addition of
mandatory redemption features
(Note 4)......................... -- (329)
Conversion of Series A,B,C and D
Redeemable Convertible Preferred
Stock into common stock.......... 36,199
Initial Public Offering of common
stock, net of offering costs of
$1,582........................... -- 71,145
Exercise of common stock warrant by
Nielsen Media Research........... -- 65,160
Purchase of common stock by Nielsen
Media Research................... -- 170,676
Net loss and comprehensive loss.... (17,866) (17,866)
-------- --------
Balances at December 31, 1999...... $(23,526) $328,261
======== ========
</TABLE>

See accompanying notes to the financial statements.

42
<PAGE>
NETRATINGS, INC.

STATEMENTS OF CASH FLOWS
($ IN THOUSANDS)

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, JULY 2, 1997
------------------------- (INCEPTION) TO
1999 1999 DECEMBER 31, 1997
----------- ----------- ------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss............................................. $(17,866) $(3,879) $(1,781)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization...................... 469 235 24
Provision for doubtful accounts.................... 372 25 --
Stock-based compensation........................... 5,344 25 --
Changes in operating assets and liabilities:
Accounts receivable.............................. (2,789) (158) --
Other current assets............................. (869) 19 (35)
Other assets..................................... (146) (85) (27)
Accounts payable................................. 1,293 260 93
Accrued liabilities.............................. 1,183 (205) 415
Amounts due Nielsen Media Research............... 998 539 --
Deferred revenue................................. 3,164 280 --
-------- ------- -------
Net cash used in operating activities................ (8,847) (2,944) (1,311)
-------- ------- -------
INVESTING ACTIVITIES
Acquisition of property and equipment.............. (893) (173) (391)
Short term investments............................. (12,959) -- --
-------- ------- -------
Net cash used by investing activities................ (13,852) (173) (391)
-------- ------- -------
FINANCING ACTIVITIES
Proceeds from initial public offering of common
stock............................................ 71,145 -- --
Proceeds from issuance of (repurchase of)
common stock..................................... 47 (2) 8
Proceeds from issuance of convertible notes
payable.......................................... -- 895 --
Proceeds from issuance of convertible notes payable
to Nielsen Media Research........................ 1,000 2,000 --
Proceeds from equipment financing and notes
payable.......................................... 485 221 --
Principal payments on notes payable and capital
lease obligations................................ (129) (35) --
Proceeds from issuance of common stock to Nielsen
Media Research................................... 235,836 -- --
Proceeds from issuance of preferred stock.......... 32,297 329 --
Contribution to capital............................ -- 501 2,245
-------- ------- -------
Net cash provided by financing activities............ 340,681 3,909 2,253
-------- ------- -------
Net increase in cash and cash equivalents.......... 317,982 792 551
Cash and cash equivalents at beginning of period..... 1,343 551 --
-------- ------- -------
Cash and cash equivalents at end of period........... $319,325 $ 1,343 $ 551
======== ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest............................. $ 191 $ 85 $ --
======== ======= =======
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Property and equipment acquired under capital lease
obligations...................................... $ 123 $ 21 $ --
======== ======= =======
Conversion of notes payable into common stock...... $ 3,895 $ -- $ --
======== ======= =======
Issuance of common stock for note receivable....... $ 128 $ -- $ --
======== ======= =======
</TABLE>

See accompanying notes to the financial statements.

43
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NETRATINGS

NetRatings, Inc. ("NetRatings") was incorporated in Delaware on July 2, 1997
and is engaged in the development and sale of Internet audience measurement
information and analysis services. Proprietary technology and data gathering
techniques enable NetRatings to offer its customers comprehensive, timely, and
reliable information through an easy-to-use software interface. NetRatings
markets and sells its products and services under the Nielsen//NetRatings brand.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents represent all highly liquid investments including
money market accounts, commercial paper, U.S. government and agency securities,
and corporate notes with insignificant interest-rate risk and original
maturities of three months or less at date of purchase. Cash and cash
equivalents are stated at fair market value. Interest income was $6,000, $18,000
and $1,106,000 for the period July 2, 1997 (inception) to December 31, 1997, the
years ended December 31, 1998, and 1999.

SHORT-TERM INVESTMENTS

Short-term investments consist principally of corporate notes and
U.S. Government and agency securities, all of which are available-for-sale and
carried at fair market value, which approximate cost. All short-term investments
have a contractual maturity of one year or less.

The following is a summary of estimated fair value of short-term investments
at December 31, 1999:

<TABLE>
<CAPTION>
ESTIMATED
FAIR VALUE
-----------
<S> <C>
Corporate Notes............................................. $ 7,941,000
U.S. government and agency securities....................... 4,990,000
-----------
$12,931,000
===========
</TABLE>

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, net of accumulated depreciation
and amortization. Property and equipment are depreciated on a straight-line
basis over the estimated useful lives of the assets, generally three to five
years.

PURCHASED TECHNOLOGY

Purchased technology consists of the costs of purchased product technology
which are amortized using the straight-line method over periods not exceeding
three years. Purchased technology is included in other assets in the
accompanying balance sheets. Management evaluates the future realization of
purchased technology quarterly and writes down any amounts that management deems
unlikely to be recovered through future product sales. No write downs have been
recorded through December 31, 1999.

44
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK-BASED COMPENSATION

NetRatings accounts for stock-based awards to employees under the intrinsic
value method in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and has adopted the
disclosure-only alternative of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("FAS 123").

REVENUE RECOGNITION

Revenue for recurring services are recognized ratably over the term of the
related contract as services are provided. Revenue for nonrecurring services is
recognized in the period in which the product is delivered. Billings rendered in
advance of services being performed are recorded as deferred revenue in the
accompanying balance sheet.

Barter transactions are recorded at the lower of estimated fair value of
services provided or the estimated fair value of goods and services received.
Revenue from barter transactions is recognized ratably over the period for which
services are performed. Barter expenses are expensed as incurred. Barter
revenues were $0, $38,000 and $55,000 and barter expenses were $0, $55,000 and
$90,000 for the period from July 2, 1997 (inception) to December 31, 1997 and
for the years ended December 31, 1998 and 1999, respectively.

PANEL COSTS

Costs of establishing and maintaining a panel (a statistically selected
group of Internet users) are expensed as incurred and are included in cost of
revenue.

ADVERTISING EXPENSE

All advertising costs are expensed as incurred. Advertising costs, which are
included in sales and marketing expense, were $0 for the period from July 2,
1997 (inception) to December 31, 1997 and $36,000 and $743,000 for the years
ended December 31, 1998 and 1999, respectively.

INCOME TAXES

NetRatings accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("FAS 109"), which requires the use of the liability method in accounting for
income taxes. Under FAS 109, deferred tax assets and liabilities are measured
based on differences between the financial reporting and tax bases of assets and
liabilities using enacted tax rates and laws that will be in effect when the
differences are expected to reverse.

IMPAIRMENT OF LONG-LIVED ASSETS

NetRatings evaluates its long-lived assets 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 recognized is measured by the amount by which the carrying
amount of the assets

45
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.

FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

The fair value of NetRatings cash and cash equivalents and short-term
investments is based on quoted market prices, and approximates their historical
cost due to their short- term nature. NetRatings uses the specific
identification method to compute realized gains and losses on its short-term
investments. The fair value of NetRatings' notes payable approximates their
carrying value as interest rates on these notes approximate market rates.

Financial instruments that potentially subject NetRatings to concentrations
of credit risk include cash and cash equivalents, short-term investments and
trade accounts receivable. NetRatings places certain of its cash in banks that
are federally insured in limited amounts and in investment-grade debt
instruments, many of which are backed by the U.S. Government or other government
agencies. NetRatings conducts business with companies in various industries
throughout the United States. NetRatings manages the accounts receivable by
performing ongoing credit evaluations of its customers, reviewing its accounts
and contracts, and by providing appropriate allowances for uncollectible
amounts. At December 31, 1998 and 1999, the allowance for doubtful accounts
totaled $25,000 and $397,000, respectively.

COMPREHENSIVE INCOME

Effective January 1, 1998, NetRatings adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS 130").
FAS 130 establishes new rules for the reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.

COMPUTATION OF NET LOSS PER COMMON SHARE

NetRatings computes net loss per share based on Financial Accounting
Standards Board Statement No. 128, "Earnings Per Share" ("FAS 128"). In
accordance with FAS 128, basic net loss per share is calculated as net loss
divided by the weighted-average number of common shares outstanding less shares
subject to repurchase. Diluted net loss per share is computed by dividing net
loss by the weighted-average number of common shares outstanding and dilutive
common stock equivalents outstanding during the period. Common equivalent shares
from stock options and warrants (using the treasury stock method) and
convertible preferred stock and notes payable have been excluded from the
calculation of net loss per share as their effect is antidilutive.

Pro forma net loss per share has been computed as described above and also
gives effect, under Securities and Exchange Commssion guidance, to the
conversion of preferred shares not included above that automatically converted
to common shares upon completion of NetRatings' initial public offering, using
the if-converted method.

46
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. Actual
results could differ from these estimates.

RECENT PRONOUNCEMENTS

As of January 1998, the Company adopted FASB Statement No. 131, Disclosures
about Segments of an Enterprise and Related Information ("FAS 131"). FAS 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. FAS 131 also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
The adoption of FAS 131 did not affect results of operations, financial
position, or disclosure of segment information. NetRatings conducts business in
one operating segment. NetRatings is engaged in the development and sale of
Internet audience measurement information and analytical services. NetRatings'
management has determined the operating segment based upon how the business is
managed and operated.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("FAS 133"). FAS 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designed as part of a
hedge transaction, and, if so, the type of hedge transaction. In June 1999, the
FASB issued FAS 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133"
("FAS 137"), which amends FAS 133 to be effective for all fiscal quarters for
all fiscal years beginning after June 15, 2000 or January 1, 2001 for
NetRatings. Management does not currently expect that adoption of FAS 137 will
have a material impact on NetRatings' financial position or results of
operations.

NOTE 2: BALANCE SHEET DETAILS

Details of balance sheet items are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Computer equipment and software..................... $1,380,000 $547,000
Office equipment, furniture, and fixtures........... 59,000 19,000
Leasehold improvements.............................. 39,000 19,000
---------- --------
1,478,000 585,000
Less accumulated depreciation and amortization...... (562,000) (191,000)
---------- --------
Property and equipment, net......................... $ 916,000 $394,000
========== ========
</TABLE>

47
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 2: BALANCE SHEET DETAILS (CONTINUED)

As of December 31, 1998 and December 31, 1999, property and equipment
includes amounts held under capital leases of $242,000 and $356,000
respectively, and related accumulated amortization of $74,000 and $205,000,
respectively.

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Accrued compensation................................ $ 216,000 $ 88,000
Accrued panel costs................................. 495,000 --
Other accrued liabilities........................... 682,000 122,000
---------- --------
Accrued liabilities............................. $1,393,000 $210,000
========== ========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Accrued amounts payable to Nielsen Media Research... $1,537,000 $ 539,000
Convertible notes payable to Nielsen Media
Research.......................................... -- 2,000,000
---------- ----------
Amounts due to Nielsen Media Research............... $1,537,000 $2,539,000
========== ==========
</TABLE>

NOTE 3: NOTES PAYABLE

In January 1998, NetRatings entered into a $500,000 equipment loan under a
master equipment financing agreement of which $242,000 and $500,000 had been
utilized as of December 31, 1998 and 1999, respectively. The equipment financing
bears interest at an annual rate of 8% and is secured by the assets purchased
with the borrowings. Borrowings and interest are due in installments over
42 months. The drawdowns under this equipment financing agreement have been
classified as capital leases.

In connection with the equipment financing, NetRatings issued warrants to
purchase 48,000 shares of common stock at an exercise price of $0.42 per share.
The warrant has a contractual term of nine years. The value of these warrants at
the date of issuance was not material and no value was attributed to them in the
accompanying financial statements. None of these warrants had been exercised as
of December 31, 1999.

In March 1999, NetRatings borrowed an additional $258,000 to fully utilize
the above facility. As of December 31, 1999, there was $336,000 due under the
agreement. In conjunction with these additional borrowings, NetRatings issued
warrants to purchase 9,000 shares of common stock at an exercise price of $2.12
per share. The warrants have a contractual term of seven years. At the date of
grant, the fair value ascribed to the warrants of approximately $45,000, based
on a Black-Scholes valuation model, was recorded as a discount to the capital
leases and is being amortized as additional interest expense over the term of
capital leases.

NOTE 4: REDEEMABLE CONVERTIBLE PREFERRED STOCK

SERIES A

In January 1998, NetRatings issued 1,900,000 shares of Series A redeemable
convertible preferred stock ("Series A") at a price of $0.18 per share for cash
proceeds of $350,000. Series A shares were

48
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4: REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)
originally not redeemable and were convertible into shares of common stock using
a conversion ratio of one share of common stock for two shares of Series A
preferred stock, subject to certain adjustments for dilution, if any, resulting
from future stock issuance. Upon issuance of Series C redeemable convertible
preferred stock shares the Series A conversion ratio was changed to one share of
common stock for eight shares of Series A preferred stock and in addition
holders of Series A were granted the redemption features described below. The
Series A was converted to common stock upon NetRatings' initial public offering.

SERIES B

In July 1999, the holders of $895,000 in convertible notes payable converted
their promissory notes and $40,000 in accrued but unpaid interest to 1,477,000
shares of Series B redeemable convertible preferred stock ("Series B") at
approximately $0.63 per share. The Series B was converted to common stock upon
NetRatings' initial public offering.

SERIES C

In August 1999, NetRatings issued 6,414,000 shares of Series C redeemable
convertible preferred stock ("Series C") at a price of $3.11 per share for a
total purchase price of $20,000,000. Nielsen Media Research converted
$3.0 million in notes payable into Series C shares and NetRatings received cash
proceeds from the sale of Series C shares of $17 million. Issuance costs related
to Series C are $620,000 including the value of warrants granted to a financial
advisor to purchase 43,000 shares at $6.24 per share. The value of the fully
vested warrants issued to the financial advisor using the Black-Scholes
valuation model is $184,000. These warrants are fully vested and expire in 2005.
The Series C was converted to common stock upon NetRatings' initial public
offering.

In August 1999, simultaneously with the Series C offering, the Company
entered into additional agreements with Nielsen Media Research superceding the
term sheet that had previously governed the Company's strategic relationship
with Nielsen Media Research. In connection with this transaction, NetRatings
also issued two warrants to Nielsen Media Research. The first warrant entitled
Nielsen Media Research to purchase 553,000 shares of common stock at the per
share exercise price of $7.20. The second warrant entitled Nielsen Media
Research to purchase 6,000,000 shares of common stock at the exercise price of
60% of NetRatings' per share price at its initial public offering ($10.20 per
share). Nielsen Media Research exercised both warrants on December 21, 1999.
NetRatings recorded a deferred charge totaling $46,721,000 representing the
value of these warrants based on a Black-Scholes valuation model. The deferred
charge is being amortized to operating expense, through December 31, 2004, the
final expiration date of the second warrant. Amortization expense is $2,712,000
for the year ended December 31, 1999 and is included in stock-based compensation
in the accompanying statement of operations. As of December 31, 1999, the
remaining deferred charge was scheduled to be amortized at the rate of
approximately $9.1 million per year in the years ended December 31, 2000-2003,
and $7.6 million in the year ended December 31, 2004.

In connection with the Series C financing transaction, NetRatings also
granted Nielsen Media Research the right to purchase additional shares of
NetRatings' common stock in connection with NetRatings' initial public offering,
at the initial public offering price. Nielsen had the right to purchase a
sufficient number of shares of NetRatings common stock to enable Nielsen to own
54% of NetRatings' outstanding fully diluted (as defined) shares immediately
following NetRatings initial public

49
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4: REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)
offering. On December 21, 1999, Nielsen Media Research exercised its right to
purchase these additional shares. Nielsen purchased 10,040,000 shares from
NetRatings for cash payments of $170,676,000.

NetRatings also entered into a stockholders agreement with Nielsen Media
Research that grants Nielsen Media Research the right to nominate six of eleven
directors.

SERIES D

In September 1999, NetRatings issued 4,887,000 shares of Series D redeemable
convertible preferred stock ("Series D") to ACNielsen and Series C stockholders
at a price of $3.14 per share for cash proceeds of $15,238,000 (net of issuance
costs of $105,000). The Series D was converted to common stock upon NetRatings
initial public offering.

NOTE 5: STOCKHOLDERS' EQUITY (DEFICIT)

CONVERTIBLE NOTES PAYABLE

In May and November 1998, NetRatings issued convertible notes payable for
total cash proceeds of $895,000. The notes were convertible in shares of
Series B stock at approximately $0.63 per share. The notes had an original
maturity date of May 2000 and bore interest at 9% per annum. The notes and a
portion of accrued but unpaid interest were converted into shares of Series B
redeemable convertible preferred stock in July 1999. In conjunction with this
debt issuance, NetRatings issued to the holders of the notes, warrants to
purchase 707,000 shares of NetRatings' Series B convertible preferred stock at
an exercise price of $0.63 per share. The warrants have a contractual term of
five years. At the date of grant, the value ascribed to the warrants was
approximately $106,000, based on a Black-Scholes valuation model. This amount
was recorded as a discount to convertible notes payable and up until the time of
conversion was being amortized as additional interest expense over the term of
the convertible notes payable. Accordingly, NetRatings recorded additional
interest expense of $35,000 in the year ended December 31, 1998 and $71,000 in
the year ended December 31, 1999. The effective interest rate on the convertible
notes, as adjusted for the ascribed value of the convertible note warrants, was
approximately 14.9% per annum. All of the warrants were exercised as of
December 31, 1999.

NetRatings entered into a strategic alliance with Nielsen Media Research in
October 1998 to develop and market Internet audience measurement products and
services in the United States and Canada using NetRatings technology and Nielsen
Media Research's proprietary panel selection methodology. Also, in
October 1998, NetRatings issued a convertible note payable to Nielsen Media
Research for cash proceeds of $2,000,000. The note had an original maturity date
of December 31, 1999 and bears interest at 6%, to be paid semiannually in
arrears.

In April 1999, NetRatings issued another convertible note payable to Nielsen
Media Research for cash proceeds of $1,000,000. This note was interest free and
was also payable on December 31, 1999. Both the notes were convertible into
shares of NetRatings' next issuance of preferred stock at the per share price of
that financing. Nielsen Media Research converted both the notes into shares of
Series C convertible redeemable preferred stock at a price of $3.11 per share.

50
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
COMMON STOCK WARRANTS

In connection with the sale of Series A preferred stock, NetRatings issued
warrants for the purchase of 225,000 shares of common stock at an exercise price
of $0.02 per share. The warrants became exercisable upon the issuance of the
Series B preferred stock in July 1999. The value of these warrants at the date
of issuance was not material and no value was attributed to them in the
accompanying financial statements. These warrants were exercised in
September 1999.

COMMON STOCK

In September 1997, under a stock purchase agreement, NetRatings issued
3,200,000 shares of common stock to founders at a price of $0.002 per share. In
May 1998, the terms of this agreement were amended and NetRatings repurchased
590,000 common shares at cost. Following the amendment, all of the remaining
outstanding shares are subject to repurchase rights which expire ratably over
the 48 months following September 1, 1996. At December 31, 1999, 489,000 shares
were subject to repurchase.

NetRatings has issued 675,000 shares of common stock to employees and
consultants under stock purchase agreements. These shares are subject to
repurchase rights which expire ratably over 48 months. Upon termination of
service, any unvested shares may be repurchased by NetRatings at the issuance
price. Shares subject to repurchase totaled 269,000 at December 31, 1998 and
208,000 at December 31, 1999. In July 1998, NetRatings repurchased at cost
173,000 shares of common stock from employees upon their termination.

NOTE RECEIVABLE FROM STOCKHOLDER

In August, 1999, NetRatings issued $125,000 in promissory notes to a member
of the Board of Directors of NetRatings in connection with the exercise of stock
options. The notes bear interest at 5% per annum, are due in three years and
NetRatings has full recourse against the holder.

CONTRIBUTION TO CAPITAL

Contributions to capital represent funds received in connection with the
formation and development of NetRatings. These funds were utilized to perform
market research, write the business plan, and commence product development.

PUBLIC OFFERING OF COMMON STOCK

On September 21, 1999, the Board of Directors authorized NetRatings to
proceed with an initial public offering of its common stock. On December 8,
1999, the company completed the initial public offering of 4,600,000 shares of
its common stock. Net proceeds from the offering totaled $71,145,000. As
described in Note 4, subsequent to the initial public offering, Nielsen Media
Research exercised its warrants and its right to acquire sufficient shares of
NetRatings common stock to establish a 54% ownership interest. In connection
with these transactions, Nielsen Media Research purchased 16,593,000 shares of
common stock for $235,836,000.

51
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
STOCK SPLIT

On September 21, 1999, the Board of Directors approved a one-for-two reverse
stock split of issued and outstanding common stock which was effective prior to
the completion of the initial public offering of its common stock. The
accompanying financial statements have been retroactively restated to give
effect to the reverse stock split.

1998 STOCK PLAN

In April 1998, NetRatings adopted the 1998 Stock Plan (the "Plan"). Under
the Plan, up to 1,215,000 shares of NetRatings' common stock has been reserved
for issuance under the terms of the Plan. Through December 31, 1999, an
additional 2,750,000 shares were reserved for issuance under the Plan. Options
may be granted at exercise prices of no less than 85% of the fair value of the
related common stock on the date of the grant (110% of fair value in certain
instances), as determined by the board of directors. Options generally vest over
a four-year period and have a maximum term of ten years.

Information with respect to stock option activity is summarized as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
OPTIONS ------------------------ WEIGHTED-
AVAILABLE FOR NUMBER OF PRICE PER AVERAGE
GRANT SHARES SHARE EXERCISE PRICE
------------- --------- ------------ --------------
<S> <C> <C> <C> <C>
Authorized................................... 1,215,000 -- -- --
Granted...................................... (868,000) 868,000 $ 0.10 $0.10
---------- --------- ------------ -----
Balance at December 31, 1998............... 347,000 868,000 $ 0.10 $0.10
Authorized................................... 2,750,000 -- -- --
Granted...................................... (2,423,000) 2,423,000 $0.10-$11.90 $5.42
Exercised.................................... -- (608,000) $ 0.10-$0.50 $0.28
Canceled..................................... 51,000 (51,000) $ 0.10-$8.40 $0.74
---------- --------- ------------ -----
Balance at December 31, 1999............... 725,000 2,632,000 $0.10-$11.90 $4.95
========== ========= ============ =====
</TABLE>

The weighted-average remaining contractual life of all outstanding options
is 9.42 years. The weighted-average fair value of options granted was $0.02 and
$5.42 during the years ended December 31, 1998 and 1999, respectively.

52
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
The following table summarizes information concerning options outstanding
and exercisable at December 31, 1999.

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------------- -----------------------------------
NUMBER OF WEIGHTED-AVERAGE WEIGHTED-AVERAGE NUMBER OF SHARES WEIGHTED-AVERAGE
EXERCISE PRICE SHARES EXERCISE PRICE REMAINING CONTRACTUAL SHARES EXERCISE PRICE
- -------------- --------- ---------------- --------------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.10 560,000 $ 0.10 8.50 293,000 $0.10
$ 0.50 596,000 $ 0.50 9.38 74,000 $0.50
$ 5.30 271,000 $ 5.30 9.63 36,000 $5.30
$ 6.22 33,000 $ 6.22 9.63 -- --
$ 6.28 36,000 $ 6.28 9.72 -- --
$ 7.20 156,000 $ 7.20 9.74 6,000 $7.20
$ 8.40 230,000 $ 8.40 9.81 -- --
$10.20 699,000 $10.20 9.87 -- --
$11.90 51,000 $11.90 9.93 -- --
--------- -------
2,632,000 409,000
========= =======
</TABLE>

SHARES RESERVED FOR FUTURE ISSUANCE

NetRatings has reserved shares of common stock for future issuance as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
Redeemable convertible preferred stock, including
effect of preferred stock warrants................ -- 1,303,000
Stock options outstanding........................... 2,632,000 868,000
Stock options, available for grant.................. 725,000 347,000
Warrants to purchase common stock................... -- 273,000
Employee stock purchase plan........................ 250,000 --
</TABLE>

1999 EMPLOYEE STOCK PURCHASE PLAN

On October 26, 1999, NetRatings' Board of Directors adopted the 1999
Employee Stock Purchase Plan effective upon the completion of NetRatings'
initial public offering of its common stock. NetRatings has reserved a total of
250,000 shares of common stock for issuance under the plan. Eligible employees
may purchase common stock at 85% of the lesser of the fair market value of the
Company's common stock on the first day of the applicable offering period or the
date of purchase.

DEFERRED COMPENSATION

NetRatings has recorded deferred stock compensation charges of $254,000, and
$3,949,000, for the years ended December 31, 1998 and 1999, respectively,
representing the difference between the exercise price of stock options and the
fair value of common stock as of the date of grant. These amounts are being
amortized to operations, using the graded method, over the vesting periods of
the individual stock options, which are four years.

53
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)

Amortization expense is $25,000 and $1,608,000 for the years ended
December 31, 1998 and 1999 and is included in stock-based compensation in the
accompanying statements of operations. As of December 31, 1999, the remaining
stock based compensation was scheduled to be amortized at the rate of
approximately $1.6 million, $675,000, $256,000 and $29,000 in the years ended
December 31, 2000, 2001, 2002, and 2003, respectively.

OPTIONS ISSUED TO NONEMPLOYEES

In 1999, NetRatings granted options to purchase 247,000 shares of common
stock to nonemployees at an exercise price of $0.50 and $7.20 per share. These
options were granted in exchange for services performed and were fully vested
upon grant. NetRatings valued these options at their fair value and recorded a
charge to operations of $1,019,000 for the year ended December 31, 1999.

PRO FORMA DISCLOSURES OF THE EFFECT OF STOCK-BASED COMPENSATION

NetRatings has elected to follow APB 25 and related interpretations in
accounting for its employee stock options. The alternative fair value accounting
provided for under Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock-Based Compensation" ("FAS 123"), requires use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB 25, when the exercise price of NetRatings' employee stock
options equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.

Pro forma information regarding net income (loss) is required by FAS 123,
which also requires that the information be determined as if NetRatings has
accounted for its employee stock options under the fair value method of
FAS 123. The fair value of these options was estimated at the date of grant
using a Black-Scholes option pricing valuation model with the following
weighted-average assumptions: volatility of 0.80; risk-free interest rates of
4.57% to 6.11% for the years ended December 31, 1998 and 1999; a dividend yield
of 0%; and a weighted-average expected life of the option of four years.

The option valuation models were developed for use in estimating the fair
value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected life of the option. Because
NetRatings' employee stock options have characteristics significantly different
from those of traded options and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

Had compensation cost for NetRatings' stock-based compensation plans been
determined using the fair value at the grant dates for awards under those plans
calculated using the Black-Scholes option pricing valuation method, NetRatings'
historical net loss applicable to common stockholders and basic and diluted net
loss per share would have been increased to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
PERIOD FROM JULY 2,
YEAR ENDED YEAR ENDED 1997 (INCEPTION) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
------------ ------------ -------------------
<S> <C> <C> <C>
Pro forma net loss................................ $(20,151,000) $(3,885,000) $(1,781,000)
============ =========== ===========
Pro forma net loss per common share............... $ (5.65) $ (2.79) $ (2.03)
============ =========== ===========
</TABLE>

54
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
The pro forma impact of compensation expense measured under FAS 123 on the
net loss for the period from July 2, 1997 (inception) to December 31, 1997 and
the years ended December 31, 1998 and 1999 is not representative of the effects
on net income (loss) for future years, as future years will include the effects
of additional years of stock option grants.

NOTE 6: NET LOSS PER SHARE OF COMMON STOCK

The calculation of historical and pro forma basic and diluted net loss per
share is as follows:

<TABLE>
<CAPTION>
PERIOD FROM JULY 2,
YEAR ENDED YEAR ENDED 1997 (INCEPTION) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
HISTORICAL: 1999 1998 1997
- ----------- ------------ ------------ -------------------
<S> <C> <C> <C>
Net loss.......................................... $(17,866,000) $(3,879,000) $(1,781,000)
============ =========== ===========
Weighted-average shares of common stock
outstanding..................................... 4,617,000 3,395,000 3,777,000
Less: weighted-average shares subject to
repurchase...................................... 1,054,000 2,002,000 2,899,000
------------ ----------- -----------
Weighted-average shares of common stock
outstanding used in computing basic and diluted
net loss per share.............................. 3,563,000 1,393,000 878,000
============ =========== ===========
Basic and diluted net loss per common share....... $ (5.01) $ (2.78) $ (2.03)
============ =========== ===========

PRO FORMA
- --------------------------------------------------
Net Loss.......................................... $(17,866,000) $(3,879,000)

Weighted-average shares used in computing basic
and diluted net loss per common share........... 3,563,000 1,393,000

Adjustment to reflect the effect of the assumed
conversion of preferred stock from the date of
issuance........................................ 2,040,000 926,000
------------ -----------
Weighted average shares used in computing pro
forma basic and diluted net loss per common
share (unaudited)............................... 5,603,000 2,319,000
============ ===========
Pro forma basic and diluted net loss per common
share (unaudited)............................... $ (3.19) $ (1.67)
============ ===========
</TABLE>

If NetRatings had reported net income, the calculation of historical and pro
forma diluted earnings per share would have included approximately an additional
736,000, and 1,201,000 common equivalent shares related to outstanding stock
options and warrants not included above (determined using the treasury stock
method) for the years ended December 31, 1998, and 1999 respectively. In
addition, if NetRatings had reported net income, the calculation of historical
diluted earnings per share would have included approximately an additional
1,800,000 and 2,040,000 common equivalent shares related to the conversion of
preferred shares and convertible notes payable using the if-converted method for
the year ended December 31, 1998 and 1999.

55
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 7: JOINT VENTURE WITH ACNIELSEN

In September 1999, NetRatings entered into a joint venture with ACNielsen to
develop and maintain audience measurement panels and to market NetRatings
products and services in key international markets. Through the joint venture,
in which NetRatings holds a 19.9% minority interest, NetRatings plans to launch
audience measurement services in over 30 countries.

Revenue from the joint venture's Internet audience measurement services will
be allocated between NetRatings and the joint venture depending on the location
of the customer and the location of the panel whose data is used in the service:

- The joint venture retains 100% of any revenue from services that the joint
venture sells to customers outside North America based on data from panels
outside North America; provided, however, that during the five year period
commencing October 1, 1999, the joint venture shall pay to NetRatings a
fee of 10% of such revenues, subject to a minimum fee of $7.5 million and
a maximum fee of $15 million for such five year period.

- NetRatings and the joint venture each retain 50% of any revenues from
services that NetRatings sells to customers in North America based on data
from panels outside North America or services that the joint venture sells
to customers outside North America based on North American panel data.

- If either NetRatings or the joint venture sells services based on data
from a combination of panels located both inside and outside North
America, the allocation of revenues is determined by an operating
committee consisting of two representatives of each company, with any
decisions requiring a unanimous vote of those present, which must include
at least one representative of each company.

NetRatings did not receive any revenue from the joint venture for the year
ended December 31, 1999.

The joint venture was initially capitalized through cash contributions by
NetRatings for the purchase of common stock and cash contributions by ACNielsen
for the purchase of preferred stock. To complete the initial capitalization of
the joint venture, ACNielsen has agreed to contribute cash to fund the initial
roll-out costs, consisting of the costs incurred to establish Internet audience
measurement panels in each of the countries targeted by the joint venture, as
such costs are incurred by the joint venture, and NetRatings has granted an
exclusive license with respect to its data collection technology for the covered
territory, subject to specified performance criteria. The preferred stock
initially purchased by ACNielsen, together with any additional preferred stock
purchased as part of the funding of the initial roll-out costs, will continue to
have an 80.1% voting interest and be convertible into 80.1% of the common stock
of the joint venture. All preferred stock issued by the joint venture will have
a liquidation preference equal to the original purchase price.

NetRatings has entered into a stockholders agreement with ACNielsen setting
forth procedures for funding the ongoing operations of the joint venture. Apart
from the initial roll-out costs, the capital requirements of the joint venture
will be the responsibility of both companies in proportion to their relative
voting interests in the joint venture. Prior to September 23, 2001, however,
ACNielsen has

56
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 7: JOINT VENTURE WITH ACNIELSEN (CONTINUED)
agreed to advance capital requirements by either purchasing additional stock,
making loans to the joint venture bearing interest at the prime rate, or
arranging loans from third parties. At the end of this period, the joint venture
must repay any such loans from ACNielsen, and NetRatings must reimburse
ACNielsen for its pro rata portion of any such stock purchases, after which the
additional stock issued to ACNielsen will be retired. Under the stockholders
agreement, the joint venture and ACNielsen have a right of first refusal to
purchase any shares of the joint venture that NetRatings wishes to sell to a
third party. In addition, if the joint venture does not effect an initial public
offering within five years, NetRatings has the right to require ACNielsen to
purchase the NetRatings equity stake at its then current fair market value.

NOTE 8: RELATED PARTY TRANSACTIONS

Concurrent with the sale of Series A preferred stock, NetRatings and a
related party entered into a technology transfer agreement which assigned and
transferred to NetRatings all ownership interest in NetRatings' core products
and technology. In January 1998, in consideration of these technology
assignments and transfers, NetRatings paid to the related party $100,000 in
cash.

In April 1999, NetRatings entered into a barter transaction under which an
annual subscription to a NetRatings service valued at $50,000 was exchanged for
web site design services provided by a company, one of whose officers is a
member of the NetRatings Board of Directors. The subscription was valued at its
fair value using NetRatings normal pricing and terms.

As described in Note 5, in August 1999, Nielsen Media Research converted its
notes payable into shares of Series C preferred stock, purchased an additional
$6 million of Series C preferred stock and in December 1999 purchased additional
shares of NetRatings common stock. NetRatings also entered into an operating
agreement covering its relationship with Nielsen Media Research. Under the terms
of the operating agreement, NetRatings pays Nielsen Media Research a commission
for selling services to certain customers. These commissions totaled $537,000
for the year ended December 31, 1999 and are included in sales and marketing
expenses in the accompanying statements of operations. NetRatings is also
charged by Nielsen Media Research for costs of maintaining the panel at the
rates Nielsen Media Research charges its own internal divisions. These costs
totaled $5,246,000 for the year ended December 31, 1999 and are included in cost
of revenue in the accompanying statements of operations.

57
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 9: COMMITMENTS AND CONTINGENCIES

LEASES

As of December 31, 1999, minimum payments under all non-cancelable lease
agreements were as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- ----------
<S> <C> <C>
Year ending December 31, 2000............................... $ 208,000 $ 615,000
Year ending December 31, 2001............................... 159,000 595,000
Year ending December 31, 2002............................... 65,000 614,000
Year ending December 31, 2003............................... -- 631,000
Year ending December 31, 2004............................... -- 650,000
Thereafter.................................................. -- 109,000
--------- ----------
Total minimum lease payments................................ $ 432,000 $3,214,000
==========
Less amount representing interest......................... (96,000)
---------
Present value of minimum lease payments..................... 336,000
Less current portion...................................... (165,000)
---------
Long-term capital lease obligations......................... $ 171,000
=========
</TABLE>

Rent expense was $103,000 and $219,000 for the years ended December 31, 1998
and 1999.

In June 1999, NetRatings entered into a loan and security agreement under
which the lender committed to equipment financing up to a principal amount of
$700,000 at an interest rate of 8% per annum. This facility expires on
April 30, 2000. As of December 31, 1999, no borrowings were outstanding under
this facility. In conjunction with the availability of this equipment financing
commitment, NetRatings issued warrants to purchase 26,000 shares of common stock
at an exercise price of $2.12 per share. The warrant has a term of nine years.
At the date of grant, the fair value ascribed to the warrants of approximately
$132,000, was recorded as deferred financing costs and is being amortized over
the term of the facility.

BANK LINE OF CREDIT

In September 1999, NetRatings secured a $1,000,000 bank line of credit
expiring in one year with interest at the prime rate. The line of credit also
has an additional $350,000 available to NetRatings to fund fixed asset
purchases. Amounts borrowed under the fixed asset facility are due over a
36 month period with interest at the prime rate. The line of credit requires
that NetRatings maintain compliance with certain restrictive financial
covenants. No borrowings have been made under this agreement.

PENDING LITIGATION

On November 4, 1999, PaineWebber Incorporated filed a lawsuit against
NetRatings in the Supreme Court of the State of New York for the County of New
York. The suit involves an agreement entered into in May 1999 in which
NetRatings engaged PaineWebber to act as a financial advisor with respect to a
potential strategic transaction. The specific transaction for which PaineWebber
was engaged was not consummated. However, the lawsuit alleges that NetRatings
breached the obligations under the agreement by failing to pay PaineWebber a fee
based upon the subsequent sale of equity securities to Nielsen Media Research
and by failing to retain PaineWebber as a managing underwriter for the initial
public offering. The complaint seeks damages in the aggregate amount of not less
than

58
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 9: COMMITMENTS AND CONTINGENCIES (CONTINUED)
$1.9 million and reimbursement for PaineWebber's attorneys' fees relating to the
dispute. At this stage of the litigation, NetRatings has filed a partial answer
and a partial motion to dismiss the complaint. PaineWebber has filed a motion
for summary judgement as to liability on all of its claims. NetRatings intends
to defend the lawsuit vigorously. NetRatings expects to incur substantial legal
fees and expenses in connection with the litigation. The litigation is in the
preliminary stage, and management is unable to predict its final outcome.
However, management currently believes that the resolution of this matter will
not have a material adverse impact on NetRatings' financial position, results of
operations or cash flows. Depending on the amount and timing, an unfavorable
resolution could materially affect NetRatings' future results of operations or
cash flows in a particular period.

NOTE 10: EMPLOYEE BENEFIT PLAN

NetRatings has a 401(k) plan which allows full-time employees to contribute
to the 401(k) plan, subject to certain limitations, up to 15% of salary on a
pretax basis. NetRatings has the option to provide matching contributions but
has not done so to date.

NOTE 11: INCOME TAXES

No income tax expense was recorded for the period from July 2, 1997
(inception) to December 31, 1997 and for the years ended December 31, 1998 and
1999 due to net operating losses.

The difference between the income tax benefit and the amount computed by
applying the federal statutory income tax rate to loss before income taxes is as
follows:

<TABLE>
<CAPTION>
PERIOD FROM JULY 2,
YEAR ENDED YEAR ENDED 1997(INCEPTION)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1997
------------ ------------ -------------------
<S> <C> <C> <C>
Income tax (benefit) at federal statutory rate..... $(5,812,000) $(1,326,000) $(606,000)
Unutilized net operating losses.................... 5,812,000 1,326,000 606,000
----------- ----------- ---------
Total.............................................. $ -- $ -- $ --
=========== =========== =========
</TABLE>

Significant components of NetRatings' deferred tax assets are as follows:

<TABLE>
<CAPTION>
AS OF DECEMBER 31
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards...................... $ 6,600,000 $ 1,500,000 $ 8,000
Tax credit carryforwards.............................. 230,000 100,000 --
Deferred stock compensation........................... 1,600,000 -- --
Other................................................. 130,000 40,000 --
----------- ----------- -------
Total deferred tax assets............................... 8,560,000 1,640,000 8,000
Valuation allowance..................................... (8,560,000) (1,640,000) (8,000)
----------- ----------- -------
Net deferred tax assets................................. $ -- $ -- $ --
=========== =========== =======
</TABLE>

FASB Statement No. 109 provides for the recognition of deferred tax assets
if realization of such assets is more likely than not. Based upon the weight of
available evidence, which includes NetRatings' historical operating performance
and the reported cumulative net losses in all prior years, NetRatings

59
<PAGE>
NETRATINGS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 11: INCOME TAXES (CONTINUED)
has provided a full valuation allowance against its net deferred tax assets.
NetRatings will continue to evaluate the realizability of the deferred tax
assets on a quarterly basis.

The net valuation allowance increased by $8,000 during the period from
July 2, 1997 (inception) to December 31, 1997, and by $1,632,000 and $6,920,000
during the years ended December 31, 1998 and 1999, respectively.

As of December 31, 1999, NetRatings had net operating loss carryforwards for
federal and state tax purposes each of approximately $16,200,000 and federal and
state research and development tax credit carryforwards of approximately
$150,000 and $115,000, respectively. The federal and state net operating loss
and tax credit carryforwards will expire at various dates beginning in 2005, if
not utilized.

Utilization of the net operating loss and tax credit carryforwards may be
subject to a substantial annual limitation due to the ownership change
limitations provided by the Internal Revenue Code of 1986, as amended, and
similar state provisions. The annual limitation may result in the expiration of
net operating loss and tax credit carryforwards before utilization.

NOTE 12: INVESTMENT IN NETRATINGS JAPAN KK

In June 1999, NetRatings granted a five year license for the use of its
proprietary software to NetRatings Japan KK, in exchange for a 32% ownership
interest in NetRatings Japan KK. The joint venture was formed to adapt, market,
service and sell interactive media and market research data in Japan. After the
initial five year period, the license is automatically renewed on a yearly basis
for no additional consideration. As NetRatings contributed technology with an
indeterminable cost or market value to this joint venture, it did not record any
cost for this investment. NetRatings is entitled to appoint one member to the
six-member board of directors of NetRatings Japan KK.

NOTE 13: SUBSEQUENT EVENTS

In January 2000, NetRatings established a joint venture in France,
Mediametrie eRatings.com, in which it currently holds a 30% ownership interest.
Mediametrie eRatings.com is responsible for building and maintaining a French
audience measurement panel and introducing our products and services to the
French market. The joint venture plans to introduce products and services to the
French market after March 2000.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

60
<PAGE>
PART III

Certain information required by Part III is omitted from this report in that
the Company intends to file its definitive proxy statement pursuant to
Regulation 14A (the "Proxy Statement") not later than 120 days after the end of
the fiscal year covered by this report and certain information therein is
incorporated herein by reference.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated by reference to
information set forth in the Proxy Statement under the headings "Election of
Directors" and "Executive Officers of Registrant."

The information required by this Item with respect to compliance with
Section 16(a) of the Securities Exchange Act of 1934 is incorporated by
reference to information set forth in the Proxy Statement under the heading
"Section 16(a) Beneficial Ownership Reporting Compliance."

ITEM 11. EXECUTIVE COMPENSATION

For information concerning this Item, see text under the captions "Executive
Compensation" in the Proxy Statement, which information is incorporated herein
by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

For information concerning this Item, see text under the captions "Security
Ownership of Certain Beneficial Owners and Management" in the Proxy Statement,
which information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

For information concerning this Item, see text under the caption "Certain
Transactions" in the Proxy Statement, which information is incorporated herein
by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as a part of this report:

(1) Financial Statements:

See Index to Financial Statements at page 38 of this report.

(2) Financial Statement Schedules:

All financial statement schedules are omitted because they are not
applicable or not required, or because the required information is
included in the Financial Statements and Notes thereto which are included
herein.

(3) Exhibits:

The exhibits listed on the accompanying Exhibit Index are filed as part
of, or are incorporated by reference into, this report.

(b) Reports on Form 8-K during the quarter ended December 31, 1999:

On January 1, 2000, we filed a report on Form 8-K, pursuant to Items 1 and 7
of such Form, regarding a change in control of the Company resulting from
the acquisition of our Common Stock by Nielsen Media Research.

61
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on March 30, 2000.

<TABLE>
<S> <C> <C>
NETRATINGS INC.

By: /s/ JACK R. LAZAR
-----------------------------------------
Jack R. Lazar
VICE PRESIDENT, CHIEF FINANCIAL OFFICER
AND SECRETARY
</TABLE>

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jack R. Lazar and Stephen J. Gross, his
attorneys-in-fact, each with the power of substitution, for him in any and all
capacities, to sign any amendments to this Report on Form 10-K, and to file the
same, with Exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or substitute or substitutes may do or cause to
be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID J. TOTH President and Chief Executive Officer March 30, 2000
------------------------------------ (Principal Executive Officer)
David J. Toth

/s/ JACK R. LAZAR Vice President, Chief Financial March 30, 2000
------------------------------------ Officer and Secretary (Principal
Jack R. Lazar Financial and Accounting Officer)

/s/ DAVID A. NORMAN Chairman of the Board March 30, 2000
------------------------------------
David A. Norman

/s/ JACK SERFASS Director March 30, 2000
------------------------------------
Jack Serfass

/s/ JAMES J. GEDDES, JR. Director March 30, 2000
------------------------------------
James J. Geddes, Jr.
</TABLE>

62
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DAVID H. HARKNESS Director March 30, 2000
------------------------------------
David H. Harkness

/s/ MICHAEL P. CONNORS Director March 30, 2000
------------------------------------
Michael P. Connors

/s/ THOMAS A. MASTRELLI Director March 30, 2000
------------------------------------
Thomas A. Mastrelli

/s/ GERALD S. HOBBS Director March 30, 2000
------------------------------------
Gerald S. Hobbs

/s/ CHARLES E. LEONARD Director March 30, 2000
------------------------------------
Charles E. Leonard

/s/ DANIEL O'SHEA Director March 30, 2000
------------------------------------
Daniel O'Shea

/s/ JOHN DIMLING Director March 30, 2000
------------------------------------
John Dimling
</TABLE>

63
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------ -------------
<C> <S>
3.1 (1) Restated Certificate of Incorporation of Registrant
3.2 (2) Amended and Restated By-Laws of Registrant
4.1 (3) Second Restated Rights Agreement
*10.1 (3) Form of Indemnification Agreement between Registrant and its
directors and officers
*10.2 (3) 1998 Stock Plan, including form of option agreement
*10.3 (3) 1999 Employee Stock Purchase Plan
10.4 (3) Form of Loan Agreement and Promissory Note between
Registrant and certain directors and officers
10.5 (3) Form of Series B Preferred Stock Warrant
10.6 (3) Series B Preferred Stock Purchase Agreement dated as of
November 15, 1998
10.7 (3) Series C Preferred Stock Purchase Agreement dated as of
August 5, 1999
10.8 (3) Series D Preferred Stock Purchase Agreement dated as of
September 22, 1999
10.9 (3) Operating Agreement between Registrant and Nielsen Media
Research dated as of August 15, 1999
10.10(3) Common Stock Purchase Warrant issued to Nielsen Media
Research, expiring December 31, 2001
10.11(3) Common Stock Purchase Warrant issued to Nielsen Media
Research, expiring December 31, 2004
10.12(3) Common Stock Purchase Agreement between Registrant and
ACNielsen eRatings.com, dated as of September 22, 1999
10.13(3) Rights Agreement among Registrant, ACNielsen Corporation and
ACNielsen eRatings.com, dated as of September 22, 1999
10.14(3) Stockholders Agreement among Registrant, ACNielsen
Corporation and ACNielsen eRatings.com, dated as of
September 22, 1999
10.15(3) Operating Agreement between Registrant and ACNielsen
eRatings.com, dated as of September 22, 1999
10.16(3) Software License Agreement between Registrant and Nielsen
Media Research, dated as of August 15, 1999
10.17(3) Panel Maintenance Agreement between Registrant and Nielsen
Media Research, dated as of August 15, 1999
10.18(3) Software License Agreement between Registrant and ACNielsen
eRatings.com, dated as of September 22, 1999
10.19(3) Support Services Agreement between Registrant and AboveNet
Communications, dated as of February 26, 1999
10.20(3) Letter agreement between Registrant and ACNielsen, dated as
of September 22, 1999
10.21 Office Space Lease between Registrant and The Irvine Company
dated November 9, 1999 (as subsequently amended)
27.1 Financial Data Schedule
</TABLE>

- ------------------------

* Constitutes a management contact or compensatory plan required to be filed
pursuant to Item 14(c) of Form 10-K.

(1) Incorporated by reference to Exhibit 3.3 to Registrant's Form S-1
Registration Statement (No. 333-87717), which became effective on
December 8, 1999 (the "1999 Registration Statement").

(2) Incorporated by reference to Exhibit 3.4 to the 1999 Registration Statement.

(3) Incorporated by reference to identically numbered exhibit to the 1999
Registration Statement.

<PAGE>

OFFICE SPACE LEASE

BETWEEN

THE IRVINE COMPANY

AND

NETRATINGS, INC.

<PAGE>

THIS LEASE is made as of the 9th day of November, 1999, by and between
THE IRVINE COMPANY, hereafter called "Landlord," and NETRATINGS, INC., a
Delaware corporation, hereinafter called "Tenant."

ARTICLE I. BASIC LEASE PROVISIONS

Each reference in this Lease to the "Basic Lease Provisions" shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.

1. TENANT'S TRADE NAME: N/A

2. PREMISES: Suite No. 300 (the Premises are more particularly described in
Section 2.1).

ADDRESS OF BUILDING: 890 Hillview Court, Milpitas, CA 95035

PROJECT DESCRIPTION (IF APPLICABLE): Hillview Executive Park

3. USE OF PREMISES: General Office, engineering and research and development,
and for no other use.

4. ESTIMATED COMMENCEMENT DATE: February 15, 2000

5. LEASE TERM: Sixty (60) months, plus such additional days as may be
required to cause this Lease to terminate on the final day of the calendar
month.

6. BASIC RENT: Forty-Eight Thousand Three Hundred Seventy-Two Dollars
($48,372.00) per month.

RENTAL ADJUSTMENTS:

Commencing twelve (12) months following the Commencement Date, the Basic
Rent shall be Forty-Nine Thousand Seven Hundred Eighty-Three Dollars
($49,783.00) per month.

Commencing twenty-four (24) months following the Commencement Date, the
Basic Rent shall be Fifty-One Thousand Three Hundred Ninety-Five Dollars
($51,395.00) per month.

Commencing thirty-six (36) months following the Commencement Date, the
Basic Rent shall be Fifty-Two Thousand Eight Hundred Six Dollars
($52,806.00) per month.

Commencing forty-eight (48) months following the Commencement Date, the
Basic Rent shall be Fifty-Four Thousand Four Hundred Nineteen Dollars
($54,419.00) per month.

7. PROPERTY TAX BASE: The Property Taxes per rentable square foot actually
incurred by Landlord for the twelve month period ending June 30, 2000.

BUILDING COST BASE: The Building Costs per rentable square foot actually
incurred by Landlord for the twelve month period ending June 30, 2000.

EXPENSE RECOVERY PERIOD: Every twelve month period during the Term (or
portion thereof during the first and last Lease years) ending June 30.

8. FLOOR AREA OF PREMISES: approximately 20,155 rentable square feet

9. SECURITY DEPOSIT: $59,861.00

10. BROKER(s): Cornish & Carey Commercial

11. PLAN APPROVAL DATE: November 15, 1999

12. PARKING: Eighty-One (81) unreserved vehicle parking spaces.

<PAGE>

13. ADDRESS FOR PAYMENTS AND NOTICES:

LANDLORD TENANT

Insignia/ESG of California, Inc. NetRatings, Inc.
160 West Santa Clara Street 890 Hillview Court
Suite 1350 Suite 300
San Jose, CA 95113 Milpitas, CA 95035

with a copy of notices to:

THE IRVINE COMPANY
P.O. Box 6370
Newport Beach, CA 92658-6370
Attn: Vice President, Operations - Office Properties

<PAGE>

ARTICLE II. PREMISES

SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant rents
from Landlord the premises shown in Exhibit A (the "Premises"), containing
approximately the floor area set forth in Item 8 of the Basic Lease Provisions
and known by the suite number identified in Item 2 of the Basic Lease
Provisions. The Premises are located in the building identified in Item 2 of
the Basic Lease Provisions (which together with the underlying real property, is
called the "Building"), and is a portion of the project described in Item 2 (the
"Project"). If, upon completion of the space plans for the Premises, Landlord's
architect or space planner determines that the rentable square footage of the
Premises differs from that set forth in the Basic Lease Provisions, then
Landlord shall so notify Tenant and the Basic Rent (as shown in Item 6 of the
Basic Lease Provisions) shall be promptly adjusted in proportion to the change
in square footage. Within five (5) days following Landlord's request, the
parties shall memorialize the adjustments by executing an amendment to this
Lease prepared by Landlord.

SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises or the Building or the suitability or
fitness of either for any purpose, except as set forth in this Lease. The
taking of possession or use of the Premises by Tenant for any purpose other than
construction shall conclusively establish that the Premises and the Building
were in satisfactory condition and in conformity with the provisions of this
Lease in all respects, except for those matters which Tenant shall have brought
to Landlord's attention on a written punch list. The list shall be limited to
any items required to be accomplished by Landlord under the Work Letter (if any)
attached as Exhibit X, and shall be delivered to Landlord within thirty (30)
days after the term ("Term") of this Lease commences as provided in Article III
below. If there is no Work Letter, or if no items are required of Landlord
under the Work Letter, by taking possession of the Premises Tenant accepts the
improvements in their existing condition, and waives any right or claim against
Landlord arising out of the condition of the Premises. Nothing contained in
this Section shall affect the commencement of the Term or the obligation of
Tenant to pay rent. Landlord shall diligently complete all punch list items of
which it is notified as provided above.

SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any
name selected by Landlord from time to time for the Building and/or the Project
as any part of Tenant's corporate or trade name. Landlord shall have the right
to change the name, number or designation of the Building or Project without
liability to Tenant; provided, however, that should Landlord voluntarily change
the address of the Building, Landlord shall reimburse Tenant for its reasonable
out-of-pocket stationery/brochure reprinting costs.

SECTION 2.4. OPTION TO EXPAND. Provided Tenant is not then in default
hereunder, Landlord hereby grants Tenant an option to lease, for a term equal
to the then unexpired portion of the Term of this Lease, approximately nine
thousand (9,000) rentable square feet of space on the second floor of the
Building in the location designated on Exhibit A-1 hereto (the "Option
Space") in accordance with and subject to the provisions of this Section 2.4;
provided, however, that Landlord may upon notice to Tenant at any time
designate a different location on the second floor for the Option Space.
Tenant shall exercise said option by providing Landlord with written notice
of its intent to lease the Option Space (the "Commitment Notice") not later
than the expiration of the third (3rd) Lease month following the Commencement
Date ("Option Expiration Date"). If Tenant fails to timely deliver the
Commitment Notice, Landlord shall be free to lease the Option Space to a
third party, subject only to the provisions of Section 2.5 below. If Tenant
timely delivers the Commitment Notice, Landlord shall prepare an appropriate
and commercially reasonable amendment to this Lease consistent with the terms
of this Section 2.4 and the other provisions of this Lease, and Tenant shall
execute and deliver the amendment to Landlord within twenty (20) days of its
receipt from Landlord. Should Tenant fail to deliver the amendment to
Landlord within that time, Landlord shall, in addition to any right or remedy
available at law or in equity (exclusive of the right to terminate this
Lease), be free to lease the Option Space to a third party. The Option Space
shall be subject to all of the terms of this Lease, except that (i) subject
to Landlord's rights in the event of "Tenant Delays" as described herein, the
term shall commence on the date Landlord has substantially completed the
tenant improvements for the Option Space (the "Commencement Date for the
Option Space"); (ii) from and after the Commencement Date for the Option
Space, the Basic Rent for the Option Space shall be at the same rate per
rentable square foot per month that Tenant is then paying from time to time
for the original Premises leased hereunder; and (iii) the tenant improvements
for the Option Space shall be completed in accordance with the terms and
conditions of the "Work Letter" attached hereto as Exhibit X, except that the
"Landlord's Contribution" set forth therein shall be based on Twenty-Five
Dollars ($25.00) per usable square foot of the Option Space and no
"Additional Allowance" shall be provided. Tenant's rights under this Section
2.4 shall belong solely to the original Tenant and may not be assigned or
transferred by it except in connection with an assignment of this Lease to a
"Tenant Affiliate" (as defined below). Any other attempted assignment or
transfer shall be void and of no force or effect.

<PAGE>

SECTION 2.5. RIGHT OF FIRST OFFER. Provided Tenant is not then in default
hereunder, Landlord hereby grants Tenant the one-time right ("First Right") to
lease, during the six (6) month period following the Option Expiration Date, the
Option Space as described in Section 2.4 above, in accordance with and subject
to the provisions of this Section 2.5. At any time during the six (6) month
period following the Option Expiration Date, following receipt by Landlord of a
bona fide letter of intent, request for proposal or other written expression of
interest to lease all or a portion of the Option Space, Landlord shall give
Tenant written notice of the Basic Rent, term, operating expense base, security
deposit, and tenant improvement allowance (collectively, the "Economic Terms")
upon which Landlord is willing to lease the Option Space, which Economic Terms
shall be expressed on a per square foot basis if and to the extent applicable.
Within five (5) business days after receipt of Landlord's notice, Tenant must
give Landlord written notice pursuant to which Tenant shall elect to (i) lease
all, but not less than all, of the Option Space upon such Economic Terms and the
same non-Economic Terms as set forth in this Lease; or (ii) refuse to lease the
Option Space on such Economic and non-Economic Terms. In the event that Tenant
does not so respond in writing to Landlord's notice within said period, Tenant
shall be deemed to have elected clause (ii) above. Should Tenant fail to elect
to lease the Option Space in a timely manner as aforesaid, Landlord shall be
free thereafter to lease all or any portion thereof to any third party and
Tenant's rights under this Section 2.5 shall thereupon cease and be of no
further force and effect. Should Tenant timely elect to lease the Option Space,
Landlord shall promptly prepare and deliver to Tenant a commercially reasonable
amendment to this Lease consistent with the foregoing, and Tenant shall execute
and return same to Landlord within fifteen (15) business days. Tenant's failure
to timely return the amendment shall entitle Landlord to specifically enforce
Tenant's commitment to lease the Option Space, to lease such space to a third
party, and/or to pursue any other available legal remedy (exclusive of the right
to terminate this Lease). Tenant's rights under this Section 2.5 shall belong
solely to the original Tenant and may not be assigned or transferred by it
except in connection with an assignment of this Lease to a Tenant Affiliate.
Any other attempted assignment or transfer shall be void and of no force or
effect.

ARTICLE III. TERM

SECTION 3.1. GENERAL. The Term shall be for the period shown in Item 5
of the Basic Lease Provisions. The Term shall commence ("Commencement Date") on
the earlier of (a) subject to the provisions of Section 3.2, the Estimated
Commencement Date as set forth in Item 4 of the Basic Lease Provisions, or (b)
the date Tenant commences its business activities within the Premises. Promptly
following request by Landlord, the parties shall memorialize, on a form provided
by Landlord and reasonably acceptable to Tenant, the actual Commencement Date
and the expiration date ("Expiration Date") of this Lease.

SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason
whatsoever, cannot deliver possession of the Premises to Tenant on or before the
Estimated Commencement Date, then subject to Section 3.4 below, this Lease shall
not be void or voidable nor shall Landlord be liable to Tenant for any resulting
loss or damage. However, Tenant shall not be liable for any rent and the
Commencement Date shall not occur until Landlord delivers possession of the
Premises and the Premises are in fact ready for occupancy as defined below,
except that if Landlord's failure to so deliver possession on the Estimated
Commencement Date is attributable to any action or inaction by Tenant (including
without limitation any Tenant Delay described in the Work Letter, if any,
attached to this Lease), then the Commencement Date shall not be advanced to the
date on which possession of the Premises is tendered to Tenant, and Landlord
shall be entitled to full performance by Tenant (including the payment of rent)
from the date Landlord would have been able to deliver the Premises to Tenant
but for Tenant's delay(s). The Premises shall be deemed ready for occupancy
upon the tendered date, but only if and when Landlord, to the extent applicable,
(a) has put into operation all building services essential for the use of the
Premises by Tenant, (b) has provided reasonable access to the Premises for
Tenant so that they may be used without unnecessary interference, (c) has
substantially completed all the work required to be done by Landlord in this
Lease, and (d) has obtained requisite governmental approvals to Tenant's
occupancy.

SECTION 3.3. RIGHT TO EXTEND. Provided that Tenant is not then in
default under any provision of this Lease, Tenant may extend the Term of this
Lease for one period of sixty (60) months. Tenant shall exercise such right to
extend the Term by and only by delivering to Landlord, not less than nine (9)
months or more than twelve (12) months prior to the scheduled expiration date of
the Term, Tenant's written notice of its irrevocable election to extend (the
"Exercise Notice"). Tenant's failure timely to deliver the Exercise Notice
shall cause this extension right to lapse and be of no further force or effect.

The Basic Rent payable under the Lease during the extension of the Term shall be
at the prevailing rental rate and other economic terms for office space being
leased by Landlord in the Project with a term commencing at or about the
commencement of the applicable extension period, as determined by Landlord based
on a reasonable extrapolation of its then-current leasing rates (the "Prevailing
Rate"). In

<PAGE>

determining the Prevailing Rate, recent new and renewal leases with
non-equity tenants of the Project shall be considered. The Prevailing Rate
shall reflect the rental rate and terms payable in those third party
transactions, taking into account pertinent economic concessions then
generally being granted by Landlord such as "free rent," Operating Expense
base years, parking charge limitations, and the like. It is understood,
however, that no consideration shall be given to brokerage commissions, lease
"takeover" payments, moving allowances, or tenant improvement allowances
(other than retrofit allowances granted to renewal tenants). The rental
rates payable in any third party transactions executed more than six (6)
months prior to the commencement of the extension period shall be reasonably
extrapolated, if applicable, to reflect current rental trends.

Following Tenant's delivery of the Exercise Notice, but not later than six (6)
months prior to the expiration date of the Term, Landlord shall notify Tenant in
writing ("Landlord's Notice") of Landlord's calculation of the Prevailing Rate
for the extension period based on the foregoing criteria. Should Tenant dispute
Landlord's calculation, then Tenant may, by written notice to Landlord within
thirty (30) days following Landlord's Notice, submit the reasonableness of
Landlord's calculation of the Prevailing Rate to arbitration in accordance with
Section 14.7(b) of the Lease (the "Arbitration Election"). Should Tenant fail
timely to make the Arbitration Election, then Landlord's determination of the
Prevailing Rate shall be conclusive.

Within twenty (20) days after the determination of the Prevailing Rate, Landlord
shall prepare a commercially reasonable amendment to this Lease consistent with
the foregoing for the extension period and Tenant shall execute and return same
to Landlord within fifteen (15) days. If Tenant fails timely to do so, then
Landlord may either enforce its rights under this Section or, upon written
notice to Tenant, elect to cause Tenant's right to extend to be extinguished, in
which event this Lease shall terminate as of the originally scheduled date of
expiration. Should the Prevailing Rate not be established by the commencement
of the extension period, then Tenant shall continue paying rent at the rate in
effect during the month preceding such commencement, and a lump sum adjustment
shall be made promptly upon the determination of such new rental.

The right to extend granted in this Section shall be personal to the original
Tenant and may not be assigned or transferred by it except in connection with an
assignment of this Lease to a Tenant Affiliate. Any other attempt to assign or
transfer such right shall be void from its inception. Time is specifically made
of the essence in this Section.

SECTION 3.4. TENANT'S RIGHT TO CANCEL FOR LATE DELIVERY. If Landlord
fails to deliver possession of the Premises, ready for occupancy, by the
"Outside Date" as defined below, then Tenant shall have the right to terminate
this Lease by giving written notice thereof to Landlord after the Outside Date
but prior to Landlord's delivery of the Premises ready for Tenant's occupancy as
aforesaid. If, from time to time prior to the Outside Date, Landlord determines
that it will not be able to deliver possession of the Premises, ready for
occupancy, by the Outside Date, Landlord shall deliver to Tenant a written
notice setting forth Landlord's opinion as to the revised outside date by which
it shall be able to deliver the Premises to Tenant, ready for occupancy. Within
five (5) working days following delivery of that notice, Tenant may elect by
written notice to Landlord to terminate this Lease; otherwise, the Outside Date
shall be deemed extended to the revised date set forth in Landlord's notice.
For purposes hereof, the "Outside Date" shall mean the date that is five (5)
months following the last to occur of (i) Tenant's execution and delivery to
Landlord of this Lease in final form, (ii) Tenant's written approval of final
construction drawings and pricing for the tenant improvement work and the
issuance of any required permit for that work, and (iii) the payment by Tenant
of all sums and deposits required hereunder prior to the commencement of
construction; provided that the Outside Date shall be extended on a day-for-day
basis for the period of any Tenant Delays.

ARTICLE IV. RENT AND OPERATING EXPENSES

SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant
shall pay to Landlord without deduction or offset a Basic Rent for the Premises
in the total amount shown (including subsequent adjustments, if any) in Item 6
of the Basic Lease Provisions. Any rental adjustment shown in Item 6 shall be
deemed to occur on the specified monthly anniversary of the Commencement Date,
whether or not that date occurs at the end of a calendar month. The rent shall
be due and payable in advance commencing on the Commencement Date (as prorated
for any partial month) and continuing thereafter on the first day of each
successive calendar month of the Term. No demand, notice or invoice shall be
required. An installment of rent in the amount of one (1) full month's Basic
Rent at the initial rate specified in Item 6 of the Basic Lease Provisions shall
be delivered to Landlord concurrently with Tenant's execution of this Lease and
shall be applied against the Basic Rent first due hereunder.

SECTION 4.2. OPERATING EXPENSE INCREASE.

<PAGE>

(a) Tenant shall compensate Landlord, as additional rent, for
Tenant's proportionate shares of "Building Costs" and "Property Taxes," as those
terms are defined below, incurred by Landlord in the operation of the Building
and Project. Property Taxes and Building Costs are mutually exclusive and may
be billed separately or in combination as determined by Landlord. Tenant's
proportionate share of Property Taxes shall equal the product of the rentable
floor area of the Premises multiplied by the difference of (i) Property Taxes
per rentable square foot less (ii) the Property Tax Base set forth in Item 7 of
the Basic Lease Provisions. Tenant's proportionate share of Building Costs
shall equal the product of the rentable floor area of the Premises multiplied by
the difference of (i) Building Costs per rentable square foot less (ii) the
Building Cost Base set forth in Item 7 of the Basic Lease Provisions. For
purposes hereof, Tenant shall be responsible for 35.8% of Building Costs and
Property Taxes allocable to the Building with respect to the initial Premises
leased hereunder by Tenant. Tenant acknowledges Landlord's rights to make
changes or additions to the Building and/or Project from time to time pursuant
to Section 6.5 below, in which event the total rentable square footage within
the Building and/or Project may be adjusted. For convenience of reference,
Property Taxes and Building Costs may sometimes be collectively referred to as
"Operating Expenses."

(b) Commencing prior to the start of the first full "Expense Recovery
Period" of the Lease (as defined in Item 7 of the Basic Lease Provisions), and
prior to the start of each full or partial Expense Recovery Period thereafter,
Landlord shall give Tenant a written estimate of the amount of Tenant's
proportionate shares of Building Costs and Property Taxes for the Expense
Recovery Period or portion thereof. Tenant shall pay the estimated amounts to
Landlord in equal monthly installments, in advance, with Basic Rent. If
Landlord has not furnished its written estimate for any Expense Recovery Period
by the time set forth above, Tenant shall continue to pay cost reimbursements at
the rates established for the prior Expense Recovery Period, if any; provided
that when the new estimate is delivered to Tenant, Tenant shall, at the next
monthly payment date, pay any accrued cost reimbursements based upon the new
estimate. Landlord may from time to time change the Expense Recovery Period to
reflect a calendar year or a new fiscal year of Landlord, as applicable, in
which event Tenant's share of Operating Expenses shall be equitably prorated for
any partial year.

(c) Within one hundred twenty (120) days after the end of each
Expense Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Property Taxes and Building Costs
incurred by Landlord during the period, and the parties shall within thirty (30)
days thereafter make any payment or allowance necessary to adjust Tenant's
estimated payments, if any, to Tenant's actual proportionate shares as shown by
the annual statement. If Tenant has not made estimated payments during the
Expense Recovery Period, any amount owing by Tenant pursuant to subsection (a)
above shall be paid to Landlord in accordance with Article XVI. If actual
Property Taxes or Building Costs allocable to Tenant during any Expense Recovery
Period are less than the Property Tax Base or the Building Cost Base,
respectively, Landlord shall not be required to pay the differential to Tenant.
Should Tenant fail to object in writing to Landlord's determination of actual
Operating Expenses within sixty (60) days following delivery of Landlord's
expense statement, Landlord's determination of actual Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on Tenant.

(d) Even though the Lease has terminated and the Tenant has vacated
the Premises, when the final determination is made of Tenant's share of Property
Taxes and Building Costs for the Expense Recovery Period in which the Lease
terminates, Tenant shall upon notice pay the entire increase due over the
estimated expenses paid. Conversely, any overpayment made in the event expenses
decrease shall be rebated by Landlord to Tenant.

(e) If, at any time during any Expense Recovery Period, any one or
more of the Operating Expenses are increased to a rate(s) or amount(s) in excess
of the rate(s) or amount(s) used in calculating the estimated expenses for the
year, then Tenant's estimated share of Property Taxes or Building Costs, as
applicable, shall be increased for the month in which the increase becomes
effective and for all succeeding months by an amount equal to Tenant's
proportionate share of the increase. Landlord shall give Tenant written notice
of the amount or estimated amount of the increase, the month in which the
increase will become effective, Tenant's monthly share thereof and the months
for which the payments are due. Tenant shall pay the increase to Landlord as a
part of Tenant's monthly payments of estimated expenses as provided in paragraph
(b) above, commencing with the month in which effective.

(f) The term "Building Costs" shall include all expenses of operation
and maintenance of the Building and the Project, together with all appurtenant
Common Areas (as defined in Section 6.2), and shall include the following
charges by way of illustration but not limitation: water and sewer charges;
insurance premiums or reasonable premium equivalents should Landlord elect to
self-insure any risk that Landlord is authorized to insure hereunder; license,
permit, and inspection fees; heat; light; power; janitorial services; repairs;
air conditioning; supplies; materials; equipment; tools; tenant services;
programs instituted to comply with transportation management requirements;
amortization of

<PAGE>

capital investments reasonably intended to produce a reduction in operating
charges or energy conservation; amortization of capital investments necessary
to bring the Building into compliance with applicable laws and building codes
enacted subsequent to the completion of construction of the Building; labor;
reasonably allocated wages and salaries, fringe benefits, and payroll taxes
for administrative and other personnel directly applicable to the Building
and/or Project, including both Landlord's personnel and outside personnel;
any expense incurred pursuant to Sections 6.1, 6.2, 6.4, 7.2, and 10.2 and
Exhibits B and C below; and a reasonable overhead/management fee. It is
understood that Building Costs shall include competitive charges for direct
services provided by any subsidiary or division of Landlord. The term
"Property Taxes" as used herein shall include the following: (i) all real
estate taxes or personal property taxes, as such property taxes may be
reassessed from time to time; and (ii) other taxes, documentary transfer
fees, charges and assessments which are levied with respect to this Lease or
to the Building and/or the Project, and any improvements, fixtures and
equipment and other property of Landlord located in the Building and/or the
Project, except that general net income and franchise taxes imposed against
Landlord shall be excluded; and (iii) any tax, surcharge or assessment which
shall be levied in addition to or in lieu of real estate or personal property
taxes, other than taxes covered by Article VIII; and (iv) costs and expenses
incurred in contesting the amount or validity of any Property Tax by
appropriate proceedings. A copy of Landlord's unaudited statement of
expenses shall be made available to Tenant upon request. The Building Costs
shall be extrapolated by Landlord to reflect at least ninety-five percent
(95%) occupancy of the rentable area of the Building.

SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant's delivery of
this Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9
of the Basic Lease Provisions (the "Security Deposit"), to be held by Landlord
as security for the full and faithful performance of Tenant's obligations under
this Lease to pay any rent as and when due, including without limitation such
additional rent as may be owing under any provision hereof, and to maintain the
Premises as required by Sections 7.1 and 15.3. Upon any breach of those
obligations by Tenant, Landlord may apply all or part of the Security Deposit as
full or partial compensation, but only after any applicable notice has been
provided and subsequent cure period has expired. If any portion of the Security
Deposit is so applied, Tenant shall within five (5) days after written demand by
Landlord deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount. Landlord shall not be required to keep
this Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. If Tenant fully performs its
obligations under this Lease, the Security Deposit or any balance thereof shall
be returned to Tenant or, at Landlord's option, to the last assignee of Tenant's
interest in this Lease.

SECTION 4.4. ADDITIONAL SECURITY DEPOSIT/RENT CREDIT. In addition to the
Security Deposit set forth in Item 9 of the Basic Lease Provisions, and as
additional security hereunder, Tenant shall deposit, concurrently with its
execution and delivery of this Lease, the sum of Two Hundred Forty-One Thousand
Eight Hundred Sixty Dollars ($241,860.00) into an escrow account with Heritage
Bank (or its successors-in-interest), San Jose Main Branch (the "Additional
Security Deposit"). Tenant understands and agrees that the escrow instructions
for the Additional Security Deposit shall be mutually acceptable to the parties
herein. Upon any default by Tenant after the expiration of any applicable notice
and cure period, including specifically Tenant's failure to pay rent or to abide
by its obligations under Sections 7.1 and 15.3 below, Landlord shall be entitled
to draw upon the Additional Security Deposit by the issuance of Landlord's sole
written demand to the issuing financial institution and Tenant agrees that the
escrow instructions shall specifically provide for same. Any such draw shall be
without waiver of any rights Landlord may have under this Lease or at law or in
equity as a result of the default. Landlord hereby agrees that in the event
Tenant has an initial public stock offering which raises funds in excess of
Thirty-Five Million Dollars ($35,000,000.00) and Tenant presents evidence
thereof satisfactory to Landlord, then provided Tenant is not then in default
under this Lease, Landlord shall give written authorization to Tenant to close
the escrow account holding the Additional Security Deposit and withdraw all
funds therefrom, in which event this Section shall thereupon be null and void.
In the event Tenant fails to raise the funds as aforesaid, and in the event that
Tenant is not and has not been in default under the Lease at any time during the
Term hereof, and provided further that Tenant has not at any time been more than
five (5) days late with respect to any payments of rent due under the Lease,
then upon the written request of Tenant, Landlord shall authorize in writing
consecutive reductions in the amount of twenty percent (20%) of the original
principal amount of the Additional Security Deposit upon the expiration of the
twelfth (12th), twenty-fourth (24th), thirty-sixth (36th), forty-eighth (48th)
and sixtieth (60th) Lease months during the Term.

ARTICLE V. USES

SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions. The parties agree that any
contrary use shall be deemed to cause material and irreparable harm to Landlord
and shall entitle Landlord to injunctive relief in addition to any other

<PAGE>

available remedy. Tenant shall not do or permit anything to be done in or about
the Premises which will in any way interfere with the rights or quiet enjoyment
of other occupants of the Building or the Project, or use or allow the Premises
to be used for any unlawful purpose, nor shall Tenant permit any nuisance or
commit any waste in the Premises or the Project. Tenant shall not do or permit
to be done anything which will invalidate or increase the cost of any insurance
policy(ies) covering the Building, the Project and/or their contents, and shall
comply with all applicable insurance underwriters rules and the requirements of
the Pacific Fire Rating Bureau or any other organization performing a similar
function. Tenant shall comply at its expense with all present and future laws,
ordinances and requirements of all governmental authorities that pertain to
Tenant or its use of the Premises, including without limitation all federal and
state occupational health and safety and handicap access requirements, whether
or not Tenant's compliance will necessitate expenditures or interfere with its
use and enjoyment of the Premises. Tenant shall not generate, handle, store or
dispose of hazardous or toxic materials (as such materials may be identified in
any federal, state or local law or regulation) in the Premises or Project
without the prior written consent of Landlord; provided that the foregoing shall
not be deemed to proscribe the use by Tenant of customary office supplies in
normal quantities so long as such use comports with all applicable laws. Tenant
agrees that it shall promptly complete and deliver to Landlord any disclosure
form regarding hazardous or toxic materials that may be required by any
governmental agency. Tenant shall also, from time to time upon request by
Landlord, execute such affidavits concerning Tenant's best knowledge and belief
regarding the presence of hazardous or toxic materials in the Premises.
Landlord shall have the right at any time to perform an assessment of the
environmental condition of the Premises and of Tenant's compliance with this
Section. As part of any such assessment, Landlord shall have the right, upon
reasonable prior notice to Tenant, to enter and inspect the Premises and to
perform tests, provided those tests are performed in a manner that minimizes
disruption to Tenant. Tenant will cooperate with Landlord in connection with
any assessment by, among other things, promptly responding to inquiries and
providing relevant documentation and records. The reasonable cost of the
assessment/testing shall be reimbursed by Tenant to Landlord if such
assessment/testing determines that Tenant failed to comply with the requirements
of this Section. In all events Tenant shall indemnify Landlord in the manner
elsewhere provided in this Lease from any release of hazardous or toxic
materials caused by Tenant, its agents, employees, contractors, subtenants or
licensees. The foregoing covenants shall survive the expiration or earlier
termination of this Lease.

SECTION 5.2. SIGNS. Tenant, upon obtaining the approval of Landlord in
writing, may affix a sign (restricted solely to Tenant's name as set forth
herein or such other name as Landlord may consent to in writing) adjacent to the
entry door of the Premises and shall maintain the sign in good condition and
repair during the Term. The sign shall conform to the criteria for signs
established by Landlord and shall be ordered through Landlord. Tenant shall not
place or allow to be placed any other sign, decoration or advertising matter of
any kind that is visible from the exterior of the Premises. Any violating sign
or decoration may be immediately removed by Landlord at Tenant's expense without
notice and without the removal constituting a breach of this Lease or entitling
Tenant to claim damages.

SECTION 5.3. EXTERIOR SIGNAGE. Tenant shall have the right to install
a sign on the exterior of the Building in a location with visibility from the
I-680, which signage shall consist only of the name "NetRatings, Inc". The
type, location and design of such signage shall be subject to prior written
approval of Landlord (which shall not be unreasonably withheld) and the City
of Milpitas, and shall be subject to the signage criteria for the Project.
Fabrication, installation, insurance, and maintenance of such signage shall
be at Tenant's sole cost and expense. Except for the foregoing, no sign,
advertisement or notice visible from the exterior of the Premises shall be
inscribed, painted or affixed by Tenant on any part of the Premises without
the prior consent of Landlord. Tenant's signage right shall belong solely to
the original Tenant and may not be transferred or assigned (except in
connection with an assignment of this Lease to a Tenant Affiliate) without
Landlord's prior written consent, which may be withheld by Landlord in
Landlord's sole discretion. In the event Tenant, exclusive of any
subtenant(s), fails to occupy the entire Premises, then Tenant shall, within
thirty (30) days following notice from Landlord, remove the exterior signage
at Tenant's expense. Tenant shall also remove such signage promptly
following the expiration or earlier termination of this Lease. Any such
removal shall be at Tenant's sole expense, and Tenant shall bear the cost of
any resulting repairs to the Building that are reasonably necessary due to
the removal.

ARTICLE VI. LANDLORD SERVICES

SECTION 6.1. UTILITIES AND SERVICES. Landlord shall furnish to the
Premises the utilities and services described in Exhibit B, subject to the
conditions and payment obligations and standards set forth in this Lease.
Landlord shall not be liable for any failure to furnish any services or
utilities when the failure is the result of any accident or other cause beyond
Landlord's reasonable control, nor shall Landlord be liable for damages
resulting from power surges or any breakdown in telecommunications

<PAGE>

facilities or services. Landlord's temporary inability to furnish any
services or utilities shall not entitle Tenant to any damages, relieve Tenant
of the obligation to pay rent (except to the extent of rental interruption
insurance proceeds available to Landlord and reasonably allocable to this
Lease) or constitute a constructive or other eviction of Tenant, except that
Landlord shall diligently attempt to restore the service or utility promptly.
Tenant shall comply with all rules and regulations which Landlord may
reasonably establish for the provision of services and utilities, and shall
cooperate with all reasonable conservation practices established by Landlord.
Landlord shall at all reasonable times have free access to all electrical
and mechanical installations of Landlord.

SECTION 6.2. OPERATION AND MAINTENANCE OF COMMON AREAS. During the Term,
Landlord shall operate all Common Areas within the Building and the Project.
The term "Common Areas" shall mean all areas within the Building and other
buildings in the Project which are not held for exclusive use by persons
entitled to occupy space, and all other appurtenant areas and improvements
provided by Landlord for the common use of Landlord and tenants and their
respective employees and invitees, including without limitation parking areas
and structures, driveways, sidewalks, landscaped and planted areas, hallways and
interior stairwells not located within the premises of any tenant, common
entrances and lobbies, elevators, and restrooms not located within the premises
of any tenant.

SECTION 6.3. USE OF COMMON AREAS. The occupancy by Tenant of the
Premises shall include the use of the Common Areas in common with Landlord and
with all others for whose convenience and use the Common Areas may be provided
by Landlord, subject, however, to compliance with all rules and regulations as
are prescribed from time to time by Landlord. Landlord shall at all times
during the Term have exclusive control of the Common Areas, and may restrain any
use or occupancy, except as authorized by Landlord's rules and regulations.
Tenant shall keep the Common Areas clear of any obstruction or unauthorized use
related to Tenant's operations. Landlord may temporarily close any portion of
the Common Areas for repairs, remodeling and/or alterations, to prevent a public
dedication or the accrual of prescriptive rights, or for any other reasonable
purpose.

SECTION 6.4. PARKING. Landlord hereby leases to Tenant, and Tenant
hereby agrees to lease from Landlord for the Term of this Lease, the number of
vehicle parking spaces set forth in Item 12 of the Basic Lease Provisions. The
parking spaces shall be provided in accordance with the provisions set forth in
Exhibit C to this Lease.

SECTION 6.5. CHANGES AND ADDITIONS BY LANDLORD. Landlord reserves the
right to make alterations or additions to the Building or the Project, or to the
attendant fixtures, equipment and Common Areas. No change shall entitle Tenant
to any abatement of rent or other claim against Landlord, provided that the
change does not deprive Tenant of reasonable access to or use of the Premises.

ARTICLE VII. MAINTAINING THE PREMISES

SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole expense
shall make all repairs necessary to keep the interior of the Premises in the
condition as existed on the Commencement Date (or on any later date that the
improvements may have been installed), excepting ordinary wear and tear. All
repairs shall be at least equal in quality to the original work, shall be made
only by a licensed, bonded contractor approved in writing in advance by Landlord
and shall be made only at the time or times approved by Landlord. Any
contractor utilized by Tenant shall be subject to Landlord's standard
requirements for contractors, as modified from time to time. Landlord may
impose reasonable restrictions and requirements with respect to repairs, as
provided in Section 7.3, and the provisions of Section 7.4 shall apply to all
repairs. Alternatively, Landlord may elect to make any such repair on behalf of
Tenant and at Tenant's expense, and Tenant shall promptly reimburse Landlord as
additional rent for all costs incurred upon submission of an invoice.

SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR.

(a) Subject to Section 7.1 and Article XI, Landlord shall provide
service, maintenance and repair with respect to any air conditioning,
ventilating or heating equipment which serves the Premises (exclusive of any
supplemental HVAC equipment installed by or at the request of Tenant) and shall
maintain in good repair the roof, foundations, footings, the exterior surfaces
of the exterior walls of the Building, and the structural, electrical and
mechanical systems, except that Tenant at its expense shall make all repairs
which Landlord deems reasonably necessary as a result of the negligence of
Tenant, its agents, employees, invitees, subtenants or contractors. Landlord
shall have the right to employ or designate any reputable person or firm,
including any employee or agent of Landlord or any of Landlord's affiliates or
divisions, to perform any service, repair or maintenance function. Landlord
need

<PAGE>

not make any other improvements or repairs except if specifically required
under this Lease or if caused by Landlord's gross negligence or willful
misconduct and not covered by Tenant's insurance, and nothing contained in
this Section shall limit Landlord's right to reimbursement from Tenant for
maintenance, repair costs and replacement costs as provided elsewhere in this
Lease. Tenant understands that it shall not make repairs at Landlord's
expense or by rental offset.

(b) Except as provided in Sections 11.1 and 12.1 below, but subject
to Section 10.5 below, there shall be no abatement of rent and, except for loss
or damage resulting from the gross negligence or willful misconduct of Landlord,
no liability of Landlord by reason of any injury to or interference with
Tenant's business arising from the making of any repairs, alterations or
improvements to any portion of the Building, including repairs to the Premises,
nor shall any related activity by Landlord constitute an actual or constructive
eviction; provided, however, that in making repairs, alterations or
improvements, Landlord shall interfere as little as reasonably practicable with
the conduct of Tenant's business in the Premises.

SECTION 7.3. ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises without the prior written consent of Landlord.
Landlord's consent shall not be unreasonably withheld as long as the proposed
changes do not affect the structural, electrical or mechanical components or
systems of the Building and are not visible from the exterior of the Premises.
Landlord may impose, as a condition to its consent, any requirements that
Landlord in its discretion may deem reasonable or desirable, including but not
limited to a requirement that all work be covered by a lien and completion bond
satisfactory to Landlord and requirements as to the manner, time, and contractor
for performance of the work. Without limiting the generality of the foregoing,
Tenant shall use Landlord's designated mechanical and electrical contractors for
all work affecting the mechanical or electrical systems of the Building,
provided that Tenant shall have the right to approve their changes before
commencing the work. Tenant shall obtain all required permits for the work and
shall perform the work in compliance with all applicable laws, regulations and
ordinances, and Landlord shall be entitled to a supervision fee in the amount of
five percent (5%) of the cost of the work. Under no circumstances shall Tenant
make any improvement which incorporates asbestos-containing construction
materials into the Premises. Any request for Landlord's consent shall be made
in writing and shall contain architectural plans describing the work in detail
reasonably satisfactory to Landlord. Unless Landlord otherwise agrees in
writing, all alterations, additions or improvements affixed to the Premises
(excluding moveable trade fixtures and furniture) shall become the property of
Landlord and shall be surrendered with the Premises at the end of the Term,
except that Landlord may, by written notice to Tenant given at the time of
Landlord's consent to the alteration or improvement, require Tenant to remove by
the Expiration Date, or sooner termination date of this Lease, all or any
alterations, decorations, fixtures, additions, improvements and the like
installed either by Tenant or by Landlord at Tenant's request and to repair any
damage to the Premises arising from that removal. Landlord may require Tenant
to remove an improvement provided as part of the initial build-out pursuant to
Exhibit X, if any, if and only if the improvement is a non-building standard
item and Tenant is notified in writing of the requirement prior to the
build-out. Except as otherwise provided in this Lease or in any Exhibit to this
Lease, should Landlord make any alteration or improvement to the Premises at the
request of Tenant, Landlord shall be entitled to prompt reimbursement from
Tenant for all costs incurred.

SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises free from
any liens arising out of any work performed, materials furnished, or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly
cause any such lien to be released by posting a bond in accordance with
California Civil Code Section 3143 or any successor statute. In the event that
Tenant shall not, within thirty (30) days following the imposition of any lien,
cause the lien to be released of record by payment or posting of a proper bond,
Landlord shall have, in addition to all other available remedies, the right to
cause the lien to be released by any means it deems proper, including payment of
or defense against the claim giving rise to the lien. All expenses so incurred
by Landlord, including Landlord's attorneys' fees, shall be reimbursed by Tenant
promptly following Landlord's demand, together with interest from the date of
payment by Landlord at the maximum rate permitted by law until paid. Tenant
shall give Landlord no less than twenty (20) days' prior notice in writing
before commencing construction of any kind on the Premises so that Landlord may
post and maintain notices of nonresponsibility on the Premises.

SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable
times have the right to enter the Premises to inspect them, to supply services
in accordance with this Lease, to protect the interests of Landlord in the
Premises, to make repairs and renovations as reasonably deemed necessary by
Landlord, and to submit the Premises to prospective or actual purchasers or
encumbrance holders (or, during the last one hundred and eighty (180) days of
the Term or when an uncured Tenant default exists, to prospective tenants), all
without being deemed to have caused an eviction of Tenant and without abatement
of rent except as provided elsewhere in this Lease. Landlord shall at all times
have and retain a key which unlocks all of the doors in the Premises, excluding
Tenant's vaults and safes, and Landlord shall have the right to use any and all
means which Landlord may deem proper to open the doors in an emergency in order
to obtain entry to the Premises, and any entry to the Premises obtained by
Landlord shall not under any circumstances be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or any eviction of Tenant
from the Premises.

ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

<PAGE>

Tenant shall be liable for and shall pay before delinquency, all taxes and
assessments levied against all personal property of Tenant located in the
Premises. When possible Tenant shall cause its personal property to be assessed
and billed separately from the real property of which the Premises form a part.
If any taxes on Tenant's personal property are levied against Landlord or
Landlord's property and if Landlord pays the same, or if the assessed value of
Landlord's property is increased by the inclusion of a value placed upon the
personal property of Tenant and if Landlord pays the taxes based upon the
increased assessment, Tenant shall pay to Landlord the taxes so levied against
Landlord or the proportion of the taxes resulting from the increase in the
assessment.

ARTICLE IX. ASSIGNMENT AND SUBLETTING

SECTION 9.1. RIGHTS OF PARTIES.

(a) Notwithstanding any provision of this Lease to the contrary,
Tenant will not, either voluntarily or by operation of law, assign, sublet,
encumber, or otherwise transfer all or any part of Tenant's interest in this
lease, or permit the Premises to be occupied by anyone other than Tenant,
without Landlord's prior written consent, which consent shall not unreasonably
be withheld in accordance with the provisions of Section 9.1.(c). No assignment
(whether voluntary, involuntary or by operation of law) and no subletting shall
be valid or effective without Landlord's prior written consent and, at
Landlord's election, shall constitute a material default of this Lease.
Landlord shall not be deemed to have given its consent to any assignment or
subletting by any other course of action, including its acceptance of any name
for listing in the Building directory. To the extent not prohibited by
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the
"Bankruptcy Code"), including Section 365(f)(1), Tenant on behalf of itself and
its creditors, administrators and assigns waives the applicability of Section
365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for
the estate of the bankrupt meets Landlord's standard for consent as set forth in
Section 9.1(c) of this Lease. If this Lease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies or other
considerations to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on and after the
date of the assignment, and shall upon demand execute and deliver to Landlord
an instrument confirming that assumption.

(b) Notwithstanding any provision of Article IX or elsewhere in this
Lease to the contrary, Tenant shall have the right, without obtaining the prior
consent of Landlord but with prior written notice to Landlord, to (a) assign or
transfer all or any part of this Lease or to sublet all or any portion of the
Premises to (i) any parent corporation of Tenant, (ii) any subsidiary
corporation of Tenant or of Tenant's parent corporation, (iii) any entity in
which Tenant, any parent corporation of Tenant or any subsidiary corporation of
Tenant or of Tenant's parent corporation holds a majority of the outstanding
shares or ownership interests, or (iv) a corporation resulting from the merger,
consolidation or reorganization of Tenant or Tenant's parent corporation with
another corporation (any entity described in clauses (i) through (iv) above
being herein described as a "Tenant Affiliate"), (b) transfer or issue shares of
Tenant in connection with any "private placement" or other financing provided to
or investment made in Tenant, or (c) issue shares of Tenant on any national
securities exchange (as defined in the Securities Exchange Act of 1934, as
amended). In addition, the shareholders of Tenant shall have the right, without
obtaining the prior consent of Landlord, to transfer the shares of Tenant which
they hold to each other, to their immediate family members, or to any trust or
other estate planning vehicle, or to sell or trade the shares of Tenant on any
national securities exchange (as defined in the Securities Exchange Act of 1934,
as amended). Any and all of the transactions permitted under this Section shall
not constitute an assignment, subletting or other transaction requiring the
consent of Landlord under the provisions of Article IX of this Lease and shall
not be subject to any of the other provisions of Section 9.1 of this Lease.

(c) If Tenant desires to transfer an interest in this Lease, it shall
first notify Landlord of its desire and shall submit in writing to Landlord:
(i) the name and address of the proposed transferee; (ii) the nature of any
proposed subtenant's or assignee's business to be carried on in the Premises;
(iii) the terms and provisions of any proposed sublease or assignment; and (iv)
any other information requested by Landlord and reasonably related to the
transfer. Except as provided in Subsection (d) of this Section, Landlord shall
not unreasonably withhold its consent, provided: (1) the use of the Premises
will be consistent with the provisions of this Lease; (2) fifty percent (50%) of
any excess rent received by the Tenant from the assignment or subletting,
whether during or after the Term of this Lease, shall be paid to Landlord when
received after first deducting all out-of-pocket costs incurred by Tenant to
make the Premises ready for such assignee or subtenant (including without
limitation brokerage fees and reasonable attorneys' fees); (3) any proposed
subtenant or assignee demonstrates that it is financially responsible by
submission to Landlord of all reasonable information as Landlord may request
concerning the proposed subtenant or assignee, including, but not limited to, a
balance sheet of the proposed subtenant or assignee as of a date within ninety
(90) days of the request for Landlord's consent and statements of income or
profit and loss of the proposed subtenant or assignee for the two-year period
preceding the request for Landlord's consent; (4) the proposed assignee or
subtenant is neither an existing tenant of the Building or Project nor a
prospective tenant with whom Landlord is then actively negotiating; and (5) the
proposed transfer will not impose additional burdens or adverse tax effects on
Landlord. If

<PAGE>

Landlord consents to the proposed transfer, Tenant may within ninety (90)
days after the date of the consent effect the transfer upon the terms
described in the information furnished to Landlord; provided that any
material change in the terms shall be subject to Landlord's consent as set
forth in this Section. Landlord shall approve or disapprove any requested
transfer within ten (10) business days following receipt of Tenant's written
request and the information set forth above. Tenant shall pay to Landlord a
transfer fee of Five Hundred Dollars ($500.00) if and when any transfer
requested by Tenant is approved.

(d) Notwithstanding the provisions of Subsection (c) above, in lieu
of consenting to a proposed assignment or subletting other than as described in
Section 9.1(b) above, Landlord may elect to (i) sublease the Premises (or the
portion proposed to be subleased), or take an assignment of Tenant's interest in
this Lease, upon the same terms as offered to the proposed subtenant or assignee
(excluding terms relating to the purchase of personal property, the use of
Tenant's name or the continuation of Tenant's business), or (ii) terminate this
Lease as to the portion of the Premises proposed to be subleased or assigned
with a proportionate abatement in the rent payable under this Lease, effective
on the date that the proposed sublease or assignment would have become
effective. Landlord may thereafter, at its option, assign or re-let any space
so recaptured to any third party, including without limitation the proposed
transferee of Tenant.

SECTION 9.2. EFFECT OF TRANSFER. No subletting or assignment, even
with the consent of Landlord, shall relieve Tenant, or any
successor-in-interest to Tenant hereunder, of its obligation to pay rent and
to perform all its other obligations under this Lease. Moreover, Tenant
shall indemnify and hold Landlord harmless, as provided in Section 10.3, for
any negligent act or willful misconduct by an assignee or subtenant. Each
assignee, other than Landlord, shall be deemed to assume all obligations of
Tenant under this Lease and shall be liable jointly and severally with Tenant
for the payment of all rent, and for the due performance of all of Tenant's
obligations, under this Lease. Such joint and several liability shall not be
discharged or impaired by any subsequent modification or extension of this
Lease; provided, however, that any predecessor Tenant hereunder shall not be
liable for any marginal increase in leasehold obligations resulting from the
modification or extension unless attributable to Tenant's exercise of a
pre-existing option or right in this Lease. Except as provided in Section
9.1(b), no transfer shall be binding on Landlord unless any document
memorializing the transfer is delivered to Landlord and both the
assignee/subtenant and Tenant deliver to Landlord an executed consent to
transfer instrument prepared by Landlord and consistent with the requirements
of this Article. The acceptance by Landlord of any payment due under this
Lease from any other person shall not be deemed to be a waiver by Landlord of
any provision of this Lease or to be a consent to any transfer. Consent by
Landlord to one or more transfers shall not operate as a waiver or estoppel
to the future enforcement by Landlord of its rights under this Lease. In
addition to the foregoing, no change in the status of Tenant or any party
jointly and severally liable with Tenant as aforesaid (e.g., by conversion to
a limited liability company or partnership) shall serve to abrogate the
liability of any person or entity for the obligations of Tenant, including
any obligations that may be incurred by Tenant after the status change by
exercise of a pre-existing right in this Lease.

SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be included in each sublease:

(a) Tenant hereby irrevocably assigns to Landlord all of Tenant's
interest in all rentals and income arising from any sublease of the Premises,
and Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until a default occurs in
the performance of Tenant's obligations under this Lease, Tenant shall have the
right to receive and collect the sublease rentals. Landlord shall not, by
reason of this assignment or the collection of sublease rentals, be deemed
liable to the subtenant for the performance of any of Tenant's obligations under
the sublease. Tenant hereby irrevocably authorizes and directs any subtenant,
upon receipt of a written notice from Landlord stating that an uncured default
exists in the performance of Tenant's obligations under this Lease, to pay to
Landlord all sums then and thereafter due under the sublease. Tenant agrees
that the subtenant may rely on that notice without any duty of further inquiry
and notwithstanding any notice or claim by Tenant to the contrary. Tenant shall
have no right or claim against the subtenant or Landlord for any rentals so paid
to Landlord. In the event Landlord collects amounts from subtenants that exceed
the total amount then due from Tenant hereunder, Landlord shall promptly remit
the excess to Tenant.

(b) In the event of the termination of this Lease, Landlord may, at
its sole option, take over Tenant's entire interest in any sublease and, upon
notice from Landlord, the subtenant shall attorn to Landlord. In no event,
however, shall Landlord be liable for any previous act or omission by Tenant
under the sublease or for the return of any advance rental payments or deposits
under the sublease that have not been actually delivered to Landlord, nor shall
Landlord be bound by any sublease modification executed without Landlord's
consent or for any advance rental payment by the subtenant in excess of one
month's rent. The general provisions of this Lease, including without
limitation those pertaining to insurance and indemnification, shall be deemed
incorporated by reference into the sublease despite the termination of this
Lease.

(c) Tenant agrees that Landlord may, at its sole option, authorize a
subtenant of the Premises to cure a default by Tenant under this Lease. Should
Landlord accept such cure, the subtenant shall have a right of reimbursement and
offset from and against Tenant under the applicable sublease.

<PAGE>

ARTICLE X. INSURANCE AND INDEMNITY

SECTION 10.1. TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit D.
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.

SECTION 10.2. LANDLORD'S INSURANCE. Landlord shall provide any or all of
the following types of insurance, with or without deductible and in amounts and
coverages as may be determined by Landlord in its discretion: "all risk"
property insurance, subject to standard exclusions, covering the Building or
Project, and such other risks as Landlord or its mortgagees may from time to
time deem appropriate, and commercial general liability coverage. Landlord
shall not be required to carry insurance of any kind on Tenant's leasehold
improvements, trade fixtures, furnishings, equipment, interior plate glass,
signs and all other items of personal property, and shall not be obligated to
repair or replace that property should damage occur. All proceeds of insurance
maintained by Landlord upon the Building and Project shall be the property of
Landlord, whether or not Landlord is obligated to or elects to make any repairs.

SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted by law,
Tenant shall defend, indemnify and hold harmless Landlord, its agents, lenders,
and any and all affiliates of Landlord, from and against any and all claims,
liabilities, costs or expenses arising either before or after the Commencement
Date from Tenant's use or occupancy of the Premises, the Building or the Common
Areas, or from the conduct of its business, or from any activity, work, or thing
done, permitted or suffered by Tenant or its agents, employees, subtenants,
invitees or licensees in or about the Premises, the Building or the Common
Areas, or from any default in the performance of any obligation on Tenant's part
to be performed under this Lease, or from any negligence or willful misconduct
of Tenant or its agents, employees, subtenants, invitees or licensees. Landlord
may, at its option, require Tenant to assume Landlord's defense in any action
covered by this Section through counsel reasonably satisfactory to Landlord.

SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord, its employees and agents for loss of or damage to any
property, or any injury to any person, or loss or interruption of business or
income, resulting from any condition including, but not limited to, fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak or flow from or into any part of the Premises or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building, whether the damage or injury results from conditions arising in
the Premises or in other portions of the Building, unless caused by Landlord's
gross negligence or willful misconduct and not covered by Tenant's insurance.
It is understood that any such condition may require the temporary evacuation or
closure of all or a portion of the Building. Should Tenant elect to receive any
service from a concessionaire, licensee or third party tenant of Landlord,
Tenant shall not seek recourse against Landlord for any breach or liability of
that service provider. Neither Landlord nor its agents shall be liable for
interference with light or other similar intangible interests. Tenant shall
immediately notify Landlord in case of fire or accident in the Premises, the
Building or the Project and of defects in any improvements or equipment.

SECTION 10.5. WAIVER OF SUBROGATION. Tenant and Landlord each hereby
waives any and all rights of recovery against the other, and against the
officers, employees, agents and representatives of the other, for loss of or
damage to the property of the waiving party or the property of others under its
control, to the extent such loss or damage is covered by proceeds for such
damage received under any insurance policy carried by the waiving party and in
force at the time of such loss or damage. Tenant and Landlord shall, upon
obtaining the policies of insurance required hereunder, give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease.

ARTICLE XI. DAMAGE OR DESTRUCTION

SECTION 11.1. RESTORATION.

(a) If the Building of which the Premises are a part is damaged as
the result of an event of casualty, Landlord shall repair that damage as soon as
reasonably possible unless: (i) Landlord reasonably determines that the cost of
repair would exceed ten percent (10%) of the full replacement cost of the
Building ("Replacement Cost") and the damage is not covered by Landlord's fire
and extended coverage insurance (or by a normal extended coverage policy should
Landlord fail to carry that insurance); or (ii) Landlord reasonably determines
that the cost of repair would exceed twenty-five percent (25%) of the
Replacement Cost; or (iii) Landlord reasonably determines that the cost of
repair would exceed ten percent (10%) of the Replacement Cost and the damage
occurs during the final twelve (12) months of the Term. Should Landlord elect
not to repair the damage for one of the preceding reasons, Landlord shall so
notify Tenant in the "Casualty Notice" (as defined below), and this Lease shall
terminate as of the date of delivery of that notice.

<PAGE>

(b) As soon as reasonably practicable following the casualty event
but not later than sixty (60) days thereafter, Landlord shall notify Tenant in
writing ("Casualty Notice") of Landlord's election, if applicable, to terminate
this Lease. If this Lease is not so terminated, the Casualty Notice shall set
forth the anticipated period for repairing the casualty damage. If the
anticipated repair period exceeds one hundred eighty (180) days and if the
damage is so extensive as to reasonably prevent Tenant's substantial use and
enjoyment of the Premises, then Tenant may elect to terminate this Lease by
written notice to Landlord within fifteen (15) days following delivery of the
Casualty Notice.

(c) Commencing as of the sixth (6th) business day following the
casualty event, the rental to be paid under this Lease shall be abated in the
same proportion that the floor area of the Premises that is rendered unusable by
the damage from time to time bears to the total floor area of the Premises.

(d) Notwithstanding the provisions of subsections (a), (b) and (c) of
this Section, but subject to Section 10.5, the cost of any repairs shall be
borne by Tenant, and Tenant shall not be entitled to rental abatement or
termination rights, if the damage is due to the negligence or willful misconduct
of Tenant or its employees, subtenants, invitees or representatives. In
addition, the provisions of this Section shall not be deemed to require Landlord
to repair any improvements or fixtures that Tenant is obligated to repair or
insure pursuant to any other provision of this Lease.

SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.

ARTICLE XII. EMINENT DOMAIN

SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of
the Premises is taken by any lawful authority by exercise of the right of
eminent domain, or sold to prevent a taking, either Tenant or Landlord may
terminate this Lease effective as of the date possession is required to be
surrendered to the authority. In the event title to a portion of the Building
or Project, other than the Premises, is taken or sold in lieu of taking, and if
Landlord elects to restore the Building in such a way as to alter the Premises
materially, either party may terminate this Lease, by written notice to the
other party, effective on the date of vesting of title. In the event neither
party has elected to terminate this Lease as provided above, then Landlord shall
promptly, after receipt of a sufficient condemnation award, proceed to restore
the Premises to substantially their condition prior to the taking, and a
proportionate allowance shall be made to Tenant for the rent corresponding to
the time during which, and to the part of the Premises of which, Tenant is
deprived on account of the taking and restoration. In the event of a taking,
Landlord shall be entitled to the entire amount of the condemnation award
without deduction for any estate or interest of Tenant; provided that nothing in
this Section shall be deemed to give Landlord any interest in, or prevent Tenant
from seeking any award against the taking authority for, the taking of personal
property and fixtures belonging to Tenant or for relocation or business
interruption expenses recoverable from the taking authority.

SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed ninety (90)
days.

SECTION 12.3. TAKING OF PARKING AREA. In the event there shall be a
taking of the parking area such that Landlord can no longer provide sufficient
parking to comply with this Lease, Landlord may substitute reasonably equivalent
parking in a location reasonably close to the Building; provided that if
Landlord fails to make that substitution within ninety (90) days following the
taking and if the taking materially impairs Tenant's use and enjoyment of the
Premises, Tenant may, at its option, terminate this Lease by written notice to
Landlord. If this Lease is not so terminated by Tenant, there shall be no
abatement of rent and this Lease shall continue in effect.

ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE

SECTION 13.1. SUBORDINATION. At the option of Landlord or any of its
mortgagees/deed of trust beneficiaries, this Lease shall be either superior or
subordinate to all ground or underlying leases, mortgages and deeds of trust, if
any, which may hereafter affect the Building, and to all renewals,
modifications, consolidations, replacements and extensions thereof; provided,
that so long as Tenant is not in default under this Lease, this Lease shall not
be terminated or Tenant's quiet enjoyment of the Premises disturbed in the event
of termination of any such ground or underlying lease, or the foreclosure of any
such mortgage or deed of trust, to which Tenant has subordinated this Lease
pursuant to this Section. It is understood that Tenant may condition its
execution of any subordination agreement upon its receipt of a commercially
reasonable non-disturbance covenant. In the event of a termination or
foreclosure, Tenant shall become a tenant of and attorn to the
successor-in-interest to Landlord upon the same terms and conditions as are
contained in this Lease, and shall promptly execute any instrument reasonably
required by Landlord's successor for that purpose. Tenant shall also, within
ten (10) days

<PAGE>

following written request of Landlord (or the beneficiary under any deed of
trust encumbering the Building), execute and deliver all instruments as may
be required from time to time by Landlord or such beneficiary (including
without limitation any subordination, nondisturbance and attornment agreement
in commercially reasonable form) to subordinate this Lease and the rights of
Tenant under this Lease to any ground or underlying lease or to the lien of
any mortgage or deed of trust; provided, however, that any such beneficiary
may, by written notice to Tenant given at any time, subordinate the lien of
its deed of trust to this Lease. Tenant acknowledges that Landlord's
mortgagees and successors-in-interest and all beneficiaries under deeds of
trust encumbering the Building are intended third party beneficiaries of this
Section.

SECTION 13.2. ESTOPPEL CERTIFICATE. Tenant shall, at any time upon not
less than thirty (30) days prior written notice from Landlord, execute,
acknowledge and deliver to Landlord, in any form that Landlord may reasonably
require, a statement in writing in favor of Landlord and/or any prospective
purchaser or encumbrancer of the Building (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
the modification and certifying that this Lease, as modified, is in full force
and effect) and the dates to which the rental, additional rent and other charges
have been paid in advance, if any, and (ii) acknowledging that, to Tenant's
knowledge, there are no uncured defaults on the part of Landlord, or specifying
each default if any are claimed, and (iii) setting forth all further information
that Landlord may reasonably require. Tenant's statement may be relied upon by
any prospective purchaser or encumbrancer of all or any portion of the Building
or Project. Tenant's failure to deliver any estoppel statement within the
provided time shall constitute a default under this Lease and shall be
conclusive upon Tenant that (i) this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) there are no uncured
defaults in Landlord's performance, and (iii) not more than one month's rental
has been paid in advance.

ARTICLE XIV. DEFAULTS AND REMEDIES

SECTION 14.1. TENANT'S DEFAULTS. In addition to any other event of
default set forth in this Lease, the occurrence of any one or more of the
following events shall constitute a default by Tenant:

(a) The failure by Tenant to make any payment of rent or additional
rent required to be made by Tenant, as and when due, where the failure continues
for a period of five (5) days after written notice from Landlord to Tenant;
provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161
and 1161(a) as amended. For purposes of these default and remedies provisions,
the term "additional rent" shall be deemed to include all amounts of any type
whatsoever other than Basic Rent to be paid by Tenant pursuant to the terms of
this Lease.

(b) Assignment, sublease, encumbrance or other transfer of the Lease
by Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy, or other means, without the prior
written consent of Landlord except as permitted under this Lease.

(c) The discovery by Landlord that any financial statement provided
by Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.

(d) The failure or inability by Tenant to observe or perform any of
the covenants or provisions of this Lease to be observed or performed by
Tenant, other than as specified in any other subsection of this Section, where
the failure continues for a period of thirty (30) days after written notice from
Landlord to Tenant; provided, however, that any such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 and 1161(a) as amended. However, if the nature of the
failure is such that more than thirty (30) days are reasonably required for its
cure, then Tenant shall not be deemed to be in default if Tenant commences the
cure within thirty (30) days, and thereafter diligently pursues the cure to
completion.

(e) (i) The making by Tenant of any general assignment for the
benefit of creditors; (ii) the filing by or against Tenant of a petition to have
Tenant adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within sixty (60) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where the seizure is not
discharged within thirty (30) days; or (v) Tenant's convening of a meeting of
its creditors for the purpose of effecting a moratorium upon or composition of
its debts. Landlord shall not be deemed to have knowledge of any event
described in this subsection unless notification in writing is received by
Landlord, nor shall there be any presumption attributable to Landlord of
Tenant's insolvency. In the event that any provision of this subsection is
contrary to applicable law, the provision shall be of no force or effect.

SECTION 14.2. LANDLORD'S REMEDIES.

<PAGE>

(a) In the event of any default by Tenant, then in addition to any
other remedies available to Landlord, Landlord may exercise the following
remedies:

(i) Landlord may terminate Tenant's right to possession of
the Premises by any lawful means, in which case this Lease shall terminate
and Tenant shall immediately surrender possession of the Premises to
Landlord. Such termination shall not affect any accrued obligations of
Tenant under this Lease. Upon termination, Landlord shall have the right to
reenter the Premises and remove all persons and property. Landlord shall
also be entitled to recover from Tenant:

(1) The worth at the time of award of the unpaid rent and
additional rent which had been earned at the time of termination;

(2) The worth at the time of award of the amount by which
the unpaid rent and additional rent which would have been earned after
termination until the time of award exceeds the amount of such loss that Tenant
proves could have been reasonably avoided;

(3) The worth at the time of award of the amount by which
the unpaid rent and additional rent for the balance of the Term after the time
of award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;

(4) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result from Tenant's default, including, but not limited to, the cost
of recovering possession of the Premises, commissions and other expenses of
reletting, including necessary repair, renovation, improvement and alteration of
the Premises for a new tenant, the unamortized portion of any tenant
improvements and brokerage commissions funded by Landlord in connection with
this Lease, reasonable attorneys' fees, and any other reasonable costs; and

(5) At Landlord's election, all other amounts in addition
to or in lieu of the foregoing as may be permitted by law. The term "rent" as
used in this Lease shall be deemed to mean the Basic Rent and all other sums
required to be paid by Tenant to Landlord pursuant to the terms of this Lease.
Any sum, other than Basic Rent, shall be computed on the basis of the average
monthly amount accruing during the twenty-four (24) month period immediately
prior to default, except that if it becomes necessary to compute such rental
before the twenty-four (24) month period has occurred, then the computation
shall be on the basis of the average monthly amount during the shorter period.
As used in subparagraphs (1) and (2) above, the "worth at the time of award"
shall be computed by allowing interest at the rate of ten percent (10%) per
annum. As used in subparagraph (3) above, the "worth at the time of award"
shall be computed by discounting the amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%).

(ii) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event Landlord may continue to enforce all
of its rights and remedies under this Lease, including the right to collect all
rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the appointment of a receiver to protect the Landlord's
interests under this Lease, shall not constitute a termination of the Tenant's
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy provided by this subsection (ii), Landlord shall not
unreasonably withhold its consent to an assignment or subletting of the Premises
subject to the reasonable standards for Landlord's consent as are contained in
this Lease.

(b) The various rights and remedies reserved to Landlord in this
Lease or otherwise shall be cumulative and, except as otherwise provided by
California law, Landlord may pursue any or all of its rights and remedies at the
same time. No delay or omission of Landlord to exercise any right or remedy
shall be construed as a waiver of the right or remedy or of any default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or default by Tenant of any provision of this Lease, other than
the failure of Tenant to pay the particular rent accepted, regardless of
Landlord's knowledge of the preceding breach or default at the time of
acceptance of rent, or (ii) a waiver of Landlord's right to exercise any remedy
available to Landlord by virtue of the breach or default. The acceptance of any
payment from a debtor in possession, a trustee, a receiver or any other person
acting on behalf of Tenant or Tenant's estate shall not waive or cure a default
under Section 14.1. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent required by this Lease shall be deemed to be other than a
partial payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice to
Landlord's right to recover the balance of the rent or pursue any other remedy
available to it. No act or thing done by Landlord or Landlord's agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender shall be valid unless in writing and signed by
Landlord. No employee of Landlord or of Landlord's agents shall have any power
to accept the keys to the Premises prior to the termination of this Lease, and
the delivery of the keys to any employee shall not operate as a termination of
the Lease or a surrender of the Premises.

SECTION 14.3. LATE PAYMENTS.

(a) Any rent due under this Lease that is not paid to Landlord within
five (5) days of the date when due and after notice from Landlord shall bear
interest at ten percent (10%) per annum

<PAGE>

from the date due until fully paid. The payment of interest shall not cure
any default by Tenant under this Lease. In addition, Tenant acknowledges
that the late payment by Tenant to Landlord of rent will cause Landlord to
incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impracticable to ascertain. Those costs may include,
but are not limited to, administrative, processing and accounting charges,
and late charges which may be imposed on Landlord by the terms of any ground
lease, mortgage or trust deed covering the Premises. Accordingly, if any
rent due from Tenant shall not be received by Landlord or Landlord's designee
within five (5) days after the date due, then Tenant shall pay to Landlord,
in addition to the interest provided above, a late charge in the amount of
one hundred dollars ($100.00) for each delinquent payment. Acceptance of a
late charge by Landlord shall not constitute a waiver of Tenant's default
with respect to the overdue amount, nor shall it prevent Landlord from
exercising any of its other rights and remedies.

(b) Following each second consecutive installment of rent that is not
paid within five (5) days following notice of nonpayment from Landlord, Landlord
shall have the option to require that beginning with the first payment of rent
next due, rent shall no longer be paid in monthly installments but shall be
payable quarterly three (3) months in advance. Should Tenant deliver to
Landlord, at any time during the Term, two (2) or more insufficient checks, the
Landlord may require that all monies then and thereafter due from Tenant be paid
to Landlord by cashier's check.

SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements
to be performed by Tenant under this Lease shall be performed at Tenant's sole
cost and expense (except as otherwise provided hereunder) and without any
abatement of rent or right of set-off. If Tenant fails to pay any sum of money,
or fails to perform any other act on its part to be performed under this Lease,
and the failure continues beyond any applicable grace period set forth in
Section 14.1, then in addition to any other available remedies, Landlord may, at
its election make the payment or perform the other act on Tenant's part.
Landlord's election to make the payment or perform the act on Tenant's part
shall not give rise to any responsibility of Landlord to continue making the
same or similar payments or performing the same or similar acts. Tenant shall,
promptly upon demand by Landlord, reimburse Landlord for all sums paid by
Landlord and all necessary incidental costs, together with interest at the
maximum rate permitted by law from the date of the payment by Landlord.

SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion.

SECTION 14.6. EXPENSES AND LEGAL FEES. Should either Landlord or Tenant
bring any action in connection with this Lease, the prevailing party shall be
entitled to recover as a part of the action its reasonable attorneys' fees, and
all other costs. The prevailing party for the purpose of this paragraph shall
be determined by the trier of the facts.

SECTION 14.7. WAIVER OF JURY TRIAL/RIGHT TO ARBITRATE.

(a) LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS
HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHT TO TRIAL BY
JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL
SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT
BY EITHER PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY
MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE,
TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE.

(b) SHOULD A DISPUTE ARISE BETWEEN THE PARTIES REGARDING ANY MATTER
DESCRIBED ABOVE, THEN EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR FORCIBLE
DETAINER EITHER PARTY MAY CAUSE THE DISPUTE TO BE SUBMITTED TO JAMS/ENDISPUTE OR
ITS SUCCESSOR ("JAMS") IN THE COUNTY IN WHICH THE BUILDING IS SITUATED FOR
BINDING ARBITRATION BEFORE A SINGLE ARBITRATOR. HOWEVER, EACH PARTY RESERVES
THE RIGHT TO SEEK A PROVISIONAL REMEDY BY JUDICIAL ACTION. NO ARBITRATION
ELECTION BY EITHER PARTY PURSUANT TO THIS SUBSECTION SHALL BE EFFECTIVE IF MADE
LATER THAN THIRTY (30) DAYS FOLLOWING SERVICE OF A JUDICIAL SUMMONS AND
COMPLAINT BY OR UPON SUCH PARTY CONCERNING THE DISPUTE. THE ARBITRATION SHALL
BE CONDUCTED IN ACCORDANCE WITH THE RULES OF PRACTICE AND PROCEDURE OF JAMS AND
OTHERWISE PURSUANT TO THE CALIFORNIA ARBITRATION ACT (CODE OF CIVIL PROCEDURE
SECTIONS 1280 ET SEQ.). NOTWITHSTANDING THE FOREGOING, THE ARBITRATOR IS
SPECIFICALLY DIRECTED TO LIMIT DISCOVERY TO THAT WHICH IS ESSENTIAL TO THE
EFFECTIVE PROSECUTION OR DEFENSE OF THE ACTION, AND IN NO EVENT SHALL SUCH
DISCOVERY BY EITHER PARTY INCLUDE MORE THAN ONE NON-EXPERT WITNESS DEPOSITION
UNLESS BOTH PARTIES OTHERWISE AGREE. THE ARBITRATOR SHALL APPORTION THE COSTS
OF THE ARBITRATION, TOGETHER WITH THE ATTORNEYS' FEES OF THE PARTIES, IN THE
MANNER DEEMED EQUITABLE BY THE ARBITRATOR, IT BEING THE

<PAGE>

INTENTION OF THE PARTIES THAT THE PREVAILING PARTY ORDINARILY BE ENTITLED TO
RECOVER ITS REASONABLE COSTS AND FEES. JUDGMENT UPON ANY AWARD RENDERED BY
THE ARBITRATOR MAY BE ENTERED BY ANY COURT HAVING JURISDICTION.

ARTICLE XV. END OF TERM

SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. If Tenant holds over for any period after the expiration (or earlier
termination) of the Term, Landlord may, at its option, treat Tenant as a tenant
at sufferance only, commencing on the first (1st) day following the termination
of this Lease. Any hold-over by Tenant shall be subject to all of the terms of
this Lease, except that the monthly rental shall be one hundred fifty percent
(150%) of the total monthly rental for the month immediately preceding the date
of termination, subject to Landlord's right to modify same upon thirty (30) days
notice to Tenant. If Tenant fails to surrender the Premises upon the expiration
of this Lease despite demand to do so by Landlord, Tenant shall indemnify and
hold Landlord harmless from all loss or liability, including without limitation,
any claims made by any succeeding tenant relating to such failure to surrender.
Acceptance by Landlord of rent after the termination shall not constitute a
consent to a holdover or result in a renewal of this Lease. The foregoing
provisions of this Section are in addition to and do not affect Landlord's right
of re-entry or any other rights of Landlord under this Lease or at law.

SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant, or a mutual termination of this Lease, shall terminate any
or all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.

SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall quit
and surrender possession of the Premises to Landlord in as good order, condition
and repair as when received or as hereafter may be improved by Landlord or
Tenant, reasonable wear and tear and repairs which are Landlord's obligation
excepted, and shall, without expense to Landlord and unless otherwise provided
herein or in the work Letter, remove or cause to be removed all wallpapering and
voice and/or data transmission cabling installed by or for Tenant, together with
all personal property and debris, except for any items that Landlord may by
written authorization allow to remain. Tenant shall repair all damage to the
Premises resulting from the removal, which repair shall include the patching and
filling of holes and repair of structural damage. If Tenant shall fail to
comply with the provisions of this Section, Landlord may effect the removal
and/or make any repairs, and the cost to Landlord shall be additional rent
payable by Tenant upon demand. If requested by Landlord, Tenant shall execute,
acknowledge and deliver to Landlord an instrument in writing releasing and
quitclaiming to Landlord all right, title and interest of Tenant in the
Premises.

ARTICLE XVI. PAYMENTS AND NOTICES

All sums payable by Tenant to Landlord shall be paid, without deduction or
offset, in lawful money of the United States to Landlord at its address set
forth in Item 13 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing. Unless this Lease expressly provides
otherwise, as for example in the payment of rent pursuant to Section 4.1, all
payments shall be due and payable within five (5) days after demand. All
payments requiring proration shall be prorated on the basis of a thirty (30) day
month and a three hundred sixty (360) day year. Any notice, election, demand,
consent, approval or other communication to be given or other document to be
delivered by either party to the other may be delivered to the other party, at
the address set forth in Item 13 of the Basic Lease Provisions, by personal
service or telegram, telecopier, or electronic facsimile transmission, or by any
courier or "overnight" express mailing service, or may be deposited in the
United States mail, postage prepaid. Either party may, by written notice to
the other, served in the manner provided in this Article, designate a different
address. If any notice or other document is sent by mail, it shall be deemed
served or delivered three (3) business days after mailing or, if sooner, upon
actual receipt. If more than one person or entity is named as Tenant under this
Lease, service of any notice upon any one of them shall be deemed as service
upon all of them.

ARTICLE XVII. RULES AND REGULATIONS

Tenant agrees to comply with the Rules and Regulations attached as Exhibit
E, and any reasonable and nondiscriminatory amendments, modifications and/or
additions as may be adopted and published by written notice to tenants by
Landlord for the safety, care, security, good order, or cleanliness of the
Premises, Building, Project and/or Common Areas. Landlord shall not be liable
to Tenant for any violation of the Rules and Regulations or the breach of any
covenant or condition in any lease or any other act or conduct by any other
tenant, and the same shall not constitute a constructive eviction hereunder.

<PAGE>

One or more waivers by Landlord of any breach of the Rules and Regulations by
Tenant or by any other tenant(s) shall not be a waiver of any subsequent breach
of that rule or any other. Tenant's failure to keep and observe the Rules and
Regulations shall constitute a default under this Lease. In the case of any
conflict between the Rules and Regulations and this Lease, this Lease shall be
controlling.

ARTICLE XVIII. BROKER'S COMMISSION

The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Each party warrants that it has had no dealings with any other real
estate broker or agent in connection with the negotiation of this Lease, and
agrees to indemnify and hold the other party harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by the indemnifying party in
connection with the negotiation of this Lease. The foregoing agreement shall
survive the termination of this Lease.

ARTICLE XIX. TRANSFER OF LANDLORD'S INTEREST

In the event of any transfer of Landlord's interest in the Premises, the
transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that (i) any funds held by the transferor in which Tenant has an
interest shall be turned over, subject to that interest, to the transferee, (ii)
Tenant is notified of the transfer, and (iii) the transferee assumes in writing
all non-accrued obligations of Landlord under this Lease. No holder of a
mortgage and/or deed of trust to which this Lease is or may be subordinate shall
be responsible in connection with the Security Deposit, unless the mortgagee or
holder of the deed of trust or the landlord actually receives the Security
Deposit. It is intended that the covenants and obligations contained in this
Lease on the part of Landlord shall, subject to the foregoing, be binding on
Landlord, its successors and assigns, only during and in respect to their
respective successive periods of ownership.

ARTICLE XX. INTERPRETATION

SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.

SECTION 20.2. HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.

SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or refund to, or the signature
of, any one or more of them shall be binding on all of them with respect to the
tenancy of this Lease, including, but not limited to, any renewal, extension,
termination or modification of this Lease.

SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.

SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.

SECTION 20.6. CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.

SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.

SECTION 20.8. WAIVER. One or more waivers by Landlord or Tenant of any
breach of any term, covenant or condition contained in this Lease shall not be a
waiver of any subsequent breach of the same or any other term, covenant or
condition. Consent to any act by one of the parties shall not be deemed to
render unnecessary the obtaining of that party's consent to any subsequent act.
No breach

<PAGE>

of this Lease shall be deemed to have been waived unless the waiver is
in a writing signed by the waiving party.

SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall
be delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, then the performance of the work or the doing
of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent.

SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises, the Building, and the Project, and all
preliminary negotiations, oral agreements, understandings and/or practices,
except those contained in this Lease, are superseded and of no further effect.
Tenant waives its rights to rely on any representations or promises made by
Landlord or others which are not contained in this Lease. No verbal agreement
or implied covenant shall be held to modify the provisions of this Lease, any
statute, law, or custom to the contrary notwithstanding.

SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance
of all the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without hindrance
or interruption by Landlord or any other person claiming by or through Landlord.

SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

ARTICLE XXI. EXECUTION AND RECORDING

SECTION 21.1. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.

SECTION 21.2. CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a
corporation or partnership, each individual executing this Lease on behalf of
the corporation or partnership represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the corporation or
partnership, and that this Lease is binding upon the corporation or partnership
in accordance with its terms. Tenant shall, at Landlord's request, deliver a
certified copy of its board of directors' resolution or partnership agreement or
certificate authorizing or evidencing the execution of this Lease.

SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact executed
and delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.

SECTION 21.4. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a "short form" memorandum of this Lease for recording
purposes.

SECTION 21.5. AMENDMENTS. No amendment or mutual termination of this
Lease shall be effective unless in writing signed by authorized signatories of
Tenant and Landlord, or by their respective successors in interest. No actions,
policies, oral or informal arrangements, business dealings or other course of
conduct by or between the parties shall be deemed to modify this Lease in any
respect.

ARTICLE XXII. MISCELLANEOUS

SECTION 22.1. NONDISCLOSURE OF LEASE TERMS. Tenant acknowledges and
agrees that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees and attorneys, shall not intentionally and
voluntarily disclose the terms and conditions of this Lease to any other tenant
or apparent prospective tenant of the Building or Project, either directly or
indirectly, without the prior written consent of Landlord, provided, however,
that Tenant may disclose the terms to prospective subtenants or assignees under
this Lease.

SECTION 22.2. REPRESENTATIONS BY TENANT. The application, financial
statements and tax returns, if any, submitted and certified to by Tenant as an
accurate representation of its financial condition have been prepared, certified
and submitted to Landlord as an inducement and consideration

<PAGE>

to Landlord to enter into this Lease. The application and statements are
represented and warranted by Tenant to be correct to Tenant's actual
knowledge and to accurately and fully reflect Tenant's true financial
condition as of the date of execution of this Lease by Tenant. Tenant shall
during the Term promptly furnish Landlord with annual financial statements
reflecting Tenant's financial condition upon written request from Landlord.

SECTION 22.3. [Intentionally omitted]

SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part
of Landlord which would otherwise entitle Tenant to be relieved of its
obligations hereunder or to terminate this Lease shall result in such a release
or termination unless (a) Tenant has given notice by registered or certified
mail to any beneficiary of a deed of trust or mortgage covering the Building
whose address has been furnished to Tenant and (b) such beneficiary is
thereafter afforded the same period granted Landlord hereunder to cure the
default, including, if necessary to effect the cure, time to obtain possession
of the Building by power of sale or judicial foreclosure provided that such
foreclosure remedy is diligently pursued.

SECTION 22.5. DISCLOSURE STATEMENT. Tenant acknowledges that it has read,
understands and, if applicable, shall comply with the provisions of Exhibit F to
this Lease, if that Exhibit is attached.

LANDLORD: TENANT:

THE IRVINE COMPANY NETRATINGS, INC.

By /s/ William R. Halford By /s/ Jack Lazar
--------------------------------- ---------------------------------
William R. Halford, President,
Irvine Office Company, Printed Name Jack Lazar
a division of The Irvine Company ----------------------
Title Vice President and CFO
----------------------------

By /s/ Vincent Hayes By /s/ Stephen Gross
--------------------------------- ---------------------------------

Vincent P. Hayes
Assistant Secretary Printed Name Stephen Gross
-----------------------
Title Vice President, Finance
------------------------------

<PAGE>

EXHIBIT B

UTILITIES AND SERVICES

The following standards for utilities and services shall be in effect
at the Building. Landlord reserves the right to adopt nondiscriminatory
modifications and additions to these standards. In the case of any conflict
between these standards and the Lease, the Lease shall be controlling. Subject
to all of the provisions of the Lease, including but not limited to the
restrictions contained in Section 6.1, the following shall apply:

1. Landlord shall furnish to the Premises during the hours of 7:00
a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m. on
Saturday, generally recognized national holidays and Sundays excepted,
reasonable air conditioning, heating and ventilation services. Subject to the
provisions set forth below, Landlord shall also furnish the Building with
elevator service (if applicable), reasonable amounts of electric current for
normal lighting by Landlord's standard overhead fluorescent and incandescent
fixtures and for fractional horsepower office machines, and water for lavatory
and drinking purposes. Tenant will not, without the prior written consent of
Landlord, consume electricity in the Premises at a level in excess of 3 watts
per square foot or otherwise increase the amount of electricity, gas or water
usually furnished or supplied for use of the Premises as general office space;
nor shall Tenant connect any apparatus, machine or device with water pipes or
electric current (except through existing electrical outlets in the Premises)
for the purpose of using electric current or water. This paragraph shall at all
times be subject to applicable governmental regulations.

2. Upon reasonable notice from Tenant, Landlord will provide any of
the foregoing building services to Tenant at such times when such services are
not otherwise available. Tenant agrees to pay Landlord for those afterhour
services at competitive rates that Landlord may establish from time to time.
Notwithstanding the foregoing, Landlord agrees that during the initial twelve
(12) months of the Lease Term, the hourly charge payable by Tenant for afterhour
HVAC services shall not exceed Thirty-Four Dollars ($34.00) per hour per floor.
If Tenant requires electric current in excess of that which Landlord is
obligated to furnish under this Exhibit B, Tenant shall first obtain the consent
of Landlord, and Landlord may cause an electric current meter to be installed in
the Premises to measure the amount of electric current consumed. The cost of
installation, maintenance and repair of the meter shall be paid for by Tenant,
and Tenant shall reimburse Landlord promptly upon demand for all electric
current consumed for any special power use as shown by the meter. The
reimbursement shall be at the rates charged for electrical power by the local
public utility furnishing the current, plus any additional expense incurred in
keeping account of the electric current consumed.

3. If any lights, machines or equipment (including without
limitation electronic data processing machines) are used by Tenant in the
Premises which materially affect the temperature otherwise maintained by the air
conditioning system, or generate substantially more heat in the Premises than
would be generated by the building standard lights and usual fractional
horsepower office equipment, Landlord shall have the right at its election to
install or modify any machinery and equipment to the extent Landlord reasonably
deems necessary to restore temperature balance. The cost of installation, and
any additional cost of operation and maintenance, shall be paid by Tenant to
Landlord promptly upon demand.

4. Landlord shall furnish water for drinking, personal hygiene
and lavatory purposes only. If Tenant requires or uses water for any
purposes in addition to ordinary drinking, cleaning and lavatory purposes,
Landlord may, in its discretion, install a water meter to measure Tenant's
water consumption. Tenant shall pay Landlord for the cost of the meter and
the cost of its installation, and for consumption throughout the duration of
Tenant's occupancy. Tenant shall keep the meter and installed equipment in
good working order and repair at Tenant's own cost and expense, in default of
which Landlord may cause the meter to be replaced or repaired at Tenant's
expense. Tenant agrees to pay for water consumed, as shown on the meter and
when bills are rendered, and on Tenant's default in making that payment
Landlord may pay the charges on behalf of Tenant. Any costs or expenses or
payments made by Landlord for any of the reasons or purposes stated above
shall be deemed to be additional rent payable by Tenant to Landlord upon
demand.

5. In the event that any utility service to the Premises is
separately metered or billed to Tenant, Tenant shall pay all charges for that
utility service to the Premises and the cost of furnishing the utility to tenant
suites shall be excluded from the Operating Expenses as to which reimbursement
from Tenant is required in the Lease. If any utility charges are not paid when
due Landlord may pay them, and any amounts paid by Landlord shall immediately
become due to Landlord from Tenant as additional rent. If Landlord elects to
furnish any utility service to the Premises, Tenant shall purchase its
requirements of that utility from Landlord as long as the rates charged by
Landlord do not exceed those which Tenant would be required to pay if the
utility service were furnished it directly by a public utility.

6. Landlord shall provide janitorial services five days per week,
equivalent to that furnished in comparable buildings, and window washing as
reasonably required; provided, however, that Tenant shall pay for any additional
or unusual janitorial services required by reason of any nonstandard
improvements in the Premises, including without limitation wall coverings and
floor coverings installed by or for Tenant, or by reason of any use of Premises
other than exclusively as offices. The cleaning services provided by Landlord
shall also exclude refrigerators, eating utensils (plates, drinking containers
and silverware), and interior glass partitions. Tenant shall pay to Landlord
the cost of removal of any of

<PAGE>

Tenant's refuse and rubbish, to the extent that they exceed the refuse and
rubbish usually attendant with general office usage.

7. Tenant shall have access to the Building 24 hours per day, 7 days
per week, 52 weeks per year; provided that Landlord may install access control
systems as it deems advisable for the Building. Such systems may, but need
not, include full or part-time lobby supervision, the use of a sign-in sign-out
log, a card identification access system, building parking and access pass
system, closing hours procedures, access control stations, fire stairwell exit
door alarm system, electronic guard system, mobile paging system, elevator
control system or any other access controls. It is specifically understood that
the initial access control procedures shall include a card key access system.
In the event that Landlord elects to provide any or all of those services,
Landlord may discontinue providing them at any time with or without notice.
Landlord may impose a reasonable charge for access control cards and/or keys
issued to Tenant. Landlord shall have no liability to Tenant for the provision
by Landlord of improper access control services, for any breakdown in service,
or for the failure by Landlord to provide access control services. Tenant
further acknowledges that Landlord's access systems may be temporarily
inoperative during building emergency and system repair periods. Tenant agrees
to assume responsibility for compliance by its employees with any regulations
established by Landlord with respect to any card key access or any other system
of building access as Landlord may establish. Tenant shall be liable to
Landlord for any loss or damage resulting from its or its employees use of any
access system.

<PAGE>

EXHIBIT C

PARKING

The following parking regulations shall be in effect at the Building.
Landlord reserves the right to adopt reasonable, nondiscriminatory modifications
and additions to the regulations by written notice to Tenant. In the case of
any conflict between these regulations and the Lease, the Lease shall be
controlling.

1. Landlord agrees to maintain, or cause to be maintained, an
automobile parking area ("Parking Area") in reasonable proximity to the Building
for the benefit and use of the visitors and patrons and, except as otherwise
provided, employees of Tenant, and other tenants and occupants of the Building.
The Parking Area shall include, whether in a surface parking area or a parking
structure, the automobile parking stalls, driveways, entrances, exits, sidewalks
and attendant pedestrian passageways and other areas designated for parking.
Landlord shall have the right and privilege of determining the nature and extent
of the automobile Parking Area, whether it shall be surface, underground or
other structure, and of making such changes to the Parking Area from time to
time which in its opinion are desirable and for the best interests of all
persons using the Parking Area. Landlord shall keep the Parking Area in a neat,
clean and orderly condition, and shall repair any damage to its facilities.
Landlord shall not be liable for any damage to motor vehicles of visitors or
employees, for any loss of property from within those motor vehicles, or for any
injury to Tenant, its visitors or employees, unless ultimately determined to be
caused by the sole active negligence or willful misconduct of Landlord. Unless
otherwise instructed by Landlord, every parker shall park and lock his or her
own motor vehicle. Landlord shall also have the right to establish, and from
time to time amend, and to enforce against all users of the Parking Area all
reasonable rules and regulations (including the designation of areas for
employee parking) as Landlord may deem necessary and advisable for the proper
and efficient operation and maintenance of the Parking Area. Garage managers or
attendants are not authorized to make or allow any exceptions to these
regulations.

2. Landlord may, if it deems advisable in its sole discretion,
charge for parking and may establish for the Parking Area a system or systems of
permit parking for Tenant, its employees and its visitors, which may include,
but not be limited to, a system of charges against nonvalidated parking,
verification of users, a set of regulations governing different parking
locations, and an allotment of reserved or nonreserved parking spaces based upon
the charges paid and the identity of users. In no event shall Tenant or its
employees park in reserved stalls leased to other tenants or in stalls within
designated visitor parking zones, nor shall Tenant or its employees utilize more
than the number of parking stalls allotted in this Lease to Tenant. It is
understood that Landlord shall not have any obligation to cite improperly parked
vehicles or otherwise attempt to enforce reserved parking rules during hours
when parking attendants are not present at the Parking Area. Tenant shall
comply with such system in its use (and in the use of its visitors, patrons and
employees) of the Parking Area, provided, however, that the system and rules and
regulations shall apply to all persons entitled to the use of the Parking Area,
and all charges to Tenant for use of the Parking Area shall be no greater than
Landlord's then current scheduled charge for parking.

3. Tenant shall, upon request of Landlord from time to time, furnish
Landlord with a list of its employees' names and of Tenant's and its employees'
vehicle license numbers. Tenant agrees to acquaint its employees with these
regulations and assumes responsibility for compliance by its employees with
these parking provisions, and shall be liable to Landlord for all unpaid parking
charges incurred by its employees. Any amount due from Tenant shall be deemed
additional rent. Tenant authorizes Landlord to tow away from the Building any
vehicle belonging to Tenant or Tenant's employees parked in violation of these
provisions, and/or to attach violation stickers or notices to those vehicles.
In the event Landlord elects or is required to limit or control parking by
tenants, employees, visitors or invitees of the Building, whether by validation
of parking tickets, parking meters or any other method of assessment, Tenant
agrees to participate in the validation or assessment program under reasonable
rules and regulations as are established by Landlord and/or any applicable
governmental agency.

4. Landlord may establish an identification system for vehicles of
Tenant and its employees which may consist of stickers, magnetic parking cards
or other identification devices supplied by Landlord. All identification
devices shall remain the property of Landlord, shall be displayed as required by
Landlord or upon request and may not be mutilated or obliterated in any manner.
Those devices shall not be transferable and any such device in the possession of
an unauthorized holder shall be void and may be confiscated. Landlord may
impose a reasonable fee for identification devices and a replacement charge for
devices which are lost or stolen. Each identification device shall be returned
to Landlord promptly following the Expiration Date or sooner termination of this
Lease. Loss or theft of parking identification devices shall be reported to
Landlord or its Parking Area operator immediately and a written report of the
loss filed if requested by Landlord or its Parking Area operator.

5. Persons using the Parking Area shall observe all directional
signs and arrows and any posted speed limits. Unless otherwise posted, in no
event shall the speed limit of 5 miles per hour be exceeded. All vehicles shall
be parked entirely within painted stalls, and no vehicles shall be parked in
areas which are posted or marked as "no parking" or on or in ramps, driveways
and aisles. Only one vehicle may be parked in a parking space. In no event
shall Tenant interfere with the use and enjoyment of the Parking Area by other
tenants of the Building or their employees or invitees.

6. Parking Areas shall be used only for parking vehicles. Washing,
waxing, cleaning or servicing of vehicles, or the parking of any vehicle on an
overnight basis, in the Parking Area (other than

<PAGE>

emergency services) by any parker or his or her agents or employees is
prohibited unless otherwise authorized by Landlord. Tenant shall have no
right to install any fixtures, equipment or personal property (other than
vehicles) in the Parking Area, nor shall Tenant make any alteration to the
Parking Area.

7. It is understood that the employees of Tenant and the other
tenants of Landlord within the Building and Project shall not be permitted to
park their automobiles in the portions of the Parking Area which may from time
to time be designated for patrons of the Building and/or Project and that
Landlord shall at all times have the right to establish rules and regulations
for employee parking. Employees shall pay to Landlord or its agents for the use
of employee parking spaces the amounts as Landlord shall from time to time
determine. Landlord may authorize persons other than those described above,
including occupants of other buildings, to utilize the Parking Area. In the
event of the use of the Parking Area by other persons, those persons shall pay
for that use in accordance with the terms established above; provided, however,
Landlord may allow those persons to use the Parking Area on weekends, holidays,
and at other non-office hours without payment. Notwithstanding the foregoing,
provided Tenant is not in default under the Lease, the monthly stall charge for
the unreserved parking spaces allotted herein to Tenant's employees shall be
waived during the initial sixty (60) month Lease Term.

8. Notwithstanding the foregoing paragraphs 1 through 7, Landlord
shall be entitled to pass on to Tenant its proportionate share of any charges or
parking surcharge or transportation management costs levied by any governmental
agency. The foregoing parking provisions are further subject to any
governmental regulations which limit parking or otherwise seek to encourage the
use of carpools, public transit or other alternative transportation forms or
traffic reduction programs. Tenant agrees that it will use its best efforts to
cooperate, including registration and attendance, in programs which may be
undertaken to reduce traffic. Tenant acknowledges that as a part of those
programs, it may be required to distribute employee transportation information,
participate in employee transportation surveys, allow employees to participate
in commuter activities, designate a liaison for commuter transportation
activities, distribute commuter information to all employees, and otherwise
participate in other programs or services initiated under a transportation
management program.

9. Should any parking spaces be allotted by Landlord to Tenant,
either on a reserved or nonreserved basis, Tenant shall not assign or sublet any
of those spaces, either voluntarily or by operation of law, without the prior
written consent of Landlord, except in connection with an authorized assignment
of this Lease or subletting of the Premises.

<PAGE>

EXHIBIT D

TENANT'S INSURANCE

The following standards for Tenant's insurance shall be in effect at
the Building. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions to those standards. Tenant agrees to obtain and
present evidence to Landlord that it has fully complied with the insurance
requirements.

1. Tenant shall, at its sole cost and expense, commencing on the
date Tenant is given access to the Premises for any purpose and during the
entire Term, procure, pay for and keep in full force and effect: (i) commercial
general liability insurance with respect to the Premises and the operations of
or on behalf of Tenant in, on or about the Premises, including but not limited
to personal injury, nonowned automobile, blanket contractual, independent
contractors, broad form property damage, fire legal liability, products
liability (if a product is sold from the Premises), liquor law liability (if
alcoholic beverages are sold, served or consumed within the Premises), and cross
liability and severability of interest clauses, which policy(ies) shall be
written on an "occurrence" basis and for not less than $2,000,000 combined
single limit (with a $50,000 minimum limit on fire legal liability) per
occurrence for bodily injury, death, and property damage liability, or the
current limit of liability carried by Tenant, whichever is greater, and subject
to such increases in amounts as Landlord may determine from time to time; (ii)
workers' compensation insurance coverage as required by law, together with
employers' liability insurance coverage; (iii) with respect to improvements,
alterations, and the like required or permitted to be made by Tenant under this
Lease, builder's all-risk insurance, in amounts satisfactory to Landlord; (iv)
insurance against fire, vandalism, malicious mischief and such other additional
perils as may be included in a standard "all risk" form, insuring the leasehold
improvements, trade fixtures, furnishings, equipment and items of personal
property in the Premises, in an amount equal to not less than ninety percent
(90%) of their actual replacement cost (with replacement cost endorsement),
which policy shall also include loss of income/business interruption/extra
expense coverage in an amount not less than nine months loss of income from
Tenant's business in the Premises. In no event shall the limits of any policy
be considered as limiting the liability of Tenant under this Lease.

2. All policies of insurance required to be carried by Tenant
pursuant to this Exhibit shall be written by responsible insurance companies
authorized to do business in the State of California and with a general
policyholder rating of not less than "A" and financial rating of not less than
"X" in the most current Best's Insurance Report. Any insurance required of
Tenant may be furnished by Tenant under any blanket policy carried by it or
under a separate policy. A certificate of insurance, certifying that the policy
has been issued, provides the coverage required by this Exhibit and contains the
required provisions, together with endorsements acceptable to Landlord
evidencing the waiver of subrogation and additional insured provisions required
under Paragraph 3 below, shall be delivered to Landlord prior to the date Tenant
is given the right of possession of the Premises. Proper evidence of the
renewal of any insurance coverage shall also be delivered to Landlord not less
than thirty (30) days prior to the expiration of the coverage. Landlord may at
any time, and from time to time, inspect and/or copy any and all insurance
policies required by this Lease.

3. Unless otherwise provided below, each policy evidencing insurance
required to be carried by Tenant pursuant to this Exhibit shall contain the
following provisions and/or clauses satisfactory to Landlord: (i) with respect
to Tenant's commercial general liability insurance, a provision that the policy
and the coverage provided shall be primary and that any coverage carried by
Landlord shall be excess and noncontributory, together with a provision
including Landlord and any other parties in interest designated by Landlord as
additional insureds; (ii) a waiver by the insurer of any right to subrogation
against Landlord, its agents, employees, contractors and representatives which
arises or might arise by reason of any payment under the policy or by reason of
any act or omission of Landlord, its agents, employees, contractors or
representatives; and (iii) a provision that the insurer will not cancel or
change the coverage provided by the policy without first giving Landlord thirty
(30) days prior written notice.

4. In the event that Tenant fails to procure, maintain and/or pay
for, at the times and for the durations specified in this Exhibit, any insurance
required by this Exhibit, or fails to carry insurance required by any
governmental authority, Landlord may at its election procure that insurance and
pay the premiums, in which event Tenant shall repay Landlord all sums paid by
Landlord, together with interest at the maximum rate permitted by law and any
related costs or expenses incurred by Landlord, within ten (10) days following
Landlord's written demand to Tenant.

NOTICE TO TENANT: IN ACCORDANCE WITH THE TERMS OF THIS LEASE, TENANT MUST
PROVIDE EVIDENCE OF THE REQUIRED INSURANCE TO LANDLORD'S MANAGEMENT AGENT PRIOR
TO OCCUPANCY OF THE PREMISES.

<PAGE>

EXHIBIT E

RULES AND REGULATIONS

The following Rules and Regulations shall be in effect at the
Building. Landlord reserves the right to adopt reasonable nondiscriminatory
modifications and additions at any time. In the case of any conflict between
these regulations and the Lease, the Lease shall be controlling.

1. Except with the prior written consent of Landlord, Tenant shall
not sell, or permit the retail sale of, newspapers, magazines, periodicals, or
theater tickets, in or from the Premises, nor shall Tenant carry on, or permit
or allow any employee or other person to carry on, the business of stenography,
typewriting or any similar business in or from the Premises for the service or
accommodation of occupants of any other portion of the Building. Tenant shall
not allow the Premises to be utilized for any manufacturing of any kind, or the
business of a public barber shop, beauty parlor, or a manicuring and chiropodist
business, or any business other than that specifically provided for in the
Lease.

2. The sidewalks, halls, passages, elevators, stairways, and other
common areas shall not be obstructed by Tenant or used by it for storage or for
any purpose other than for ingress to and egress from the Premises. The halls,
passages, entrances, elevators, stairways, balconies and roof are not for the
use of the general public, and Landlord shall in all cases retain the right to
control and prevent access to those areas of all persons whose presence, in the
judgment of Landlord, shall be prejudicial to the safety, character, reputation
and interests of the Building and its tenants. Nothing contained in this Lease
shall be construed to prevent access to persons with whom Tenant normally deals
only for the purpose of conducting its business on the Premises (such as
clients, customers, office suppliers and equipment vendors and the like) unless
those persons are engaged in illegal activities. Neither Tenant nor any
employee or contractor of Tenant shall go upon the roof of the Building without
the prior written consent of Landlord.

3. The sashes, sash doors, windows, glass lights, solar film and/or
screen, and any lights or skylights that reflect or admit light into the halls
or other places of the Building shall not be covered or obstructed. The toilet
rooms, water and wash closets and other water apparatus shall not be used for
any purpose other than that for which they were constructed, and no foreign
substance of any kind shall be thrown in those facilities, and the expense of
any breakage, stoppage or damage resulting from the violation of this rule shall
be borne by Tenant.

4. No sign, advertisement or notice visible from the exterior of the
Premises shall be inscribed, painted or affixed by Tenant on any part of the
Building or the Premises without the prior written consent of Landlord. If
Landlord shall have given its consent at any time, whether before or after the
execution of this Lease, that consent shall in no way operate as a waiver or
release of any of the provisions of this Lease, and shall be deemed to relate
only to the particular sign, advertisement or notice so consented to by Landlord
and shall not be construed as dispensing with the necessity of obtaining the
specific written consent of Landlord with respect to any subsequent sign,
advertisement or notice. If Landlord, by a notice in writing to Tenant, shall
object to any curtain, blind, tinting, shade or screen attached to, or hung in,
or used in connection with, any window or door of the Premises, the use of that
curtain, blind, tinting, shade or screen shall be immediately discontinued and
removed by Tenant. No awnings shall be permitted on any part of the Premises.

5. Tenant shall not do or permit anything to be done in the
Premises, or bring or keep anything in the Premises, which shall in any way
increase the rate of fire insurance on the Building, or on the property kept in
the Building, or obstruct or interfere with the rights of other tenants, or in
any way injure or annoy them, or conflict with the regulations of the Fire
Department or the fire laws, or with any insurance policy upon the Building, or
any portion of the Building or its contents, or with any rules and ordinances
established by the Board of Health or other governmental authority.

6. The installation and location of any unusually heavy equipment in
the Premises, including without limitation file storage units, safes and
electronic data processing equipment, shall require the prior written approval
of Landlord. Landlord may restrict the weight and position of any equipment
that may exceed the weight load limits for the structure of the Building, and
may further require, at Tenant's expense, the reinforcement of any flooring on
which such equipment may be placed and/or an engineering study to be performed
to determine whether the equipment may safely be installed in the Building and
the necessity of any reinforcement. The moving of large or heavy objects shall
occur only between those hours as may be designated by, and only upon previous
written notice to, Landlord, and the persons employed to move those objects in
or out of the Building must be reasonably acceptable to Landlord. No freight,
furniture or bulky matter of any description shall be received into or moved out
of the lobby of the Building or carried in any elevator other than the freight
elevator designated by Landlord unless approved in writing by Landlord.

7. Landlord shall clean the Premises as provided in the Lease, and
except with the written consent of Landlord, no person or persons other than
those approved by Landlord will be permitted to enter the Building for that
purpose. Tenant shall not cause unnecessary labor by reason of Tenant's
carelessness and indifference in the preservation of good order and
cleanliness. Landlord shall not be responsible to Tenant or its employees for
loss or damage to property in connection with the provision of janitorial
services by third party contractors.

<PAGE>

8. Tenant shall not sweep or throw, or permit to be swept or thrown,
from the Premises any dirt or other substance into any of the corridors or halls
or 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 Premises, or permit or suffer the Premises to be occupied or
used in a manner offensive or objectionable to Landlord 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 with other tenants, nor shall
any animals or birds be kept by Tenant in or about the Building. Smoking or
carrying of lighted cigars, cigarettes, pipes or similar products anywhere
within the Premises or Building is strictly prohibited, and Landlord may enforce
such prohibition pursuant to Landlord's leasehold remedies. Smoking is
permitted outside the Building and within the project only in areas designated
by Landlord.

9. No cooking shall be done or permitted by Tenant on the Premises,
except pursuant to the normal use of a U.L. approved microwave oven and coffee
maker for the benefit of Tenant's employees and invitees, nor shall the Premises
be used for the storage of merchandise or for lodging.

10. Tenant shall not use or keep in the Building any kerosene,
gasoline, or inflammable fluid or any other illuminating material, or use any
method of heating other than that supplied by Landlord.

11. If Tenant desires telephone, telegraph, burglar alarm or similar
connections, Landlord will direct electricians as to where and how the wires are
to be introduced. No boring or cutting for wires or otherwise shall be made
without directions from Landlord.

12. Upon the termination of its tenancy, Tenant shall deliver to
Landlord all the keys to offices, rooms and toilet rooms and all access cards
which shall have been furnished to Tenant or which Tenant shall have had made.

13. Tenant shall not mark, drive nails, screw or drill into the
partitions, woodwork or plaster or in any way deface the Premises, except to
install normal wall hangings. Tenant shall not affix any floor covering to the
floor of the Premises in any manner except by a paste, or other material which
may easily be removed with water, the use of cement or other similar adhesive
materials being expressly prohibited. The method of affixing any floor covering
shall be subject to approval by Landlord. The expense of repairing any damage
resulting from a violation of this rule shall be borne by Tenant.

14. On Saturdays, Sundays and legal holidays, and on other days
between the hours of 6:00 p.m. and 8:00 a.m., access to the Building, or to the
halls, corridors, elevators or stairways in the Building, or to the Premises,
may be refused unless the person seeking access complies with any access control
system that Landlord may establish. Landlord shall in no case be liable for
damages for the admission to or exclusion from the Building of any person whom
Landlord has the right to exclude under Rules 2 or 18 of this Exhibit. In case
of invasion, mob, riot, public excitement, or other commotion, or in the event
of any other situation reasonably requiring the evacuation of the Building,
Landlord reserves the right at its election and without liability to Tenant to
prevent access to the Building by closing the doors or otherwise, for the safety
of the tenants and protection of property in the Building.

15. Tenant shall be responsible for protecting the Premises from
theft, which includes keeping doors and other means of entry closed and securely
locked. Tenant shall cause all water faucets or water apparatus to be shut off
before Tenant or Tenant's employees leave the Building, and that all
electricity, gas or air shall likewise be shut off, so as to prevent waste or
damage, and for any default or carelessness Tenant shall make good all injuries
sustained by other tenants or occupants of the Building or Landlord.

16. Tenant shall not alter any lock or install a new or additional
lock or any bolt on any door of the Premises without the prior written consent
of Landlord. If Landlord gives its consent, Tenant shall in each case promptly
furnish Landlord with a key for any new or altered lock.

17. Tenant shall not install equipment, such as but not limited to
electronic tabulating or computer equipment, requiring electrical or air
conditioning service in excess of that to be provided by Landlord under the
Lease except in accordance with Exhibit B.

18. Landlord shall have the right to restrict access to the Building
or Project of persons whom Landlord determines will be involved in general
solicitation activities, or the proselytizing, petitioning, or disturbance of
other tenants or their customers or invitees. Landlord reserves the absolute
right and discretion to limit or prevent access to the Buildings by any food or
beverage vendor, whether or not invited by Tenant, and Landlord may condition
such access upon the vendor's execution of an entry permit agreement which may
contain provisions for insurance coverage and/or the payment of a fee to
Landlord.

19. Tenant shall be required to utilize the third party contractor
designated by Landlord for the Building to provide any telephone wiring services
from the minimum point of entry of the telephone cable in the Building to the
Premises. Notwithstanding the foregoing, however, in the event Tenant does not
have a telephone switch within the Premises, Tenant may, with Landlord's
approval and supervision, use a trained contractor to provide such wiring
services, but only from the Premises to the telephone room on the floor on which
the Premises are situated.

20. Landlord may from time to time grant tenants individual and
temporary variances from these Rules, provided that any variance does not have a
material adverse effect on the use and enjoyment of the Premises by Tenant.

<PAGE>

EXHIBIT X

WORK LETTER

DOLLAR ALLOWANCE

I. TENANT IMPROVEMENTS

The Tenant Improvement work (herein "Tenant Improvements") shall consist of
any work, including work in place as of the date hereof, required to
complete the Premises pursuant to plans and specifications approved by both
Landlord and Tenant. All of the Tenant Improvement work shall be performed
by a contractor selected by Landlord and in accordance with the following
procedures and requirements:

A. Tenant and Landlord have approved, or shall approve within the time
period set forth below, both (i) a detailed space plan for the
Premises, prepared by the architect engaged by Landlord for the work
described herein ("Landlord's Architect"), which includes interior
partitions, ceilings, interior finishes, interior office doors, suite
entrance, floor coverings, window coverings, lighting, electrical and
telephone outlets, plumbing connections, heavy floor loads and other
special requirements ("Preliminary Plan"), and (ii) an estimate,
prepared by the contractor engaged by Landlord for the work herein
("Landlord's Contractor"), of the cost for which Landlord will
complete or cause to be completed the Tenant Improvements
("Preliminary Cost Estimate"). Tenant shall approve or disapprove
each of the Preliminary Plan and the Preliminary Cost Estimate by
signing copies of the appropriate instrument and delivering same to
Landlord within five (5) business days of its receipt by Tenant. If
Tenant disapproves any matter, Tenant shall specify in detail the
reasons for disapproval and Landlord shall attempt to modify the
Preliminary Plan and the Preliminary Cost Estimate to incorporate
Tenant's suggested revisions in a mutually satisfactory manner.
Notwithstanding the foregoing, however, Tenant shall approve in all
respects a Preliminary Plan and Preliminary Cost Estimate not later
than the date set forth in Item 11 of the Basic Lease Provisions
("Plan Approval Date"), it being understood that Tenant's failure to
do so shall constitute a "Tenant Delay" for purposes of this Lease.

B. On or before the Plan Approval Date, Tenant shall provide in writing
to Landlord or Landlord's Architect all specifications and information
reasonably requested by Landlord for the preparation of final
construction documents and costing, including without limitation
Tenant's final selection of wall and floor finishes, complete
specifications and locations (including load and HVAC requirements) of
Tenant's equipment, and details of all "Non-Standard Improvements" (as
defined below) to be installed in the Premises (collectively,
"Programming Information"). Except to the extent occasioned by any
delay caused by Landlord, Tenant's failure to provide the Programming
Information by the Plan Approval Date shall constitute a Tenant Delay
for purposes of this Lease. Tenant understands that final
construction documents for the Tenant Improvements shall be predicated
on the Programming Information, and accordingly that such information
must be accurate and complete.

C. Upon Tenant's approval of the Preliminary Plan and Preliminary Cost
Estimate and delivery of the complete Programming Information,
Landlord's Architect and engineers shall prepare and deliver to the
parties working drawings and specifications ("Working Drawings and
Specifications"), and Landlord's Contractor shall prepare a final
construction cost estimate ("Final Cost Estimate") for the Tenant
Improvements in conformity with the Working Drawings and
Specifications. Tenant shall have five (5) business days from the
receipt thereof to approve or disapprove the Working Drawings and
Specifications and the Final Cost Estimate, and any disapproval or
requested modification shall be limited to items or cost increases not
contained in the approved Preliminary Plan or Preliminary Cost
Estimate. In no event shall Tenant disapprove the Final Cost Estimate
if it does not exceed the approved Preliminary Cost Estimate. Should
Tenant disapprove the Working Drawings and Specifications and the
Final Cost Estimate, such disapproval shall be accompanied by a
detailed list of revisions. Any revision requested by Tenant shall,
subject to Landlord's reasonable approval rights, be incorporated by
Landlord's Architect into a revised set of Working Drawings and
Specifications and Final Cost Estimate, and Tenant shall approve same
in writing within five (5) business days of receipt without further
revision. Tenant's failure to comply in a

<PAGE>

timely manner with any of the requirements of this paragraph shall
constitute a Tenant Delay, except to the extent occasioned by
delays caused by Landlord. Without limiting the rights of
Landlord for Tenant Delays as set forth herein, in the event
Tenant has not approved both the Working Drawings and
Specifications and the Final Cost Estimate within sixty (60) days
following the date of this Lease (as extended for the period of
any delays caused by Landlord), then Landlord may, at its option,
elect to terminate this Lease by written notice to Tenant. In the
event Landlord elects to effect such a termination, Tenant shall,
within ten (10) days following demand by Landlord, pay to Landlord
any costs incurred by Landlord in connection with the preparation
or review of plans, construction estimates, price quotations,
drawings or specifications under this Work Letter and for all
costs incurred in the preparation and execution of this Lease,
including any leasing commissions.

D. In the event that Tenant requests in writing a revision in the
approved Working Drawings and Specifications ("Change"), then provided
such Change is acceptable to Landlord (which approval shall not be
unreasonably withheld), Landlord shall advise Tenant by written change
order as soon as is practical of any increase in the Completion Cost
and/or any Tenant Delay such Change would cause. Tenant shall approve
or disapprove such change order in writing within three (3) business
days following its receipt from Landlord. Tenant's approval of a
Change shall be accompanied by Tenant's payment of any resulting
increase in the Completion Cost. It is understood that Landlord shall
have no obligation to interrupt or modify the Tenant Improvement work
pending Tenant's approval of a change order.

E. It is understood that the Preliminary Plan and the Working Drawings
and Specifications, together with any Changes thereto, shall be
subject to the prior approval of Landlord (which approval shall not be
unreasonably withheld). Landlord shall identify any disapproved items
within three (3) business days (or two (2) business days in the case
of Changes) after receipt of the applicable document. In lieu of
disapproving an item, Landlord may approve same on the condition that
Tenant pay to Landlord, prior to the start of construction and in
addition to all sums otherwise due hereunder, an amount equal to the
cost, as reasonably estimated by Landlord, of removing and replacing
the item upon the expiration or termination of the Lease. Should
Landlord approve work that would necessitate any ancillary Building
modification or other expenditure by Landlord, then except to the
extent of any remaining balance of the "Landlord's Contribution" as
described below, Tenant shall, in addition to its other obligations
herein, promptly fund the cost thereof to Landlord.

F. Notwithstanding any provision in the Lease to the contrary, if Tenant
fails to comply with any of the time periods specified in this Work
Letter, fails otherwise to approve or reasonably disapprove any
submittal within five (5) business days, fails to approve in writing
both the Preliminary Plan and Preliminary Cost Estimate for the Tenant
Improvements by the Plan Approval Date, fails to provide all of the
Programming Information requested by Landlord by the Plan Approval
Date, fails to approve in writing the Working Drawings and
Specifications and the Final Cost Estimate within the time provided
herein, requests any Changes, furnishes inaccurate or erroneous
specifications or other information, or otherwise unreasonably delays
in any manner the completion of the Tenant Improvements (including
without limitation by specifying materials that are not readily
available) or the issuance of an occupancy certificate (any of the
foregoing being referred to in this Lease as a "Tenant Delay"), then
Tenant shall bear any resulting additional construction cost or other
expenses, and the Commencement Date of this Lease shall be deemed to
have occurred for all purposes, including Tenant's obligation to pay
rent, as of the date Landlord reasonably determines that it would have
been able to deliver the Premises to Tenant but for the collective
Tenant Delays. In no event, however, shall such date be earlier than
the Estimated Commencement Date set forth in the Basic Lease
Provisions. Should Landlord determine that the Commencement Date
should be advanced in accordance with the foregoing, it shall so
notify Tenant in writing and shall state therein with specificity
Landlord's basis for the determination. Landlord's determination
shall be conclusive unless Tenant notifies Landlord in writing, within
ten (10) business days thereafter, of Tenant's election to contest
same by arbitration with JAMS/ENDISPUTE pursuant to Section 14.7(b) of
the Lease. Pending the outcome of such arbitration proceedings,
Tenant shall make timely payment of all rent due under this Lease
based upon the Commencement Date set forth in the aforesaid notice
from Landlord.

<PAGE>

G. Landlord shall permit Tenant and its agents to enter the Premises
prior to the Commencement Date of the Lease in order that Tenant may
perform any work to be performed by Tenant hereunder through its own
contractors, subject to Landlord's prior written approval (which
approval shall not be unreasonably withheld), and in a manner and upon
terms and conditions and at times satisfactory to Landlord's
representative. The foregoing license to enter the Premises prior to
the Commencement Date is, however, conditioned upon Tenant's
contractors and their subcontractors and employees working in harmony
and not interfering with the work being performed by Landlord. If at
any time that entry shall unreasonably interfere with the work being
performed by Landlord, this license may be withdrawn by Landlord upon
twenty-four (24) hours written notice to Tenant. That license is
further conditioned upon the compliance by Tenant's contractors with
all requirements imposed by Landlord on third party contractors and
subcontractors, including without limitation the maintenance by Tenant
and its contractors and subcontractors of workers' compensation and
public liability and property damage insurance in amounts and with
companies and on forms satisfactory to Landlord, with certificates of
such insurance being furnished to Landlord prior to proceeding with
any such entry. The entry shall be deemed to be under all of the
provisions of the Lease except as to the covenants to pay rent.
Landlord shall not be liable in any way for any injury, loss or damage
which may occur to any such work being performed by Tenant, the same
being solely at Tenant's risk. In no event shall the failure of
Tenant's contractors to complete any work in the Premises extend the
Commencement Date of this Lease beyond the date that Landlord has
completed its Tenant Improvement work and tendered the Premises to
Tenant.

H. Tenant hereby designates Stephen Gross, Telephone No. (408) 957-0699,
as its representative, agent and attorney-in-fact for the purpose of
receiving notices, approving submittals and issuing requests for
Changes, and Landlord shall be entitled to rely upon authorizations
and directives of such person(s) as if given directly by Tenant.
Tenant may amend the designation of its construction representative(s)
at any time upon delivery of written notice to Landlord.

II. COST OF TENANT IMPROVEMENTS

A. Landlord shall complete, or cause to be completed, the Tenant
Improvements, at the construction cost shown in the approved Final
Cost Estimate (subject to the provisions of this Work Letter), in
accordance with final Working Drawings and Specifications approved by
both Landlord and Tenant. Landlord shall pay towards the final
construction costs ("Completion Cost") as incurred a maximum of Four
Hundred Forty-Five Thousand Nine Hundred Dollars ($445,900.00)
("Landlord's Contribution"), based on $25.00 per usable square foot of
the Premises, and Tenant shall be fully responsible for the remainder
("Tenant's Contribution"). If the actual cost of completion of the
Tenant Improvements is less than the maximum amount provided for the
Landlord's Contribution, such savings shall inure to the benefit of
Landlord and Tenant shall not be entitled to any credit or payment.

B. The Completion Cost shall include all direct costs of Landlord in
completing the Tenant Improvements, including but not limited to the
following: (i) payments made to architects, engineers, contractors,
subcontractors and other third party consultants in the performance of
the work, (ii) permit fees and other sums paid to governmental
agencies, (iii) costs of all materials incorporated into the work or
used in connection with the work, and (iv) keying and signage costs.
The Completion Cost shall also include an administrative/ supervision
fee to be paid to Landlord in the amount of five percent (5%) of all
such direct costs.

C. Prior to start of construction of the Tenant Improvements, Tenant
shall pay to Landlord the amount of the Tenant's Contribution set
forth in the approved Final Cost Estimate. In addition, if the actual
Completion Cost of the Tenant Improvements is greater than the Final
Cost Estimate because of modifications or extras specifically
requested by Tenant and not reflected on the approved working
drawings, or because of Tenant Delays, then Tenant shall pay to
Landlord, within ten (10) days following submission of an invoice
therefor, all such additional costs, including any additional
architectural fee. If Tenant defaults in the payment of any sums due
under this Work Letter, Landlord shall (in addition to all other
remedies) have the same rights as in the case of Tenant's failure to
pay rent under the Lease.

D. Notwithstanding the foregoing and in addition to the Landlord's
Contribution, Landlord agrees to fund the cost of other tenant
improvement work in the Premises requested in writing by Tenant, but
exclusive of furniture, furnishings and removable

<PAGE>

personal property, up to a maximum of Eighty-Nine Thousand One
Hundred Eighty Dollars ($89,180.00) (the "Additional Allowance").
For every One Hundred Dollars ($100.00) or portion thereof of the
Additional Allowance so funded by Landlord, the Basic Rent payable
during the initial sixty (60) months of this Lease by Tenant shall
increase by Two Dollars and Twenty Cents ($2.20) per month,
retroactive to the Commencement Date of this Lease. Upon request
by Landlord, the amount of such rental adjustment shall be
memorialized on a form provided by Landlord. In the event that
the amount of the rental adjustment is finally determined
subsequent to the Commencement Date, Tenant shall promptly pay to
Landlord a lump sum amount equal to the total accrued sums owing
due to the retroactive adjustment.

E. Landlord shall warrant that the Tenant Improvements installed by or
under the supervision of Landlord will be constructed in a good and
workmanlike manner and without material defects. Tenant shall not be
responsible for payment of any costs required to correct defective or
non-complying work or materials, provided Tenant notifies Landlord
thereof within six (6) months following the Commencement Date.

<PAGE>

FIRST AMENDMENT TO LEASE

I. PARTIES AND DATE.

This First Amendment to Lease (the "First Amendment") dated November 17,
1999, is by and between THE IRVINE COMPANY ("Landlord"), and NETRATINGS,
INC., a Delaware corporation ("Tenant").

II. RECITALS.

On November 9, 1999, Landlord and Tenant entered into an office space lease
("Lease") for space in a building located at 890 Hillview Court, Suite 300,
Milpitas, California ("Premises").

Landlord and Tenant each desire to modify the Lease to add on a temporary
basis Suite 260 comprising approximately 2,599 rentable square feet of space in
the building located at 860 Hillview Court and as shown on Exhibit A hereto (the
"Temporary Premises") in accordance with the provisions set forth in "III.
MODIFICATIONS" next below.

III. MODIFICATIONS.

TEMPORARY PREMISES. Landlord shall lease to Tenant, and Tenant shall lease
from Landlord, the Temporary Premises. The lease of the Temporary Premises
shall be subject to all of the terms of the Lease except that:

(i) The lease term for the Temporary Premises shall commence ("Commencement
Date for the Temporary Premises") on the date Landlord makes the Temporary
Premises available to Tenant following the execution of this Amendment, and
shall continue thereafter until the Commencement Date of the Lease, or, if
applicable, the sooner termination of the Lease. Promptly following
request by Landlord, the parties shall memorialize on a form provided by
Landlord the actual Commencement Date for the Temporary Premises.

(ii) The Basic Rent for the Temporary Premises shall be Six Thousand Four
Hundred Ninety-Eight Dollars ($6,498.00) per month, as appropriately
prorated for any partial month;

(iii) Tenant shall not be obligated to reimburse Landlord for Operating
Expenses for the Temporary Premises accruing during Tenant's occupancy
thereof; and

(iv) Tenant shall take possession of the Temporary Premises in its existing
condition (i.e., "as-is"), and waives any right or claim against Landlord
arising out of the condition of the Temporary Premises.

IV. GENERAL.

A. EFFECT OF AMENDMENTS. The Lease shall remain in full force and effect
except to the extent that it is modified by this Amendment.

B. ENTIRE AGREEMENT. This Amendment embodies the entire understanding
between Landlord and Tenant with respect to the modifications set forth in "III.
MODIFICATIONS" above and can be changed only by a writing signed by Landlord and
Tenant.

C. COUNTERPARTS. If this Amendment is executed in counterparts, each is
hereby declared to be an original; all, however, shall constitute but one and
the same amendment. In any action

<PAGE>

or proceeding, any photographic, photostatic, or other copy of this Amendment
may be introduced into evidence without foundation.

D. DEFINED TERMS. All words commencing with initial capital letters in
this Amendment and defined in the Lease shall have the same meaning in this
Amendment as in the Lease, unless they are otherwise defined in this Amendment.

E. CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a corporation or
partnership, or is comprised of either or both of them, each individual
executing this Amendment for the corporation or partnership represents that he
or she is duly authorized to execute and deliver this Amendment on behalf of the
corporation or partnership and that this Amendment is binding upon the
corporation or partnership in accordance with its terms.

F. ATTORNEYS' FEES. The provisions of the Lease respecting payment of
attorneys' fees shall also apply to this Amendment.

V. EXECUTION.

Landlord and Tenant executed this Amendment on the date as set forth in "I.
PARTIES AND DATE." above.

LANDLORD: TENANT:

THE IRVINE COMPANY NETRATINGS, INC.

By /s/ Craig D. Brashier By /s/ Jack Lazar
------------------------------- ---------------------------
Craig D. Brashier, Vice President,
Operations Irvine Office Company, Title Vice President and CFO
a division of The Irvine Company ---------------------------

By /s/ Vincent P. Hayes By /s/ Stephen Gross
------------------------------- ---------------------------
Vincent P. Hayes
Assistant Secretary Title Vice President, Finance
---------------------------

<PAGE>

SECOND AMENDMENT TO LEASE

I. PARTIES AND DATE.

This Second Amendment to Lease (the "Second Amendment") dated January 17,
2000, is by and between THE IRVINE COMPANY ("Landlord"), and NETRATINGS, INC.,
a Delaware corporation ("Tenant").

II. RECITALS.

On November 9, 1999, Landlord and Tenant entered into an office space lease
for space in a building located at 890 Hillview Court, Suite 300, Milpitas,
California ("Premises"), which lease was amended by a First Amendment to Lease
dated November 17, 1999 (as amended, the "Lease").

Landlord and Tenant each desire to modify the Lease to add the entire
second floor of the Building comprising approximately 19,454 rentable square
feet ("Suite 200"), adjust the Basic Rent, and make such other modifications as
are set forth in "III. MODIFICATIONS" next below.

III. MODIFICATIONS.

A. BASIC LEASE PROVISIONS. The Basic Lease Provisions are hereby amended
as follows:

1. Effective as of the Commencement Date for Suite 200, Item 2 shall
be amended by adding "Suite 200."

2. Item 4 is hereby amended by adding the following:

"Estimated Commencement Date for Suite 200: May 1, 2000"

3. Effective as of the Commencement Date for Suite 200, Item 6 shall
be amended by adding the following:

"Basic Rent for Suite 200: Twenty-Three Thousand Three Hundred
Forty-Five Dollars ($23,345.00) per month.

Rental Adjustments for Suite 200: Commencing three (3) months
following the Commencement Date for Suite 200, the Basic Rent for
Suite 200 shall be Forty-Six Thousand Six Hundred Ninety Dollars
($46,690.00) per month.

Commencing twelve (12) months following the Commencement Date of
the Lease, the Basic Rent for Suite 200 shall be Forty-Eight
Thousand Fifty-One Dollars ($48,051.00) per month.

Commencing twenty-four (24) months following the Commencement
Date of the Lease, the Basic Rent for Suite 200 shall be Forty-
Nine Thousand Six Hundred Eight Dollars ($49,608.00) per month.

Commencing thirty-six (36) months following the Commencement Date
of the Lease, the Basic Rent for Suite 200 shall be Fifty
Thousand Nine Hundred Sixty-Nine Dollars ($50,969.00) per month.

Commencing forty-eight (48) months following the Commencement
Date of the Lease, the Basic Rent for Suite 200 shall be
Fifty-Two Thousand

<PAGE>

Five Hundred Twenty-Six Dollars ($52,526.00) per
month."

4. Effective as of the Commencement Date for Suite 200, Item 8 shall
be deleted in its entirety and the following shall be substituted in
lieu thereof:

"8. Floor Area of Premises: approximately 39,609 rentable square
feet."

5. Item 9 is hereby deleted in its entirety and the following shall
be substituted in lieu thereof:

"9. Security Deposit: "$117,640.00"

6. Item 11 is hereby amended by adding the following:

"11. Plan Approval Date for Suite 200: February 15, 2000"

7. Effective as of the Commencement Date for Suite 200, Item 12
shall be deleted in its entirety and the following shall be
substituted in lieu thereof:

"12. Parking: One Hundred Fifty-Nine (159) unreserved vehicle
parking spaces."

B. SECURITY DEPOSIT. Concurrently with Tenant's delivery of this Second
Amendment, Tenant shall deliver the sum of Fifty-Seven Thousand Seven Hundred
Seventy-Nine Dollars ($57,779.00) to Landlord, which sum shall be added to the
Security Deposit presently being held by Landlord in accordance with Section 4.3
of the Lease.

C. FLOOR PLAN OF PREMISES. Effective as of the Commencement Date for
Suite 200, Exhibit A attached to this Second Amendment shall be added to the
Lease.

D. TENANT IMPROVEMENTS. Landlord hereby agrees to complete the Tenant
Improvements for Suite 200 in accordance with the provisions of Exhibit X, Work
Letter, attached to the Lease, except that the "Landlord's Contribution"
described in Paragraph II.A shall be Four Hundred Thirty Thousand Four Hundred
Dollars ($430,400.00), based on $25.00 per usable square foot of Suite 200, and
the "Additional Allowance" described in Paragraph II.D. shall not be applicable
to Suite 200.

IV. GENERAL.

A. EFFECT OF AMENDMENTS. The Lease shall remain in full force and effect
except to the extent that it is modified by this Amendment.

C. COUNTERPARTS. If this Amendment is executed in counterparts, each is
hereby declared to be an original; all, however, shall constitute but one and
the same amendment. In any action or proceeding, any photographic, photostatic,
or other copy of this Amendment may be introduced into evidence without
foundation.

<PAGE>

Amendment on behalf of the corporation or partnership and that this Amendment
is binding upon the corporation or partnership in accordance with its terms.

F. ATTORNEYS' FEES. The provisions of the Lease respecting payment of
attorneys' fees shall also apply to this Amendment.

V. EXECUTION.

Landlord and Tenant executed this Amendment on the date as set forth in "I.
PARTIES AND DATE." above.

LANDLORD: TENANT:

THE IRVINE COMPANY NETRATINGS, INC.

By /s/ William R. Halford By /s/ Jack Lazar
---------------------------------- ----------------------------
William R. Halford, President,
Irvine Office Company, Title Vice President and CFO
a division of The Irvine Company ----------------------------

By /s/ Richard G. Sim By /s/ Stephen Gross
---------------------------------- ----------------------------
Richard G. Sim
President Title Vice President, Finance
----------------------------

<PAGE>
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